Understanding NFTs and Smart Contracts in IoT

Welcome to ChainDecoded —Your guide to the world of Web3, Crypto and Blockchain. You will receive one email every Thursday with various news, concepts and facts going on in this week.

Learn how to make AI work for you.

How do you stay up-to-date with the insane pace of AI? Join The Rundown – the world’s fastest-growing AI newsletter with over 500,000+ readers learning how to become more productive using AI every morning.

1. Our team spends all day researching and talking with industry experts.

2. We send you updates on the latest AI news and how to apply it in 5 minutes a day.

3. You learn how to become 2x more productive by leveraging AI.

Subscribe with one click.

Understanding NFTs and Smart Contracts in IoT

Smart Contracts:

Smart contracts are secure lines of code that automatically execute predefined actions when specific conditions are met. These contracts operate autonomously without the need for intermediaries, ensuring quick and reliable execution of transactions. They define the rules and penalties of an agreement and enforce them automatically.

Non-Fungible Tokens (NFTs):

NFTs represent unique digital or physical assets that cannot be replicated or exchanged on a one-to-one basis. While fungible assets like dollars or bitcoins are interchangeable, NFTs are indivisible and have distinct properties. In the realm of IoT, NFTs are utilized to uniquely identify devices, ensuring authenticity and preventing malicious activities like device spoofing.

Creation of NFTs for IoT:

NFTs for IoT devices are generated using the ERC-721 standard, producing a single token per physical or digital asset. Each NFT is associated with a unique identifier and metadata, including information like manufacturer, user, owner, and approvers. The process involves the generation of public-private key pairs for IoT devices, which are then passed to a smart contract for minting NFTs and managing ownership.

Special Properties of NFTs:

NFTs have unique identifiers directly linked to Ethereum addresses, making them non-interchangeable with other tokens. Each token has a verifiable owner, and the private key serves as proof of ownership, while the creator's public key acts as a certificate of authenticity.

Enabling Smart Communication with NFTs and Smart Contracts:

IoT devices interact with the blockchain through their Blockchain Accounts (BCA), which are attributes of NFTs. BCAs allow devices to self-sign transactions, facilitating secure data sharing across the network. Smart contracts enable automated transactions based on predefined conditions, reducing the need for intermediaries and lowering authentication costs.

Benefits of Using Smart Contracts and NFTs in IoT:

1. Metadata Recording: IoT devices can record metadata like location, time, and temperature on the blockchain for compliance and audit purposes.

2. Automated Payments: Smart contracts enable automated payments and negotiations between devices and services, executed within seconds.

3. Micropayments: NFTs facilitate micropayments between devices and services, enhancing transaction efficiency.

4. Secure Software Updates: Secure software updates can be published on the blockchain, and IoT devices can validate updates using cryptographic hash functions, ensuring integrity and authenticity.

HOW NFT SMART CONTRACTS REALLY WORK - Can metadata be changed? How staking works?

Fundamental knowledge you must know when working with NFTs. A must watch video for the whole NFT ecosystem wether you are a developer, flipper or noob.