The Role of Cryptocurrencies in the Internet of Things (IoT) Economy
The Internet of Things (IoT) is a host of connected devices. Cryptocurrency provides many opportunities to improve upon this. We discuss the role of crypto and the IoT below.
You will most likely have the IoT working all around you. From your Alexa to your Smart TV and even energy-saving lightbulbs, our world is now connected. Cryptocurrency and the blockchain provide a way to level up these systems, providing efficiency and better security. In many ways, they already are.
Applications for cryptocurrency in the IoT
The heart of cryptocurrency lies in its use of a blockchain. While Bitcoin is the most famous cryptocurrency, Ethereum is the most famous of blockchains, with its currency being known as Ether. However, there are plenty of rivals looking to steal its crown, such as the popular Solana. All of these blockchains are decentralized, meaning no one person owns or has control of them. As no central bank or institution has control over this currency, you can use it for things you may not normally be able to use fiat currencies for.
This does, however, result in huge levels of volatility, for better or worse. The Ethereum price USD is currently at $2747 at the time of writing. This has seen it rise over 2% in a single day, making huge gains for investment. This is despite crypto markets seeing $2.3 billion in liquidations in a 24-hour period. Of that, $600 million was from Ethereum. This has further increased the volatility of the currency but also provided a bedrock for huge gains and losses. Such is the nature of cryptocurrency investing.
While many consumer products are still unconnected from blockchain technology, a closer synergy between them would be a huge benefit. It is no secret that many devices from the IoT often have security issues, particularly those built and purchased with lower budgets. By using a decentralized ledger found in cryptocurrency, it can eliminate many of the steps where information can be intercepted. This decentralized nature, which cuts out the middleman, makes it less susceptible to attacks.
The Advantages of Using Crypto in the IoT
As well as the enhanced security it can bring, cryptocurrency has several other advantages to the IoT. Firstly, it is transparent. All transactions on digital ledgers are recorded in open formats for all to see. It also opens up new possibilities for the trading of digital assets and tokens. Imagine mainstream consoles where gaming rewards were minted as non-fungible tokens, owned by one person alone.
There have even been whole companies and currencies dedicated to the convergence of crypto and the IoT. An example of this is IOTA. This was the first currency that used devices in an IoT network to create crypto units. When devices are connected to it, they can use their processing power to create coins. Even devices with low processing power can do this. Crucially, they do not face any of the issues of scalability found in other blockchains.
On a different level, and more retail-focused, is MXC. This is a coin that allows you to purchase products and services through connected devices. You also gain the ability to mine from connected devices, so IoT works on two levels. It also shares many of the same features as Bitcoin and Ethereum, making it easier to use for many people.
Will Ethereum Be the Currency of IoT?
Ethereum is the king of blockchains, but whether it will be the currency of IoT remains to be seen. There are some questions over its usability at the moment, which need to be rectified, that are impacting the value of its currency. If its currency devalues, then rivals can quickly take its place.
One factor holding it back is that the total supply of Ether recently increased. This shows it is not a deflationary asset, as it was once thought to be. This is important as the global economy looks towards a possible continued rise in inflation in the Western world and further afield. The action of whales has also increased a bearish sentiment toward the Ethereum coin and network. Whales are those who hold large supplies of cryptocurrency. There has been a decline in the supply from these investors. This, combined with large losses, is usually the signal of a looming price drop.
Historical analysis of the gains made in financial quarters gives little indication as to how it will fare this year. Six out of the nine quarters have yielded an increased return for holders of Ethereum. Yet 2025 is one of the years when the first quarter saw a –16.12% yield. Similar years have then gone on to yield losses in at least two other quarters. All of this supports the bearish thesis for Ethereum in 2025.
By no means is the value of Ethereum linked to its possible future use entirely. As the IoT expands, it will need the security blockchains to bring: that is a given. However, which cryptocurrency becomes the main user is up for grabs. This will undoubtedly raise its value in the investment market.