Economy of things: devices as economic agents. Finest hour of Device Twins

Today, the concept of "Economy of Things" (EoT) is gaining momentum. Advocates of this concept predict a massive shift of connected devices towards this mode of interaction and, consequently, a colossal market.

Let's explore what the new wonderful world holds for us, both from the user's perspective (use cases) and from the developer's perspective (technological stack). Device Twins may have a special place in this concept.

The Core Concept

The idea behind the concept is as simple as it is bold: to empower things (devices, objects) with the freedom to make decisions to achieve economic goals. In other words, to grant things the authority and means to act on their own discretion (within certain constraints, of course).

Such an approach is a specific case of multi-agent systems, the theory of which has been developed since the end of the last century. Now, the technological readiness has come for the practical implementation of this concept.

The agents must meet the following criteria:

Autonomy: Agents are independent, at least partially.

Limited Representation: No agent has knowledge about the entire system, or the system is too complex for any agent to have practical knowledge about it.

Decentralization: There are no agents controlling the entire system.

Let's take a look at how a mundane action like turning on the lights in a hallway using a remote control will change. In the traditional "analog" scenario, you press the button on the remote control, it emits a radio packet that transmits the command to the relay of the lamp to turn it on.

Now, let's consider how it will work in the EoT concept. Suppose there can be more than one lamp at each location in the hallway. Each lamp is represented on a cloud platform (either shared or separate) by its twin (Device Twin - details below). The remote control also has a similar twin. The remote control has pre-established contracts with the lamps. When you press the button on the remote control, it sends a command to its twin about illuminating the hallway. The twin checks the conditions based on the established contracts and selects the best course of action (criteria for selection can be diverse). Additionally, the remote control has the freedom to enter into and terminate contracts with the lamps.

The market

In February 2022, Vodafone announced the launch of the Digital Asset Broker (DAB) platform in partnership with Mastercard and Energy Web. In May 2023, they released a joint report with STL Partners' titled "The Economy of Things: Unlocking the true value of IoT data."

The report provides a forecast of the market for this technology, broken down by different use case scenarios. The forecast is given in terms of the number of devices, not monetary values, but the projected annual growth of 68% is likely to excite many enthusiasts.

In 2015, IBM presented its vision of the Economy of Things, and Bosch has also expressed its interest and involvement in this direction. It is evident that we can expect news of alliances being formed in the near future to further develop and promote the EoT concept.

Scenarios of Use

Shared Economy

All scenarios involving shared usage or short-term rentals fit perfectly into EoT paradigm. Let's take car-sharing as an example. Users will no longer need to be concerned about which specific service owns the car. The mobile application will connect the user to their digital twin on the platform, and it will find the desired car. By making cars active agents on the platform, they can promote themselves in various ways. For instance, a group of cars parked in a remote location can collaborate to provide location-targeted advertisements and increase demand. Simultaneously, a car can function as an advertising medium and sell advertising space.

Energy Management

Currently, any energy system is a complex organism, comprising numerous electricity consumers, producers (including microgeneration), and transmission networks. Implementing the Smart grid approach based on EoT principles adds flexibility and removes barriers for integrating new participants, helping to balance the energy grid effectively.

Logistics

Cargo transportation is also a challenging task today. In the EoT concept, individual units of cargo, such as containers, can act as autonomous agents, aiming to be delivered from point A to point B with minimal costs and within a limited timeframe. In the case of multimodal transportation, a container can establish contracts with all participants in the supply chain and monitor compliance with conditions.

Smart Homes

A smart home can independently enter into and pay contracts for utility services while generating income from microgeneration of electricity and other opportunities, such as advertising placements or parking.

Connected Cars

As independent agents, connected cars can enter into contracts for their maintenance, charging or refueling, as well as offer themselves for rental. This became the first use case for Vodafone's DAB - enabling payment for electric vehicle charging without human intervention.

The list of scenarios mentioned above is far from exhaustive, but it illustrates the new qualities of EoT concept. Devices, based on priorities and constraints set by their owners, autonomously seek to achieve their goals. In such a system, devices act as proactive economic agents, interacting with each other and making decisions to optimize their operations and outcomes.

Technology: what's under the hood

EoT relies on two essential environments: the environment for agent operations and the environment for their interactions, including contract formation.

