Blockchain technology and decentralization principles are applied to physical infrastructure and systems through decentralized physical infrastructure networks (DePINs). DePINs enable real-time, automated interactions within physical infrastructure through technologies like smart contracts and the Internet of Things (IoT), making systems more responsive and adaptable to human demands.

The Internet of Things (IoT) has been growing over the past few years, but the business model is the problem. Companies need a steady flow of income to keep their products running. Customers understand that it's reasonable to pay a subscription to keep, for example, the software on their door knob or refrigerator running. The result is a great deal that often comes with a nasty hangover: products that stop working when the subscription runs out because the company selling them wants to stop maintaining the product.

Blockchain offers an alternative, combining open-source technology with decentralized systems, allowing us to build IoT networks that can manage themselves and function more sustainably. The problem lies in the mismatch between the lifespan of products and the lifespan of the product line sold by the business. We can throw away our smartphones and PCs every three to five years, but in general, bulbs, doorknobs, refrigerators and other home devices are expected to stay in place much longer.

DePINs can bring blockchain and IoT together by allowing devices with extra computing power and network connectivity to run more complex applications at the network level. Want to control your home's electricity consumption based on the grid's status? Sell power at the best time or use generative AI systems for conversational interfaces? All of these things consume a lot of computing power and bandwidth, and if we want a sustainable business model and pricing, we need to do it without requiring a lot of new data centers.

Smart home devices have become very smart. This isn't because we really need the intelligence of a smartphone in our bulbs. It's because it turns out to be cheaper to put the whole smartphone brain in a light bulb than to make a customized smart chip for each device. Chip manufacturing is a volume business, and building a general-purpose overly-smart chip and using software to make it do things like handle lighting or refrigerator management is cheaper and more scalable than customizing each device.

The result is a lot of idle connected computing power that can be used to build a blockchain-linked decentralized cloud computing infrastructure. Your smart home and car can "pay their own way" when it comes to computing, selling excess capacity when not in use and using more from others when needed. The result should be a sustainable network infrastructure that doesn't require continuous capital injection from the original product sellers to keep working.

There are many ways to build decentralized computing infrastructure. But there's a reason why, when I started down this path over a decade ago, I chose blockchain and not other technologies: payments and contracts. It's very simple: if we want a system where smart devices transact with each other to provide computing services, we need accounts, ledgers and agreements. Blockchains come with these baked in.