The Internet of Things and its transformative potential in the modern economy

Why has the Internet of Things become inevitable?

In today's world, devices are no longer just static equipment – they have become intelligent, interconnected agents that communicate without human intervention. This transformation, known as the Internet of Things (IoT), is not merely a technical novelty but rather a fundamental shift in the paradigm of how we maintain and control the environment around us. From home security systems to agricultural monitoring, IoT technology penetrates virtually every industry, offering unprecedented possibilities for control and efficiency.

The appeal of the cycle lies in a simple truth – thousands of non-intelligent sensors and devices operating 24/7 provide data that was previously unavailable or required excessive resources to obtain. As a result, businesses and homeowners can make decisions based on real-time information rather than guesses or later analyses.

The Cause of IoT and the Machine Economy

To make the right decision, systems often cannot wait for human action. Smart home systems automatically adjust the temperature, production lines autonomously order depleting materials, and security sensors independently issue alerts. In this context, there is a natural need for an automated payment system between devices – that is, machine-to-machine (M2M) economy.

Traditional financial infrastructure is not suitable for this purpose – banking systems are too expensive, slow, and centralized for microtransactions that can occur in seconds or even milliseconds. This is where cryptocurrencies come in, offering a decentralized, powerful, and economic solution for small amounts of money exchanged between computing entities.

Blockchain: a perfect justification or a wasted hope?

Initially, blockchain seemed like the ideal medium for M2M economy. It is decentralized, provides cryptographic security, is compatible with cryptocurrencies, and supports micropayments. However, a significant limitation emerged in practice – most blockchains (, especially proof-of-work and proof-of-stake systems), can only process a limited number of transactions per second.

For example, the Bitcoin network can process about 7 transactions per second, while the Ethereum main network can handle around 15. In comparison, the traditional payment system VISA can process thousands of transactions per second. This limitation means that current blockchain systems are not practically equipped for mass IoT microtransaction processing.

However, the industry is not raising its hands. Projects like the Bitcoin Lightning Network and Ethereum Plasma are working on second-layer solutions that offload larger volumes from the main network, reducing congestion and speeding up transactions. These solutions could become a bridge between IoT and blockchain potential.

Practical Implementation of IoT: From Theory to Reality

The spectrum of applications is extremely wide. Home automation allows control of lighting, heating, security systems, and even refrigerators through a unified interface – often with voice commands. Hospitals install smart beds that automatically monitor patients and alert staff if a patient is left unattended. Households with elderly family members can install sensors that alert about critical health parameters.

In industry, IoT sensors monitor temperature, humidity, and air quality, providing precise environmental control for critical processes. Farmers use smart sensors to track livestock – their water supply status, feed consumption – and even automatically order additional supplies when stocks fall below a critical threshold.

Challenges to Overcome

The main challenge remains fragmentation. To monitor ten different devices, one may have to use ten different apps and platforms. This problem has been addressed by companies like Apple (HomeKit), Amazon (Echo), and Samsung (SmartThings) – creating unified control platforms that function independently of internet availability.

Another question is energy efficiency. Millions of sensors cannot constantly recharge batteries, so the industry is looking for new solutions, ranging from energy-harvesting endless sensors to the development of new communication protocols.

Historical Context and Future Perspectives

The IoT concept is not new – in 1994, Reza Raji proposed mass data transmission for automation. The Massachusetts Institute of Technology experimented with sensor networks at the end of the 20th century to control production. However, the official birth of the IoT industry is considered to be in 2008, when the number of connected electronic devices first exceeded the number of people on Earth.

In contrast, the integration of the Internet and cryptocurrency is still a new but upward trend. In the coming years, it is expected that more projects will focus on IoT-specific solutions, offering both better scalability and specific micropayment protocols.

Conclusion

The Internet of Things is slowly becoming an organism of our daily lives – invisible, yet everywhere. Its potential combined with decentralized financial systems is immense, but currently, scalability issues require significant technological breakthroughs. The direction is clear: IoT and cryptocurrencies are preparing to come together in the near future – it is already happening, albeit in hidden laboratories and startup breakthrough scenarios.