The economy of things: How blockchain, AI and IOT will add value to our economy

The holy trinity

Apart from each other, blockchain, AI and IOT each have the potential to change our daily lives. Combined however, they could revolutionize the world in less than two decades because of the promise they hold to let “things” contribute individually to our economy.

The internet of things (IOT)

The internet of things is the network of physical devices, vehicles, home appliances, and other items embedded with electronics, software, sensors and network connectivity which enable these objects to connect and exchange data. Think connected cars, smart thermostats or even your smartphone.

The fact that these devices are connected and can exchange data is the important part here. Soon, your smart energy meter will be able to tell your smart heating system that it is using more energy than last year and needs review from a mechanic. This is where AI starts playing a major role.

AI

The progress made during the last years in artificial intelligence, will enable “things” to work independently and make decisions based on their own experience and the knowledge they have access to. Already today, AI is used to write articles, service customers or determine medical conditions. This doesn’t necessarily mean that these machines are self-conscious (Je pense donc je suis) but it allows them to reason and decide on the next step.

When your smart heating receives a message that it is using way too much energy from your smart meter, AI will help it to choose what to do about the problem. Your heating might decide to ignore the message when it is colder outside than last year, but it might also decide to get in touch with your windows to see if they are open and send you a message to close them. In case there is something wrong with your heating system, it can deduct that it is using more energy because of a faulty air filter and order a new one. To pay for this filter however, the heater needs money and that’s where blockchain technology comes at play.

Blockchain

Bitcoin was the application blockchain technology needed to get noticed by the bigger public, but it is so much more than just cryptocurrencies. Peter Hinssen describes blockchain as “the trust machine” and that is exactly what it is and why it is going to change the future.

Let’s oversimplify business today to explain how. If I as an individual want to buy something, I can go to a shop, present my bank card and pay for the goods. The only reason why the seller accepts this, is because the bank has confirmed that I have enough money and that he will get paid sooner or later. In this case, the bank is the “trust machine” that enables my payment. I have a bank account and so does the seller and that’s why we trust each other and can-do business.

But what about machines? How do machine to machine payments work? In the current economy, devices always need humans to link their bank account to them to execute payments. Not only does this prevent machines from working on their own, it is slow, and it does not allow one machine to pay directly to another machine. Enter the blockchain.

A blockchain is basically a list of who owns what distributed over thousands of devices. Because of this distributed list (or ledger), trust between machines and humans can exist and transactions can be made without the help of a middleman like a bank since everybody in the network knows who owns what. That is why blockchain technology will allow machines to “own” money and quickly exchange value when necessary.

The economy of things

So, if we have “things” that can reason, can communicate with other entities and make payments? What is stopping us from letting them participate in the economy?

In a couple of years, it might make more sense to pay our heater for warmth instead of buying a heating installation. We pay our heater; the boiler pays for its own energy usage and maintenance and keeps doing so until another one can deliver us warmth at a lower price rate.

There are a lot of ifs in the preceding examples but sooner or later, it will happen. While this looked like science fiction merely 10 years ago, AI, Blockchain and IOT are now advanced enough to support the economy of things.

At nexxworks, we believe that artificial intelligence will enhance us, not replace us. Society however, will need to think about the next steps. It might sound absurd to question if a machine needs to take a job interview or must pay taxes, but it makes total sense when we consider these machines as things contributing to our economy.

If we reflect on the possible effects today, we might be able to construct a world where everybody can profit from the benefits of the economy of things. Robots are not machines coming to kill us, they are here to lead us to the next step in humanity. If only we could start thinking about the day after tomorrow right now.