How Cryptocurrency Can Be Used for IoT

Abigail Harper -
Cryptocurrency, IoT
Illustration: © IoT For All

The Internet of Things (IoT) is a system of internet-connected devices receiving and transferring data over a wireless network with minimal human intervention. IoT has several applications, including making homes safer and more comfortable. For instance, smart homes use IoT to automate everything from their HVAC systems and lighting to security and entertainment.

While IoT has experienced several advances in recent years, it still has its limits. One of the largest limits is paying for products or services. Fortunately, several solutions have started emerging, and IoT crypto (cryptocurrency) is leading the charge.

Use Cases of Cryptocurrency for IoT

Cryptocurrency is an encrypted and decentralized form of digital currency. The most popular cryptocurrency is Bitcoin, and like most other cryptocurrencies, it uses blockchain technology.

Centralized banking and government regulations have minimal control over cryptocurrency, meaning you can use cryptocurrency in ways that you can’t use traditional currency, such as using it to perform IoT transactions.

A simple to understand IoT crypto use case is restocking your fridge. Several IoT devices have options for making purchases and do not require physical currency. If you set up your smart home to buy groceries or pay your cable bill at certain times of the month, using IoT crypto as a payment option makes the process far more seamless.

If you run a company, you can also take advantage of blockchain technology to secure how your IoT handles data. IoT involves continuously sending data back and forth from various devices, and its centralized network is not the most secure. Since blockchain technology is cryptographically secure and decentralized, incorporating it into IoT makes transferring data safer and more efficient.

How IoT Botnets Help in Mining Cryptocurrency

You can mine blockchains to generate cryptocurrencies but cannot accomplish anything without hashing power. Hashing power is what your computer uses to run and solve different hashing algorithms. The bigger your computer’s processing capability, the bigger your hashing power and the faster you can mine and acquire cryptocurrencies.

Since each computer has limited hashing power, you need several people mining at once to accumulate significant crypto units. IoT botnets help simplify the process and eliminate the need for several people crypto mining at once.

The process involves releasing botnets on a private network of interconnected computers, smartphones, and other devices. The botnets combine the processing power of all the connected devices to generate computational power for mining cryptocurrency. The result is an increase in mining output with the use of fewer resources.

Best IoT Cryptocurrencies

The best cryptocurrency to use for an Internet of Things transaction is one with an IoT connection. If you are considering using IoT crypto to your advantage, below are the top three available options.

IOTA

Of all the cryptocurrencies, IOTA (MIOTA) was the first to take advantage of devices in an IoT network to generate crypto units. Compared to Bitcoin, IOTA does not have scalability issues, and it facilitates free micro-transactions between IoT devices. IOTA coin is based in Germany and can be bought from the safe and secure Binance Exchange.

IOTA is currently the preferred option of many big data organizations because this IoT crypto is a convenient and fee-free option for purchasing the data generated by IoT-connected devices.

Other advantages of IOTA include:

Versatility: It can operate on a wide variety of devices, including ones with minimal processing power. Being able to operate on various IoT devices eliminates the need for human miners. Not using miners reduces operating costs, which is how IOTA stays fee-free.

Quantum proof: It uses hash-based signatures, which are faster than elliptic curve cryptography (ECC). Simplifying the signing process makes verifying transactions quicker and less complex.

High levels of scalability: IOTA uses a directed acyclic graph (DAG) called Tangle to process each transaction individually. Traditional blockchain technology groups transactions into blocks and processes them together. If the current transactions can’t fit into one block, delays occur as each created block undergoes processing one at a time. The Tangle’s simplified method allows it to accommodate countless device transactions.

IoTeX

Unlike IOTA that uses Tangle technology, IoTeX (IOTX) operates as a private blockchain-within-a-blockchain. IoTeX’s Roll-DPoS consensus technology combines Proof-of-Stake with a sidechain infrastructure to create a privacy-centric blockchain that is fast and scalable.

It eliminates many of the problems associated with the mass adoption of IoT technology, including lack of functional value and high operating costs. Below is a closer look at the features that give IoTeX an advantage over other IoT cryptos:

Separation of duties: Since different IoT applications have different needs, putting every IoT node into a single blockchain can cause computations to become bloated and slow. IoTeX solves this problem by creating sidechains for each IoT function. Each sidechain only operates when needed, which increases the overall blockchain’s efficiency.

Integrated privacy: Having separate sidechains increases privacy because each sidechain handles a different function, and the sidechains only interact when necessary. IoTeX further optimizes user and transaction privacy with ring signatures and relayed payment codes that hide each transaction receiver’s address.

Lightweight and simple: IoTeX’s lightweight design minimizes energy usage, which means requiring fewer resources for mining. Also, it keeps processes fast by providing each device with what it needs to complete a process. It is simpler than connected devices relying on a single blockchain for necessary resources.

MXC

MXC is a specialized IoT crypto that makes IoT transactions as simple as possible. You can use the MXC crypto-coin to purchase products or services via IoT connected devices. The cryptocurrency uses the MXC Protocol and a decentralized Low Power Huge Access Network (LPWAN) to simplify making micro-payments.

Anyone can get MXC IoT crypto and use it to trade as they please from anywhere in the world. You can make payments at third party sensors or payment terminals without worrying about data safety.

To mine for MXC cryptocurrency, connect your devices to the Internet of Things (IoT). The LPWAN gateway will monetize each device by letting you access and publish available data. Note that the MXProtocol uses a permissionless blockchain, which does not require users to verify transactions publicly. The benefits of this feature include:

Fast transactions: The permissionless framework operates as a decentralized network that facilitates quick transaction confirmations.

Security: Using a permissionless blockchain also has the upside of preventing DoS attacks and other malicious operations.

Low barrier to entry: Permissioned blockchains only allow specific users to create smart contracts and verify blocks. MXC’s permissionless blockchain allows anyone to join and start verifying blocks.

Tested and trusted system: Several other major cryptocurrencies use permissionless blockchain, including Ethereum and Bitcoin.

Which IoT Crypto Should You Use?

The correct answer to this question depends on your preferences and goals. If you already transact with Bitcoin and Ethereum, MXC might be a good fit since it shares many features with the other two cryptocurrencies.

Do you have limited resources but want to perform blockchain mining efficiently and safely? IoTeX comes highly recommended. If you need IoT crypto for business and options for free micro-transactions between IoT devices, go for IOTA. It is also an ideal choice for avoiding scalability issues.

Don’t forget that the Internet of Things is a broad field with several ways to use cryptocurrencies to your advantage. No one-size-fits-all solution exists, so consider experimenting with your available options until you find one that works best for you.

Author
Abigail Harper

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Guest writers are IoT experts and enthusiasts interested in sharing their insights with the IoT industry through IoT For All. If you're interested in contributing to IoT For All, cli...
Guest writers are IoT experts and enthusiasts interested in sharing their insights with the IoT industry through IoT For All. If you're interested in contributing to IoT For All, cli...