Internet of Things

What is the Internet of Things (IoT)?

In simple terms, the Internet of Things (IoT) is a system of interconnected devices. As the name suggests, any interrelated group of devices qualifies as IoT. If we take a broad perspective, the internet of things can include a network bound by a wi-fi connection through Bluetooth or near-field communication (NFC) technology. For example, in the typical household, laptops, cell phones, and smart televisions are connected by the same wi-fi connection, which makes them IoT.

Even household appliances like air conditioners, refrigerators, and security systems can be considered IoT since they are connected. The configurations of a home security system can be accessed through a cell phone, which is another example of IoT. You name it, webcams, wearable fitness gadgets, smart speakers, and these devices are IoT since they are tethered to the same connection.

IoT in Cryptocurrency

The concept of the internet of things is prevalent in the cryptocurrency space. There are more than twenty thousand tokens in the market, so one can only imagine how many transactions are performed every second. Since financial micro-transactions are being conducted at breakneck speed by users who require seamless transitions, IoT is imperative.

IoT facilitates a machine-to-machine (M2M) economy, which is the trading of money on non-human devices. Therefore, cryptocurrencies are a feasible option for internet-of-things compatible currencies.

Generally, blockchain technology has the fundamental framework to support an M2M economy since it is synonymous with cryptocurrencies and administers micropayments. However, many blockchain networks have limitations capacity-wise, which means the system cannot manage large volumes of transactions per second.

As it stands, proof-of-work (PoW) and proof-of-stake protocols are inadequate because they have limited scope for scalability. However, the issue of unscalable platforms is being addressed by players in the cryptocurrency space. Scalable solutions like Bitcoin Lightning Network and Ethereum Plasma are being introduced.