What is the Economy of Things?
The Internet of Things, v2.
This is a simplified introduction to the Economy of Things, I’ve intentionally omitted nuance and detail. If you’d like a bit more detail check this out.
The Economy of Things is the result of the emergence and combination of two fields; the Internet of Things and Distributed Ledger Technology. So to understand the Economy of Things, it first makes sense to jog our memory of the Internet of Things and DLT.
The Internet of Things
Put simply, the IoT is the internet as you and I use it — to connect and exchange information — but for things. Things are devices, sensors and machines that send and receive information via the internet. Nowadays things are everywhere. In your living room you can have smart lights, speakers, a smart TV — even curtains. Walk outside and cars, street lights, cameras, doorbells and parking places are considered ‘smart’. Smart homes are a thing. Smart cities are a thing. You get the idea.
The number of things in the world is forecast to almost triple from roughly 9 billion in 2020 to over 25 billion by 2030. In 2019 the IoT market stood at $250bn, by 2027 it is predicted to hit over $1400bn. The IoT is here, and it’s here to stay. It is valuable because it saves us time and energy. It automates processes in life and business and allows for certain tasks to be done faster and better than we ever could.
Here’s a simple example which I’ll refer back to throughout this article; Alice needs to charge her electric car. Thanks to connected sensors at charging stations which monitor if stations are occupied or not, she can be guided to the closest available charging station directly, instead of having to look for one herself.
Distributed Ledger Technology
The second main ingredient of the Economy of Things is Distributed Ledger Technology. DLT is basically an elaborate database. It’s a new way of storing and exchanging information. But when information is the lifeblood of the world, even a tiny shift is significant. And this is no tiny shift. For more on that you can check out this article.
Ledgers are the systems by which people establish who owns what and who owes what to whom. They are the basis of accounting and they always have been. Distributed Ledger Technology distributes the ledger among all those using it, putting the responsibility to maintain and validate it in the hands of all stakeholders instead of third parties like banks and institutions. The result is a decentralized data registry system where transactions are instant, transparent and incorruptible.
Why is this significant? This new way of storing, sending and receiving value will permeate every nook and cranny of the digital world. With regards to the IoT and EoT, the connotations are so huge because DLT makes three extremely interesting applications possible; Decentralized Platforms & Marketplaces, Self-Sovereign Identity and Cryptocurrency.
The rest of this blog was published on peaq’s blog, here: