The Blockchain IoT Market is expected to grow with a CAGR of 40% over the forecast period 2020 – 2025. With the rapid development of communication technologies, the Internet of Things is experiencing exponential growth both in research and industry and is getting out of its infancy to maturity phase with the volume of data generated, transmitted and processed but it still suffers from pitfalls such as privacy and security vulnerabilities that is leveraged by the asymmetric cryptography of the blockchain technology.
- The traditional IoT systems are powered by centralized topology where data is transmitted from physical devices to cloud where the data is processed using analytics and output is received back to the IoT device, but with the increase of frequency of network devices limits the scalability of the IoT platforms and risk it with vulnerabilities that would eventually compromise users network security and privacy.
- For instance, In 2017, the US FDA ( Food and Drug Administration) announced that St Jude Medical’ implantable cardiac are vulnerable to hack due to vulnerabilities in the transmitter powered by IoT which were deployed to monitor the patient heart function and control heart attack, Also few of the infamous IoT attacks include Mirai Botnet DDoS attack affected internet service for the entire East Coast of America including Netflix, Reddit, and Twitter.
- As with the Blockchain powered by decentralized architecture and cryptographic encryptions leverages the IoT platform by ensuring the privacy and security in a peer-to-peer network. However, it requires high computational power resulting in higher bandwidth overhead and delay
- Furthermore, centralized architecture such as cloud model that powers traditional IoT result in latency, high cost and the risk of single point of failure. Blockchain technologies on other hand provide security protocols and infrastructure that enable billions of IoT devices to have trusted interoperability for both data and commerce.
The Financial institutions and other major companies are usually are inherently slow in adopting any new technology but Banks and Financial institutes such as HSBC, Deutsche Bank, ING that are exploring the potential of blockchain technology added with the flexibility IoT open up innumerable use cases to run smart operation leveraging the everyday devices equipped with sensors and thereby achieve more efficiency.
With the rapid growth of urbanization and government initiatives across the world foster the demand for smart cities. The smart cities are entitled to problems such as high operation cost of the data center, poor security of IoT, equipment maintenance among others. However, technologies such as blockchain IoT would provide the necessary infrastructure for transaction management, asset tracking, smart contracts while ensuring security and transparency and thereby increasing the operational efficiency
For instance, smart city developers such as Hancom Group announced that its 470 acres smart city project Gapyeong Malang Malang Smart Ecosystem will be incorporating blockchain as the basis for development.
Key Market Trends
Smart City end-users to hold major market share
- Over the last few decades, the world has experienced unparalleled urban growth majorly due to an increase in population, scarcity of resources and climate changes. According to the United Nations, about 54% of people dwell in cities and is expected to reach 66% by 20250. To cope up with urban growth government bodies are focusing on modern technologies such as IoT, wireless communication, blockchain aiming to reduce cost and use resources optimally
- For instance, the Netherlands deployed IoT infrastructure in Amsterdam to regulate and monitor the city’ energy usage, traffic flow and safety real-time
- Data security is one of the vital constraints for devices and services deployed in a metropolitan city, which leveraged with the blockchain’s decentralized platform ensures the trust of the public and hence, fosters the growth of the market.
- Also, Government initiatives around the world are starting to appreciate the potential of blockchain as it provides the infrastructure necessary for transaction management while ensuring transparency and security which stands to be critical elements in smart city implementation.
- For instance, In 2015, India has pioneered to openly enact smart city mission across 12 cities with Government approved tender amounting to INR 1,62,000 Cr under this programme. Additionally, Government recently announced will be reported report card for the 100 selected smart cities in June 2020
Asia-Pacific to Witness the Highest Growth
- The Asia-Pacific region is expected to grow at the highest rate over the forecast period owing to the rising influx of technology companies in the region coupled with the increasing investment in IoT technology, Smart City deployments, Government initiative and growth of urban population, the region is expected to boost the market growth rate.
- For instance, In November 2019, Hyperchain, a blockchain firm announced that China’ State Grid Corporation accepted its bid for a blockchain solution to leverage the Internet of things ( IoT) capabilities as a part of its procurement program.
- Also, In February 2020 Chinese central government issued the CCP Central Committee and State Council Opinions Concerning Effectively Seizing Key Work in the ‘Three Agricultures’ Sphere featuring the application advance technologies such as IoT, Blockchain and Artificial Intelligence to Chinese Agriculture.
- In August 2019, Reliance, a leading Indian multinational conglomerate company announced its plan to introduce Blockchain network with emphasis on modernizing agriculture, supply chain at its annual general meeting, The plan is aimed to be delivered by August 2020 and is hoped to capable of fulfilling thousand of node operations added with smarty city initiatives by the government are expected to drive the growth of IoT market.
The Blockchain IoT market is highly competitive owing to the presence of many large and small players in the market operating in the domestic as well as in the international market. The market appears to be fragmented due to the presence of many technological giants in the market. Key strategies adopted by the major players in the market are product innovation and mergers and acquisitions. Some of the major players in the market are Cisco Systems, Inc., Google, Inc., IBM Corporation, Microsoft Corporation among others.
- October 2019 – IBM announced a new supply chain service based on its blockchain platform and its recently acquired Red Hat open-source software, This service enables developers to integrate legacy data systems on to the distributed ledger with the help of open APIs. The end-users such as distributors, manufacturers, and retailers would seamlessly be able to integrate the data from sources such as IoT sensor systems onto Hyperledger so as to track products throughout the supply chain in realtime.
- September 2019- Linux Foundation announced that it seeks to closely integrate with IOTA Foundation to further leverage LF Edge table. This open colloboration leads the development of LF Edge framework which is an open-source stack of Cloud interoperability, IoT edge with distributed ledger technologies and help the company to leverage its stack of technologies to advance its development approach towards interoperable solution for IoT, Cloud and Edge integration.
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