For decades, banks and insurance companies used the same mostly static but highly profitable and centralized business models. Also, big tech companies like Facebook, Microsoft, Amazon, Apple and Google have monopolized user data for their profit for decades. However, blockchain projects could significantly challenge Big Tech’s grip on user data.
In 2015, the future of money was at the forefront of financial experts’ attention at the World Economic Forum in Davos. There, they began to seriously focus on the challenges posed by the rise of Bitcoin (BTC), digital assets and fintech. The world of finance has begun to realize that new technologies are upending everything in the sector, from savings to trading to making payments and cross-border and peer-to-peer transactions.
Then in the summer of 2020 he came decentralized finance (DeFi) Renaissance. After several years of the extraordinary rise of this new concept, the machine economy began to take center stage and the concern over who should own the world’s new greatest commodity, data.
Thanks to blockchain we have DeFi, SocialFi, GameFi and an emerging asset category: machine financialization (MachineFi) or the decentralized machine economy. It allows owners of billions of Internet-connected devices around the world to monetize them and developers to create decentralized applications (DApps) that draw device data for monetization.
One obvious question is: Why? Why do devices need finance or decentralized markets? The answer is quite obvious.
Big Tech has built trillion-dollar empires selling user data. Blockchain can change this by democratizing the data and machine economy.
Historically, machine economies have failed to gain traction due to the infrastructure and capital requirements needed to operate them. Blockchain changes this by providing end-to-end solutions for users, businesses, and developers to distribute, organize, and monetize large numbers of smart devices within a unified computing network.
There are currently more than 50 blockchain projects related to the Internet of Things (IoT). There are also several traditional tech companies—such as IBM, Azure, Samsung, Apple, Google, and Amazon—that are combining IoT and blockchain to power the growing machine economy.
The only version of the truth
So when we look back to 2021, we see it as the year blockchains got smart. Oracles has introduced a new data source that provides real-world facts to make them safer and more trustworthy. Agreement on the price of Bitcoin and other crypto-assets soon followed, creating a “single version of the truth” that led to the growth of an entirely new financial system. DeFi has been the basis for new concepts such as peer-to-peer lending and borrowing and revenue farming, which have opened up new opportunities for passive income investors. Verifiable real-world data has become the proof needed for the DeFi revolution.
Everyone in the crypto space knows about proof-of-work and proof-of-stake, proofs provided to the blockchain in order to obtain a reward or permission. If a Bitcoin miner proves to have solved a computationally intensive problem, they become eligible to become the next block producer. For Ethereum, if someone stakes a certain amount of Ether (ETH), qualify to become an Ethereum validator.
Similarly, a “single version of the truth” from unbiased, secure machines will be proof of work done in the real world, creating limitless opportunities for new business models.
Proof of anything
What if “proof” could also be generated from ordinary activities that people perform in their daily lives? IoT devices and machines — such as those in the smart home, wearables, cameras and autonomous vehicles – have the potential to become “proof providers” that can use blockchain to capture the utility and value people create through everyday activities.
Proof of presence could be determined using an on-vehicle asset tracking tool that provides real-time GPS location information to a crowdsourced map. In insurance, proof of health can be provided using health data from a wearable device, or proof of safety can be obtained from driving patterns. Proof-of-humanity helps verify the identity of people using biometric information.
Smart devices and machines on the blockchain will provide the opportunity to return ownership of data to people, allowing them to do whatever they want with their assets – including monetizing them. Blockchain-based IoT projects offer greater trust, security, interoperability and scalability than their predecessors, creating new efficiencies and business value by drawing on the data provided by IoT devices and sensors.
Smart Devices: The New Machine Economy
Estimates suggest that by 2030, IoT projects will be worth more than $12 trillion worldwide. But who will own this value? Will large corporations continue to manage devices on centralized cloud platforms and be the gatekeepers of the new machine economy? We are at a pivotal moment in history. Decisions about how the machine economy will evolve will have consequences – or benefits – for decades.
A decentralized backbone purpose-built to enable billions of machines on the blockchain is what we need to democratize the machine economy / IoT industry and remove it from the domain of Big Tech. The IoT machine economy would require a combination of blockchain, secure hardware and confidential computing to enable user devices, applications and services:
- Secure hardware captures and signs real data that anyone can verify and trust.
- Real-world oracles then bring this verifiable data into the blockchain in a trusted way.
- Decentralized identity allows people and machines to own their data as digital assets that can be monetized and traded using DApps.
By combining the integrity of secure hardware with the immutability of the blockchain, we can create a new paradigm for total trust that will help ensure that the machine economy grows in a way that creates more opportunity for users and limits the influence of the few. large companies that would seek to control it.
Raullen Chai is the co-founder and CEO of IoTeX. He previously worked for companies including Google, Uber and Oracle. He holds a Ph.D. from the University of Waterloo, where his research focused on the design and analysis of lightweight IoT ciphers and authentication protocols. At Google, he led many important security initiatives for its technical infrastructure, including mitigating SSL attacks, reducing the burden of privacy-protecting SSL, and enabling certificate transparency for all Google services. He was also the founding engineer of Google Cloud Load Balancer, which now powers thousands of cloud services with over 1 million queries per second.
This article is for general informational purposes and is not intended and should not be construed as legal or investment advice. The views, thoughts and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.