26.06.2024
The integration of digital technology into our daily lives has evolved in different stages and phases, changing how we relate to objects and concepts and transforming our sense of reality.
Digitization is the foundational step of this transformation, involving the conversion of analog data (an object, image, sound, or signal) into a digital format. Steven Lisberger, the writer and director of Tron (a science fiction movie about a programmer trapped in a software cyberspace), wrote the movie inspired and intrigued by the first video game, Pong. How can a digital object represent a real-world object and interact with each other?
In the late 1970s, Lisberger realized how the US government was already digitizing and storing personal data using computing power: I’m already in your system. So why don’t I have access to myself? More than 40 years ago, the Tron film was the premonition of the intricacies of the existence of digital objects… and also of digital subjectivization.
Due to the advancements in computing and binary code, digitalization has become an omnipresent force that has permeated and transformed nearly every aspect of human activity. Digitalization can be defined as the process of utilizing digital tools to modify and enhance existing operations. A prime example is the replacement of typewriters by personal computers, which brought about significant changes not only in the act of writing but also in related activities such as management and business operations.
In the digital transformation era, we witness a profound shift and deeper transmutation of human interactions. This transformation involves integrating various digital tools to create a new paradigm that reshapes how we interact and engage with the world around us.
Blockchain technology, with its decentralized and secure framework, is an ascendant force in digital transformation projects. The way it offers an immutable and transparent method to record and track transactions, automate and streamline digital operations and improve trust between their users. As part of the digital transformation, blockchain implementation has become a threshold of digital tools and innovative technologies and real-world problems.
Decentralized Physical Infrastructure Networks (DePIN) integrate blockchain technology with physical infrastructure, their purpose is the decentralization of the management and operation of physical assets and services, offering economic incentives to promote community participation of their users.
DePIN can be used for diverse applications: decentralized wireless networks, data storage, energy management, and other infrastructure services. The blockchain implementation seeks to create a more transparent, efficient, and community-driven ecosystem. Ultimately, the main purpose of DePIN is to provide control and democratic access over physical infrastructure to reduce costs, enhance efficiency by filling use gaps, and distribute services equitably.
DePIN can enable a system in which users can power an internet connection by a decentralized network of individuals sharing their bandwidth or owning and operating assets like a solar PV farm to power a community.
At its core, DePIN represents the fusion of blockchain technology and tokenized economies to decentralize the ownership and management of physical infrastructure. Through its network deployment, users can become stakeholders and contributors and earn digital tokens and rights for participation in the network.
To provide insight into the DePIN paradigm, let’s examine four projects: Filecoin, Akash Network, Hivemapper, and Helium Network.
Filecoin: a decentralized storage network.
Filecoin is an open-source P2P storage marketplace that enables users to share data without a centralized intermediary. The network fuses the DePIN trifecta: it uses the blockchain to record data, ensuring its transparency and security; the physical infrastructure is involved with storage providers contributing their unused hard drive space to the marketplace in exchange for token incentives for their services.
Filecoin is mainly designed for decentralized storage, using blockchain to provide a secure and reliable network to keep digital data distributed in multiple nodes, this reduces the risk of censorship or data slashing. In contrast to the conventional HTTP protocol, the traditional web protocol, the InterPlanetary File System (IPFS), is used to identify data by its content instead of its location through a URL.
To securitize file storage and retrieval in the network, Filecoin uses two consensus mechanisms: proof-of-replication (PoRep) and proof-of-spacetime (PoSt). PoRep works as cryptographic evidence of entire data replication; PoSt checks that the data has been stored for a determined time. Filecoin has attracted many institutional users: the University of California, Berkeley and the City of Philadelphia, and more recently, has sealed a partnership with the Solana Foundation to integrate its decentralized storage network.
Akash Network: A cloud computing marketplace.
Akash Network is a decentralized cloud computing platform that implements blockchain technology to create an open-source marketplace for computing resources. Basically, it offers a more efficient, secure, and cost-effective alternative to conventional cloud services by facilitating the buying and selling of computing power through a decentralized dynamic.
Source: Akash Network Media
Akash Network leases dedicated IP addresses, deploys secure applications, facilitates peer-to-peer communication, provides sovereign compute experience, and manages infrastructure through code. Its implementation solves problems like high costs, vendor lock-in, security concerns, and underutilized infrastructure in traditional cloud computing.
Its wide use cases include hosting websites, running computations, deploying dApps, facilitating peer-to-peer communication, and providing scalable infrastructure.
Hivemapper: the "Drive-to-Earn" global network.
Hivemapper is a decentralized global mapping network that rewards contributors for collecting street-level imagery using dashcams. It leverages blockchain technology and a "Drive-to-Earn" model to incentivize users to contribute to creating an accurate and dynamic map of the world.
Source: Hivemapper Explorer
Hivemapper aims to provide a more up-to-date and comprehensive alternative to traditional mapping services like Google Maps. Contributors' data is used to create detailed maps that can be used for a wide range of applications, including navigation, real estate, insurance, logistics, city planning, and AI development. For example, in logistics, the data can be used to optimize routes and improve transportation security and efficiency; in city planning, the data can provide traffic patterns and the development of infrastructure.
Hivemapper addresses the limitations of traditional mapping services, which can have outdated and incomplete data. Hivemapper's objective is to create a dynamic and ever-changing database by incentivizing a vast network of contributors.
Helium Network: A decentralized wireless network.
Helium Network is a decentralized wireless network designed to provide long-range, low-power connectivity for Internet of Things (IoT) devices. It combines blockchain technology and LoRaWAN (a wireless protocol) to create a global, peer-to-peer network using hotspots.
Source: Helium Hotspots Map
Blockchain implementation in the Helium network creates a path to drive its capabilities to new territories. The long-range connectivity/low power consumption ratio enables communication over a wider range than traditional Wi-Fi, consuming less energy for its basic operation. The network is decentralized and not controlled by a single entity, making it censorship-resistant and cheaper to transfer data between users.
Helium's main purpose is to enable the connection of IoT devices using fewer resources and reaching more users, consuming minimal power. Its application in physical infrastructure includes smart cities, logistics, agriculture, and environmental monitoring. For example, in smart city implementation, the network can prevent floods through the detection of high-risk areas and drainage systems; in utility solutions, smart water meters can collect data on consumption and leakage in the distribution system to prevent overflows and inefficient operations.
DePIN, a step forward for crypto adoption.
DePIN is one of the most interesting and promising crypto ecosystems. With a market capitalization of around $24 billion among their main projects, and along with AI and Real World Assets (RWA), the DePIN narrative has become a prominent narrative of this cycle.
Source: DePIN Market Cap
Venture Capital (VC) funding has identified a unique opportunity in DePIN projects. These projects aim to merge existing or developing physical infrastructure with the seamless integrity of blockchain technology and its incentive system. By investing in DePIN projects, VCs can support projects with high adoption potential and use-case technology. This approach enables the integration of blockchain technology into real-world infrastructure, promoting innovation and building a bridge between the physical and digital worlds.