A survey of over 500 U.S. companies found that 75% of IoT adopters had already implemented blockchain or were planning to by the end of 2020. Only 10% of the respondents said they had no plans for blockchain adoption.
According to the Gartner 2019 Hype Cycle, blockchain is maturing and serious use cases are emerging, although blockchain on its own is in the “trough of disillusionment”. However, in combination, Gartner predicts that blockchain and IoT use cases will start to climb out of the trough into the ‘slope of enlightenment’. Gartner VP Avivah Litan states that the combination of technologies is “moving ahead at a much faster pace than expected, according to the survey.”
Blockchain and IoT are seen as complementary. IoT devices are used for automation and invariably are part of a network. The new types of data generated need to be secured, and hence the ability of blockchain to prevent tampering is important.
This sentiment is affirmed by Gartner’s survey, where 63% of respondents said the top benefit of integrating IoT and blockchain is increased security and trust in shared multiparty transactions and data. Other drivers for blockchain adoption include — business efficiency and lower costs (56%), increased revenue and business opportunities (43%), improved experience (37%).
Industries involving moving physical items are the sectors most attracted to the combination of IoT and blockchain. Specifically, companies involved in pharmaceuticals, energy, natural resources, utilities and transportation.
“These industries all have business models that include the movement of physical goods, so they benefit from links that bridge the physical to the digital world, especially those enabled by a combination of blockchain and IoT technologies,” said Ms. Litan.
However, despite the high interest of blockchain amongst IoT adopters, Gartner believes there are several technical and business challenges. Blockchain protocols are constantly evolving, whereas IoT devices have significant longevity. This mismatch in timeframes could prove challenging. Another aspect is the scalability of blockchain, which is known to have a low transaction processing rate. This may pose a problem where a large number of parties are interconnected.
In conclusion, Gartner believes blockchain and IoT will take five to 10 years to achieve maturity. The prediction is in line with the 2019 blockchain hype cycle published three months ago.