In the crypto and blockchain space, the “machine economy” will emerge this year as one of the most promising opportunities for consumers, businesses, and enterprises.
The metaverse is one of the four major machine economy use cases and the one with the most potential to unlock a multi-trillion-dollar economy for users, businesses, and smart device makers.
The industrial metaverse, a hot topic during this year’s World Economic Forum (WEF) summit in Davos, is set to outgrow the rest by at least threefold due to its wider range of applications, such as advanced training, industrial simulations, medicine and surgery, among many others. It combines immersiveness, real-time data, and digital twins to create new business models and accelerate digitalization.
And while technologists try to figure out how the metaverse will impact businesses and consumers, the industrial metaverse has already transformed how we design, manufacture, and interact with physical entities across industries.
One of the industrial metaverse’s critical applications is digital twins, a virtual replica of a product or process used to predict how the physical entity will perform throughout its lifecycle.
BMW, for example, created a virtual twin of its production plant in Bavaria before building the physical facility. Boeing uses a digital twin development model to design its airplanes. The government of Singapore even created a digital representation of the Southeast Asian nation — Virtual Singapore — to support its policy decisions and test new technologies.
However, challenges remain. One of the puzzle pieces of the industrial metaverse is to connect edge devices and trusted data flow with the digital twins to create near real-time simulation and prediction for real-world situations.
That’s where Web3 comes in.
Machine economy, the next digital frontier
The metaverse showed tremendous growth in 2022 despite the global economic slowdown. Experts believe it will continue to grow significantly — the WEF, for instance, predicts the market will reach $800 billion in 2024.
According to Deloitte, the global metaverse market could grow to $13 trillion in the next seven years. McKinsey states that metaverse is a massive business opportunity that companies should pay attention to because it has the potential to grow to $5 trillion by 2030.
The machine economy represents an era of automation driven by billions of intelligent, connected and economically independent machines interacting and transacting with each other on behalf of people and businesses, unlocking trillions of dollars in business value.
Vast amounts of user data — which today has become the most valuable commodity worldwide — are powering this thriving new Internet of Things (IoT) frontier which, according to PwC, will contribute to 70% of the global gross domestic product in the next seven years.
Within that frontier, the machine economy — which combines distributed ledger technology, such as blockchain, with artificial intelligence and machine learning — will transform the IoT industry, according to research conducted by two leading tech firms, IoTeX and Siemens, published by the Industrial IoT Consortium.
Benefits and challenges
While IoT is already a fast-growing sector, blockchain or Web3 democratizes the multitrillion-dollar machine economy, benefiting intelligent device security, scalability, transparency, efficiency, speed and automation.
A chief problem with current IoT systems is their security architecture, with a centralized model managed by a central authority, making it highly susceptible to a single point of failure. Blockchain addresses this problem by decentralizing the decision-making process into a consensus-based network of devices.
The most visible challenges are that Web3 may not be accessible to advanced gadgets, it needs to become more user-friendly, and — due to a lack of understanding and education — it is still difficult for authorities to regulate, potentially leading to an increase in cybercrime.
Other challenges are for countries and organizations with legacy systems, which are difficult and expensive to replace. And social and human labor concerns still loom over the potential for digital automation because it is clear that decision-making AI and machines will be the primary driver of economic growth in the coming years.
The machine economy will shake the status quo for intelligent device makers and users. The combination of Web2 businesses and their IoT market footprint, plus a vibrant, ultra-dynamic environment of Web3, creates the perfect ground for significant disruption. In this context, the speed of adoption will once again be the primary driver for success.
However, to embrace the machine economy successfully and build a reliable and sustainable position in the future, business owners should consider several factors, including business model fairness and transparency, as well as the effectiveness of customer engagement strategies.
Also, the robustness of token economy models is needed — critical for incentivizing all stakeholders in a machine economy ecosystem. With these factors in place, we can ensure long-term sustainability and steady growth of machine economy businesses.
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