What happens when you combine a world of connected devices with the potential for secure transfer of digital value? You unlock a staggering digital opportunity.
The long-discussed hype surrounding the Internet of Things (IoT) has been building for years. The latest projections estimate that there could be more than 20 billion connected devices by 2020, and over 500 billion by 2030.
A key barrier to growth of today's IoT networks is their reliance mainly on centralised, brokered communication models. These models are ill-suited to meet the needs of IoT networks that must handle communications between billions of unsecured devices, with no standardised connection authority or communication protocols.
Blockchain technology may thus help unleash the true potential of IoT. The marriage of always-online, globally distributed data-collecting devices with decentralised and encrypted distributed ledger technology, offering tamper-proof real-time records, holds great promise.
The pressing need to unleash that potential will be realised in a nursery-type environment, wherein both technologies are adequately supported and allowed to evolve and thrive -- an opportunity that Thailand is making positive moves to embrace.
AGILE OPPORTUNITY
Agility is opportunity in the emerging world of innovative connected tech -- one that Thailand seems poised to realise.
While mammoth economies such as the United States struggle to adopt coherent regulation for blockchain and IoT-based innovations, Thailand is leading the way with regulatory frameworks that reflect a willingness to not just adapt, but also to foster a supportive ecosystem for both technologies to grow.
New rules for initial coin offerings (ICOs), alongside a scheduled 2019 release of regulatory guidelines for IoT networks by the National Broadcasting and Telecommunications Commission, place Thailand way ahead of the curve not just in Southeast Asia, but also globally.
The benefits of a supportive ecosystem to foster innovation are already beginning to bear fruit, with initiatives by Thai companies already coming to life.
The property developer Sansiri Plc is using Power Ledger blockchain technology to enable residents to trade electricity between buildings in its developments, while Siam Commercial Bank (SCB) is using the Ripple platform to power blockchain-enabled transactions between Thailand and Japan, the first such facility in Asia.
The Agriculture Ministry, meanwhile, has partnered with DTAC to develop its Precision Farming solution for IoT-enabled agriculture. CAT Telecom is initiating a nationwide IoT network, with plans for a smart city framework in Phuket already under way.
REALISING THE POTENTIAL
The connected global opportunity of blockchain and IoT offers huge potential, but the realisation of working solutions is still a challenging hurdle for many enterprises to overcome. Boston Consulting Group (BCG) estimates that of 400 companies globally offering an IoT platform today, only about 50 are enterprise-ready. Adding blockchain to that equation delivers a new layer of complexity, but cases of success do exist to provide optimism for the future.
In a recent example of blockchain and IoT integration, BCG Digital Ventures partnered with De Beers to construct a blockchain-based system for end-to-end tracking of diamonds through its entire supply chain. A secure digital register streamlines manual processes, improves efficiency and offers that all-important assurance to consumers about the provenance of their diamonds.
Provenance is a powerful opportunity in the synergy of blockchain and IoT. The environmental group WWF is tapping this potential to help support ethnical consumption choices for Australian diners. The OpenSC platform, in partnership with BCG Digital Ventures, gives consumers insight into the sustainability of their food choices from source to plate, through just a simple scan of a QR code on a menu.
CONNECTING THE BLOCKS
BCG's research has identified several key areas where blockchain and IoT can drive value for enterprises. Initially such value will consist of improving processes and helping reduce costs, as well as through mitigation of operational risks. Over time, the value of blockchain and IoT will shift from driving cost reduction to enabling entirely new business models and revenue streams.
Crucial to realising this potential will be nurturing an innovative and collaborative ecosystem. Alongside positive regulatory moves around cryptocurrency and IoT networks, the wider roadmap set out by Thailand 4.0 frames a broader picture of an economy that recognises the importance of innovation in supporting emerging opportunities.
What's clear is that this expanding Thai ecosystem is driven by a vision of what innovation could realise. A positive framework has been established, and the doorway to that future stands ready in front of businesses. All that remains is for us to see which enterprises find the key to unlock that opportunity in practice.
Prae Dumrongmongcolgul is a partner and managing director with Boston Consulting Group in Thailand. Anand Chawra is a principal with BCG.
