Banks and insurance companies have for decades used the same primarily fixed but highly profitable and centralized business models.
On the other hand. by exerting monopolistic control over user data, big Tech companies like Facebook, Microsoft, Amazon, Apple, and Google have profited for decades. But, blockchain projects have the potential to substantially pose a challenge to Big Tech’s control over user data.
Financial experts who participated at the World Economic Forum in Davos in 2015 had plans for the future course of money on their minds. Since then, they began to focus heavily on the hurdles posed by the growth of Bitcoin, digital assets, and fintech. The financial world began to recognize that new technologies had the potential to disrupt everything in the sector, ranging from savings to trading to payments and cross-border and peer-to-peer transactions.
And then, a virtual revolution in the field was ushered in by decentralized finance (DeFi) in the summer of 2020. After a few years of witnessing a significant rise in this new concept, the machine economy began to take centre stage, as did concern about who should own the world’s new greatest commodity, data.
We now have DeFi, SocialFi, GameFi, and a new emerging asset category: machine financialization (MachineFi), also known as the decentralized machine economy because of blockchain. This technology allows owners of billions of internet-connected devices worldwide to monetize them and developers to create decentralized applications (DApps) that use device data for monetization.
The obvious question is, “Why?” Why are financialization and decentralized markets required for devices? The answer is self-evident.
Big Tech has amassed trillion-dollar fortunes by selling user data. Blockchain has the potential to change this by democratizing the data and machine economy.
Machine-based economies have traditionally not been able to gain traction because of the infrastructure and capital needed to operate them. Blockchain alters this by offering users, businesses, and developers a complete solution for distributing, orchestrating, and monetizing many smart devices as a unified machine network.
There are over 50 blockchain projects linked to the Internet of Things (IoT). Traditional technology firms, such as IBM, Azure, Samsung, Apple, Google, and Amazon, are also merging IoT and blockchain to drive the rapidly growing machine economy.
As a result, 2021 will be remembered as the year blockchains became intelligent. Oracles created a new data source that supplied real-world facts, making them more safe and trustable. Soon after, accord on the price of Bitcoin and other crypto assets emerged, resulting in a “single version of the truth” that fueled the expansion of an entirely new financial system. DeFi laid the groundwork for new concepts, such as peer-to-peer lending, borrowing, and yield farming, which opened up new avenues for investors to generate passive income. Real-world data that could be verified became the proof required for the DeFi revolution.
Proof-of-work and proof-of-stake are two types of evidence submitted to the blockchain to receive a reward or permission.
If a Bitcoin miner can demonstrate that they have solved a computationally difficult problem, they are eligible to be the next block producer. When it comes to Ethereum, anyone who takes a certain amount of Ether qualifies to become an Ethereum validator.
Likewise, a “single version of the truth” generated by unbiased, secure machines will work in the real world, opening up unlimited possibilities for new business models.
What if “proof” could be created from everyday activities people engage in? IoT devices and machines, like those found in a smart homes, wearables, cameras, and self-driving cars, have the prospects to become “proof providers” that can employ blockchain to encapsulate the utility and value generated by people’s daily activities.
An asset tracker on a vehicle that supports real-time GPS location data to a crowdsourced map could provide proof of presence. In the insurance industry, wellness information from a wearable could provide evidence of health, while driving patterns could provide proof of safety. With biometric details, proof of humanity aids in verifying people’s identities.
People will be able to reestablish their ownership of their data with the use of smart devices and machines on the blockchain. That will allow people to undertake whatever tasks they want using their property, including monetizing the properties. Blockchain-powered IoT projects are more trustworthy, secure, interoperable, and scalable than those that preceded them, and they can deliver new efficiencies and business value by leveraging data from IoT devices and sensors.
According to estimates, IoT projects will be worth more than $12 trillion worldwide by 2030. However, the question is, who will be the owner of this value? Will management of such connected devices on centralized cloud platforms be at the hands of large corporations who will thereby serve as gatekeepers for the new machine economy?
The current period is a watershed moment in history. There will be long-term impacts – or benefits- from the choices made today about how the machine economy will evolve.
There is a requirement for a decentralized backbone that is custom created to give power to billions of machines on the blockchain to democratize the machine economy/IoT industry and remove it from the clutches of Big Tech. A combination of blockchain, secure hardware, and confidential computing would be required to give power to user-owned devices, apps, and services in the IoT machine economy.
It is possible to create a new paradigm for end-to-end trust by combining the integrity of secure hardware with the immutability of the blockchain. This will help ensure that the machine economy expands in a manner that creates more opportunities for users while limiting the sway of the handful of huge corporations that would strive to have control over it.