Why is everyone so interested in blockchain, and what does that interest mean for the Internet of Things? Blockchain is beginning to play a major part in the Internet of Things by enhancing security, enabling inclusion of low-value devices to be increasingly viable and making managing a device easier for decades to come. Blockchain is a peer to peer distributed ledger technology for a new generation of transactional applications. It is a peer to peer distributed ledger technology for a new generation of transactional applications which maintains a continuously growing list of cryptographically secured data records hardened against tampering and revision. It can help establish trust, accountability and transparency while streamlining business processes.
I've been fortunate enough to attend the first meeting of what then became the Trusted IoT consortium, held in Berkeley in late 2016. The key idea was, combining properties of blockchain such as identity and immutable ledger with sensor data where provenance, authenticity, location, and governance are crucial for actions taken on the basis of the sensor data stream. It still takes an effort to wrap your mind around the way the two areas, Blockchain and IoT, interoperate. Various objects need to be ascertained as being something, belonging to someone, and being somewhere. One example is Supply Chain -- when a container is shipped from say Shanghai to Oakland, the buyer, the seller and the shipper all need to know, and to be able to prove, that it follows a certain state machine -- with loading, sailing, arrival, customs, and unloading, sequenced one after the other in time.
Blockchain technology has been the new kid on the "block" for some time now and is especially hot when enabling new currencies with the rollercoaster rides that these have recently taken. However, blockchains are not limited to crypto-currencies but are widely being adopted by other industries as well, especially the automotive industry. According to Frost and Sullivan, 10–15% of connected vehicle transactions are expected to be on blockchain by 2025. Toyota is exploring blockchain technology in collaboration with MIT Media Lab to develop a new mobility ecosystem that could accelerate the development of autonomous driving technology, particularly with secure data sharing, car/ride share transactions and usage-based insurance. German supplier ZF and IBM announced in 2017 that they were jointly developing Car eWallet, a payment technology targeting future mobility services.
Blockchain has captured the collective curiosity of the business and technology world and rapidly approaches the peak of the hype-cycle witnessed in other technology "fads" of the past. However, this "fad" is different from those in that it is largely not based on new technology, but rather a composite of proven technologies applied to create the underpinning of Bitcoin. However, that same technology when applied to other use cases happens to address a substantial latent pain that exists across industries. Blockchain, or more accurately Distributed Ledger, is more of a catalyst to inspire change in the way disparate organizations work together in highly competitive markets. Existing inter-company transactions carry enormous costs in process, procedure and crosschecking of records to come to settlement on what could turn out to be a trivial exercise using blockchain technology. In short, blockchain or distributed ledger technologies can provide the next wave of innovation that streamlines the way business operates, the same way the web did, giving birth to a new collaborative economy. Bletchley is Microsoft's architectural approach to building an Enterprise Consortium Blockchain Ecosystem. To be clear, this is not a new blockchain stack.
Banking isn't the only industry that could be affected by blockchain tech. Law enforcement, ride-hailing, and many other sectors could also have blockchain in their future. What began as the basis of cryptocurrencies such as Bitcoin, blockchain technology -- essentially a virtual ledger capable of recording and verifying a high volume of digital transactions -- is now spreading across a wave of industries. Blockchain tech has gone far beyond its beginnings in banking and cryptocurrency: In 2019, businesses are expected to spend $2.9B on the technology, up almost 90% from 2018, according to IDC. Industries from insurance to gaming to cannabis are starting to see blockchain applications. Bitcoin's popularity helped demonstrate blockchain's application in finance, but entrepreneurs have come to believe blockchain could transform many more industries. Ultimately, the use cases for a transparent, verifiable register of transaction data are practically endless -- especially since blockchain operates through a decentralized platform requiring no central supervision, making it resistant to fraud. Download the free report to learn about the biggest emerging trends in blockchain and strategies to watch for 2019. As companies use blockchain to drive greater transparency and veracity across the digital information ecosystem, they're boosting awareness of the technology in sectors ranging from infrastructure to public policy. Here are the latest innovative ways companies are harnessing the power of global blockchain. Banking is just the beginning. From a macro perspective, banks serve as the critical storehouses and transfer hubs of value. As a digitized, secure, and tamper-proof ledger, blockchain could serve the same function, injecting enhanced accuracy and information-sharing into the financial services ecosystem. Swiss bank UBS and UK-based Barclays are both experimenting with blockchain as a way to expedite back office functions and settlement, which some in the banking industry say could cut up to $20B in middleman costs. In May 2019, Barclays invested in Crowdz, a blockchain-based B2B payments startup that helps companies collect payments and automate digital invoices. Blockchain is also growing as a solution aimed at reducing the cost of cross-border transactions, which accounted for 27% of global transaction revenue in 2017, according to McKinsey. Blockchain company Ripple has partnered with financial institutions like Santander and Western Union with the goal of improving the efficiency of cross-border transactions. Blockchain startup BanQu is working with AB InBev to facilitate payments to cassava farmers in Zambia.