On the Horizon
Imagine logging into your Amazon account—but instead of buying a book, movie, or new Kindle, you’re able to purchase data generated by an IoT device (or collection of devices) somewhere in the world. It could be from sensors on an oil rig in the North Sea bought by government agencies to create better predictive weather models; or from a major airline’s jet engines for researchers to train better machine learning algorithms; or from air-conditioning units in a major office tower in Dubai bought by real estate developers trying to gain a competitive advantage over their competitors when designing new projects.
This is the concept of an IoT data marketplace, and it’s not far from becoming mainstream.
By 2030, forecasts predict $3.9 trillion investment expected in IoT, with 100 billion IoT devices in operation. This creates a strong sense of urgency for companies to extract more value out of each IoT device deployed and the data they collectively generate. Platforms addressing the need to monetize IoT devices will give birth to IoT data marketplaces. Enabled by blockchain, these marketplaces will facilitate the exchange of IoT data between buyers and sellers, potentially unlocking more than $3.6 trillion in value by 2030. IoT data will be traded similar to securities on the stock market. Prices of exchanges will be determined based on the supply and demand of particular data assets.
Is an IoT Data Marketplace Really Needed?
There are already established channels through which companies can buy and sell data such as the “data-as-a-service” (DaaS) industry which is poised to become a $10.4 billion market by 2021.
However, IoT data is not easily sold in this way. The gross of the data transacted in the DaaS industry consists of metadata from specific organizational content (anonymized customer data, utilization data, etc) that can be easily aggregated and packaged.
On the other hand, IoT data streams are much more difficult to handle as they come from devices that control critical processes, infrastructure, and sensitive information. This makes IoT data a particularly good target for hackers. Recent data suggest DDoS attacks on IoT devices have increased 91 percent in 2017 alone. In fact, security concerns are the number-one inhibitor of IoT adoption. The issues of trust and security are two big obstacles that impact organizations’ willingness to sell and buy IoT data.
IoT data potentially unlocking more than $3.6 trillion in value by 2030
Blockchain Closing the Trust and Security Gap
By design, blockchain builds trust into every transaction via attributes not available in standard database models. With blockchain, traditional independent transactions are cryptographically validated by the ecosystem participants using mathematical models and the entire transaction history is available for all to see, in either public or private ledgers within each ecosystem.
Every time someone buys or sells data from an IoT device or devices, it’s securely recorded in the blockchain in a way that lets anyone know who sold a particular data set, who bought it, and for what purpose. The existence of a perpetual, encrypted and validated record of transactions via blockchain increases confidence in buyers and sellers to exchange their sensitive IoT data assets, effectively ‘unlocking’ the intrinsic value of data that would otherwise be too risky to monetize.
Who’s Buying and Who’s Selling?
Within an IoT data marketplace, like in many commercial transactions, there will be buyers, sellers, and brokers that extract economic value from their assets—which, in this case, is IoT data.
Data sellers: In addition to the growing investment in IoT devices outlined above, Gartner predicts 80 percent of organizations fail to monetize their IoT data. This can amount to more than 6 billion devices, a significant opportunity for organizations of all sizes to generate additional sources of revenue. The industries driving the growth of IoT devices include the below. Because of this, they have the greatest need—and potential—to monetize data.
- Industrial devices (24.4 percent CAGR)
- Medical Devices (20.8 percent CAGR)
- Automotive/Transportation devices (21.4 percent CAGR)
By monetizing the data collected, these organizations can create new revenue streams with only an incremental additional investment.
For their part, users (buyers) get on-demand access to data they’ve never had before that they can use in a variety of ways. Organizations will in fact be able to acquire existing and real-time data streams to create new, disruptive business models for tomorrow.
Here’s one example: A company planning to undertake a major capital expense on a 100,000-square-foot building can buy data from IoT devices deployed in similar structures elsewhere in the world. This data allows the company to save project costs on its new facility by accurately predicting, for example, HVAC costs, light usage, or services utilization before they invest in these systems.
So What’s a Terabyte of IoT Data Worth?
Based on initial projections, by 2030, blockchain-enabled IoT data marketplaces revenue could reach $4.4 billion. The market value of the data being transacted via these exchanges could rise to $3.6 trillion by 2030— by which time, more than 1 million organizations would be monetizing their IoT data assets and more than 12 exabytes of data would be transacted every day. That’s an impressive figure the digital equivalent of 27,000 times the entire contents the U.S. Library of Congress stores.
What’s the Road Ahead?
Blockchain promises to accelerate the maturity of IoT and other data exchanges by reducing the barriers to accessing data. Doing so increases data’s intrinsic value by allowing innovators to transform data sources from a discrete use (i.e., a single use or single owner) to a multi-use paradigm.
Therefore, it’s not surprising that by 2020, 100 percent of large organizations will buy some type of external data sets to augment their internal data to help them remain competitive. IoT data, accessible 24/7 with the tap of an app, will become yet another type of this “must-have” data as the next wave of IoT reinvents key industries and adds trillions of dollars to the global economy in the Industrial IoT realm alone according to Accenture Estimates.
All this ultimately underscores the importance of having a complete environment to capture, preserve, access and transform data.