The advent of cryptocurrency disrupted the whole technological industry by introducing blockchain, decentralized currency, and applications. Until then, everything was controlled by higher organizations like banks, governments, and companies; crypto made even finance possible without any third-party involvement. Ever since then, many advancements have been introduced, like Web3. One such innovation that has gained attention in the crypto network recently is DePIN, which is short for Decentralized Physical Infrastructure Network.

What Is DePIN? Expalined In Simple Terms

DePIN is a blockchain-based framework that allows people and organizations to be a part of a large physical infrastructure in a decentralized manner with the help of smart contracts by building, operating, and monetizing it. Basically, DePIN takes everything that cryptocurrency and blockchain stand for and bridges it with the physical world. 

Imagine a large company like Uber or some hotel chain, instead of the company owning and managing all the assets, it’s run by a community of people all around the world. Blockchain technology is used to keep it running smoothly by coordinating, funding, and rewarding participants with tokens. Smart contracts are used in the network for transparency and efficiency. Now everyone can be part of a huge institution or company and share their profits directly. 

How DePIN Works 

Deep in the system, DePIN functions on three major principles. How the assets are represented in the network, how they are coordinated, and how the participants are rewarded

1. Assets

Physical assets like an electric charging station, Wi-Fi hotspot, data storage, or GPUs and CPUs are represented as tokens on the crypto network. This induces transparency and control while showcasing ownership. 

2. Coordination

Large companies have an authority dictating and coordinating the processes; here, participants across the globe connect through the crypto network to coordinate and operate the assets. The smart contracts and network protocol ensure the safety and security of all these nodes or assets. 

3. Rewards

The most important factor that governs the participation and growth of the infrastructure and network is rewards. They are incentivized using the network’s native cryptocurrency for resources, services, and for providing services.

The Future Of DePIN

DePIN brings about a world of opportunities unimagined before. Instead of just currency or a web app, this can help solve real-world problems and bring control into the hands of people instead of huge corporations. Bitchat can be used as an example where Bluetooth and GPS from phones were utilized to send messages between users without using the networks of corporations. Similarly, decentralized internet networks can be created using Wi-Fi hotspots from users, and they can earn tokens for participating in the network. 

EV charging stations can be registered by individuals on this network and can earn rewards in the form of tokens. Shared storage where one’s computational power can be shared and compensated for. 

DePIN Pros And Cons

Pros

• Everyone can be part of the infrastructure network and earn from it. One doesn’t need to have large funds to start a business, just enough to get the components of the network to be part of the larger firm.
• Unmatched security because it uses smart contracts, which are self-executing codes, to manage operations and keep them verifiable.
• DePIN breaks borders by creating a new global economy using shared physical infrastructure. Unrestricted by borders, letting anyone from the world be a part of the network.

Cons

• Just as decentralized cryptocurrency created issues with governments as they lost control over the money, DePIN could clash with local laws and governments.
• Even though DePIN sounds perfectly functional in theory, in practice, it could be quite challenging to maintain the physical infrastructure in a decentralized manner.
• DePIN still needs to get traction, to make people believe that it would work, and convincing them to participate in the network could be a bit hard and time-consuming. People would need to be educated about the network.

Final Thoughts

This is a much-awaited innovation for those who believe in what decentralization stands for. DePIN could potentially bridge the gap between blockchain and the physical world. Instead of large corporations and companies controlling businesses, this would allow everyone willing to be part of a network or business operation in a decentralized manner. Cryptocurrency made financial transactions decentralized, and DePIN could achieve the same. Imagine a large electric charging station network owned and operated by many instead of a single company; the same could be implemented on many other scalable models, such as Wi-Fi networks, taxi services, IoT services, etc. DePIN is something crypto enthusiasts would definitely be watching closely.