How the Internet of Things and Cryptocurrency interact could also bring significant benefits that are greater than the sum of their parts. This article takes a glimpse into the future convergence of IoT and crypto.
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Definition: The Internet of things means things that connect and exchange data with other devices and the internet.
The IoT revolution started with the advent of fast broadband speeds, and with the continuing rollout of 5G across the globe, it’s now gaining rapid traction. According to Statista, 2019 was the tipping point when the number of IoT devices overtook the number of non-IoT connected devices. By 2025, there will be three times as many IoT devices—over 30 billion—than connected devices.
Smart home devices such as light bulbs, refrigerators, and even connected cars are already becoming the norm for many people. However, IoT is transforming how many industries operate, particularly the use of sensors and robotics in factories, supply chains, and agriculture.
Not to mention that IoT is playing a significant role in developing the smart cities of the future by using sensors and automation to save energy, make waste management more efficient, monitor air quality, and so on.
But, with so much transformation already underway in the pure IoT space, what role can cryptocurrency play to help further the journey?
The main uses of IoT for crypto centers on automated digital payments. For instance, Amazon was quick to spot the potential for allowing its customers to make orders with the home Alexa-enabled devices. If Amazon started accepting cryptocurrencies—a prospect that no longer seems unrealistic—it would be possible to pay for those orders with Bitcoin (BTC) and other cryptos.
This functionality could also extend to other smart devices, such as a smart refrigerator that orders food automatically when your supplies are running low.
Looking to the future, we could be paying energy bills based on real-time usage with cryptocurrencies, using IoT-enabled sensors that track the exact utilization. Furthermore, using blockchain for peer-to-peer energy grids, it’s feasible to imagine that you could purchase some stored electricity from your solar-panel-equipped neighbor and pay for it using cryptocurrency.
Automated payments using crypto in IoT-equipped smart cities are also not so far away. Connected cars are already a reality, and with Elon Musk’s love of crypto, digital currencies might be used to pay for toll fees, road taxes, or parking charges.
Incorporating blockchain and smart contracts could introduce an additional element of automation to processes such as car or accommodation rentals. For instance, if you wanted to rent a car as part of a municipal car-sharing scheme, you’d walk up to the vehicle of your choice and deposit your crypto to the correct address. An IoT-enabled vehicle lock would then give you access to the car to start driving.
Mining BTC and many cryptocurrencies require specialized equipment to achieve the necessary hash power to compete for block rewards.
However, this isn’t true of all cryptocurrencies. Some, such as Monero, are easy enough to mine using a home computer. Although IoT devices have meager hash power, it’s still possible to harness enough to mine some cryptocurrencies with enough of them.
This possibility has both upsides and downsides. Cybersecurity is perhaps one of the biggest concerns surrounding the increasing dependence on IoT devices.
Equipment tends to be mass-produced and shipped with weak security. If a hacker can figure out how to penetrate one device, they can potentially infiltrate all networks using the same device model. In early 2020, cybersecurity firm Bitdefender discovered a botnet with Monero mining features attempting to hijack routers.
On the other hand, there are instances of projects that aim to use the potential for mining crypto using IoT devices. IOTW is one example, a network that allows users to use their IoT devices to mine tokens while also allowing them to sell their IoT usage data to manufacturers in return for crypto.
Finally, it’s worth mentioning a few of the other projects working at the convergence of IoT and crypto. The biggest and best known is IOTA.
In contrast to a traditional blockchain, IOTA uses a non-linear distributed ledger technology called a Directed Acyclic Graph (DAG) and operates as a protocol layer for exchanging data and value between connected IoT devices.
The DAG structure permits parallel processing of transactions, allowing IOTA to operate at a high capacity and run a cryptocurrency called MIOTA.
IoTeX is another example of a crypto-cum-IoT project. It’s building a blockchain network designed to secure IoT-connected devices from being hacked or used for surveillance.
Although there’s plenty of effort going into bringing the potential of IoT and crypto to life, it’s worth noting that we’re still at the very beginning of this journey. The use cases and projects mentioned here are only the tips of the iceberg.
Over the coming years, innovators will inevitably find new ways to converge cryptocurrencies, blockchain, and IoT devices together.
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