This blog was originally published on Forbes.
Imagine a 19-hour internet outage knocking one-quarter of your home country’s population offline. Sounds pretty apocalyptic, right? Banks fail to process payments, logistics fall apart and general disarray is in abundance. Canadians wouldn’t have to strain their imagination too hard.
This example is just one of the many instances of a problem plaguing entire industries, from transportation to finance and power grids. Too often, the infrastructure enabling more and more of our daily routines ends up concentrated in the hands of a few companies.
Blockchain offers other options to run things. And no, this isn’t another “X is broken, so let’s break it again, but with crypto” piece. Blockchain doesn’t magically fix everything, but let’s look at how it can drive meaningful real-world change. In this article, I will examine decentralized physical infrastructure networks (DePINs), in particular, which are also sometimes known as token incentivized physical infrastructure networks (TIPINs).
DePINs: A New Paradigm In Infrastructure
DePINs are physical infrastructure grids that leverage blockchain technology to manage the real-world services they render with transparency and efficiency. Consider projects like Planetwatch, a decentralized air quality sensor network; Drive&, an app that taps private smartphone cameras to detect various events while users are driving (full disclosure: Drive& is currently integrating with peaq network); or Nodle, a decentralized network for IoT connectivity.
The hardware that makes up these networks—which could range from solar panels to healthcare wearables—is owned and deployed by users. Blockchain provides the business logic layer, enabling people to buy and sell the services or data that the devices in the network offer. The goal is to provide the same services as a traditional company would—from excess power sales to mobility—with greater scalability, transparency and without a centralized middleman.
This could radically shift traditional corporate dominance in the infrastructure industry, placing power directly in the hands of users. It could also make the basis for more federated, and thus resilient, infrastructure networks that lack a central point of failure.
The Benefits Of DePINs
DePINs can bring different services, manufacturers and entire device ecosystems together on a single vendor-neutral platform.
Imagine a charging station that has to provide the best possible service to EVs of any brands without forcing the owners to sign up with a new centralized service and sell the charging session data on a particular data marketplace.
Without a shared digital space to enable the necessary communications and value exchanges between the devices, there would be some friction in the experience. A public blockchain, though, can smooth this exchange while enabling the charging station to buy excess power from citizens’ own solar panels via another DePIN.
DePINs change the entire equation for ownership, elevating users from consumers to co-owners who co-govern the terms and conditions it runs on. If implemented correctly, they offer benefits to the entire spectrum of stakeholders:
• Private individuals could enjoy a more competitive marketplace and get a stake in the infrastructure enabling critical processes. Device owners would be able to do more with less, exchange the services provided by their devices and operate the hardware that serves them.
• SMBs would get a tool that enables them to scale faster without having to build up a war coffer to match major enterprises. They also get to engage with their users in a new way, creating together.
• Enterprises can launch a host of new and exciting services on a decentralized platform that is immune to vendor lock-in. For a carmaker, it could mean setting up a car-sharing DePIN akin to that imagined by Tesla’s chief but focused on privacy and how to lower fees.
A case study on LO3 Energy’s Exergy, a startup that has applied blockchain to electric power grids, has shown that implementing blockchain to power energy microgrids can result in tangible improvements for the community. World Mobile has also been successful in bringing affordable web access to underserved communities. These and other examples show that blockchain can change the world for the better in a more inclusive way than traditional corporatism.
The Challenges In The Way
As promising as exciting as the DePIN model is, its implementation is not without its hurdles. For now, it seems more attuned to services that don’t require hardware with a high upfront installation cost. You wouldn’t expect your neighbors to set up a wind turbine array by themselves, after all.
Furthermore, when scaling up, the DePIN model puts its faith into the free market’s self-regulation as opposed to the top-down approach of the traditional businesses. In other words, instead of researching the market to estimate what amount of new infrastructure needs to be set up to effectively saturate the demand, it leaves it for the supply side to figure that out on its own, which can be troublesome in certain circumstances.
Also, as with anything blockchain, there are potential regulatory risks to consider.
In an era defined by economies of scale, the DePIN model offers an alternative to the process of consolidation across industries and markets. It could help do away with the corporate encroachment into more and more spheres of our lives and bring ownership back into the hands of the individual.
It may not be perfect or fully ready, but the future it promises is more hopeful than a world where services are concentrated into the hands of a few.
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