Environment for Agent Operations

Agents in the EoT are software or hardware entities closely tied to their respective devices. In some cases, such as smart homes or smart cars, the devices themselves may contain all the necessary resources (e.g., electrical power, computational capacity, constant connectivity) to support agent operations. However, for devices utilizing LPWAN (Low Power Wide Area Network), where resources are limited and battery life is critical, Device Twins come to the rescue. Device Twins serve as digital replicas of the physical devices and allow agents to execute either entirely on the device or partially on the device and partially on the platform.

Authentication of devices and execution of sensitive operations, like cryptographic functions, are crucial in such a setup. These sensitive operations are often performed within a Trusted Execution Environment (TEE). A secure element, typically utilized within the device, helps create such an environment. Vodafone DAB, for instance, utilizes the SIM card, enhancing its functionality through software to serve as a secure element. This aligns with the GSMA IoT SAFE strategy, which uses SIM cards not only for mobile network registration but also for other security tasks.

Environment for Interactions

The environment for interactions between economic agents allows them to become aware of each other's existence and needs, as well as facilitates contract formation (acting as a marketplace). Even if agents do not trust each other, they must trust the environment (similar to two individuals trusting a notary during a contract agreement). The source of this trust can be either the environment owner or certain properties of the environment.

Blockchain technology (along with Distributed Ledger Technology - DLT) is one of the most suitable technologies for such environments. In blockchain-based systems, the source of trust depends on the type of blockchain - private (trust originates from the owner) or public (trust comes from the algorithm).

Certain types of blockchains enable the execution of specific applications, such as smart contracts. Once executed, smart contracts are immutable until they are fulfilled or the environment ceases to exist. The concept of smart contracts first appeared in the Ethereum blockchain.

Vodafone DAB has chosen a similar path and developed its own blockchain, proudly referred to as "the blockchain of blockchains." Until the technology details are fully disclosed, it is open to speculation. It could potentially be a platform that not only enables the implementation of smart contracts but also facilitates communication between smart contracts across different blockchains (similar to how it is done in Hyperledger Fabric). For example, a car could have contracts with a service center for maintenance and repair and an insurance company for comprehensive coverage (KASKO). In the event of an accident, these contracts would need to interact with each other.

The role of Device Twins

The role of Device Twins in the Economy of Things is critical, especially when dealing with low-power devices. In such scenarios where device resources are limited, Device Twins become a crucial component to ensure the functioning and decision-making capabilities of agents. Let's look at the roles of Device Twins in this context:

1. Decentralization: Device Twins enable distributed execution of agents between devices and the cloud platform. This allows agents to be lightweight and flexible as some computations and decision-making can be offloaded to more powerful cloud servers while some tasks can be performed on the device itself.
2. Security: Device Twins provide secure isolation of agents from each other and other system components. Data protection and access control become critical in the context of the Economy of Things, and Device Twins play an essential role in ensuring security.
3. Mobility: Device Twins must be able to follow their devices across a distributed infrastructure, including edge computing. This ensures continuous communication and interaction between agents and the platform, even if devices move or operate in remote locations.
4. Accessibility: Device Twins must always be accessible from both the platform's side and the device's side. This ensures constant interaction and data exchange between agents and the platform.
5. Cloud Native: Device Twins align well with Cloud Native principles used in modern IoT cloud platforms. The Cloud Native approach allows for building scalable, flexible, and reliable systems, which is particularly important when dealing with a massive number of devices and agents.

Device Twins play a significant role in the Economy of Things, ensuring the functioning and interactions of agents on devices with limited resources. IoT 5G operators represent the most suitable environment for implementing such solutions as they already possess the infrastructure and experience of working with a large number of devices and agents in the network, and the Cloud Native approach aligns with the requirements of EoT.

Conclusion

The Economy of Things (EoT) holds tremendous market prospects, given its well-developed concept of multi-agent systems and the complete technological readiness for its implementation. This can lead to entirely new economic forms and elevate process optimization to a new level.

Security concerns are highly sensitive in such solutions, which is why all significant transactions must be securely (=cryptographically) confirmed, for which blockchain and distributed ledgers (DLT) are applied, and secrets are stored in secure elements.

Low-power devices already represent the most massive segment of the IoT, and this trend will continue to strengthen. Such devices cannot handle the entire load independently, and a significant part of it, in the form of Device Twins, needs to be delegated to the cloud. The optimal place for hosting the environment for their execution is within the infrastructure of LPWAN operators, particularly 5G.