Blockchain is expected to be instrumental in digital transformation in the coming years, especially in the field of IoT. But there are technical hurdles to overcome largely because most IoT devices lack the adequate computing power to participate in blockchains directly. That said, as with most IoT initiatives, a small thing like power isn’t going to stop the world from trying.
You just have to look at the importance of cryptocurrencies, which rely on blockchain to operate, to see the potential. Cryptocurrencies, which allow people to move money in the same way they move information on the internet, are being traded in huge sums. There are currently more than 900 different cryptocurrencies being traded and the most popular, the Bitcoin (BTC), has a market cap of over $40 billion with daily volumes averaging $1 billion and peaking at around $2 billion.
Besides providing real opportunities for cyber criminals and clever, high risk, traders, our interest in cryptocurrencies has proven that blockchain is a viable technology to exponentially grow the IoT ecosystem. At the moment though, technologists are grappling with exactly how it will do this.
The future of IoT is decentralised
To understand the need for technologies like blockchain for IoT, we need to understand the problem IoT will be facing in the future. Most of today’s IoT ecosystems are built around a centralised, brokered communication model. All the IoT devices in the system are known and authenticated by and communicate through a centralised, large cloud which provides huge amounts of processing power and storage.