Why We Invested in Nodle and a Decentralized Internet of Things
Observers of Internet of Things (IoT) technology will be familiar with this niche’s particular ups and downs, and they’ll probably admit that there have been too many downs.
IoT was overhyped from the beginning in the marketing blurb of companies (such as ARM and other chip makers), who correctly anticipated the need for millions of different types for electronic devices to talk to each other, but who took the concept too quickly into sci-fi.
Then, as the technology became more feasible and dependable, it also became boring — confined to use cases like street lighting, while more ambitious and profitable use cases involving diverse devices and user groups failed to take off.
Today, however, IoT has the dubious distinction of being perceived not only as boring, but simultaneously as risky. It is associated in the minds of most people (91% to be exact) with rogue nations taking over air traffic control towers and innocent people’s toasters.
The benefits of decentralization
The security fears are real and a total deal-breaker for many companies. However, this is not the fault of IoT as a concept (which is by now beyond reproach).
The truth is that IoT arrived a little too early, before the benefits of decentralized systems were widely understood. It was largely the mindset of centralization — visible in so many IoT marketing images, for example, including the typical one at the top of this article — that made IoT systems risky.
(Note to marketers: If you have to put something in the center of your “IoT spider-web” diagram, at least make it the user).
At BR Capital, we’ve been waiting for a project that could redesign IoT to benefit from decentralization. Not only in terms of security, by avoiding the need for millions of devices to communicate with a few central and vulnerable servers, but also in efficiency, for example by allowing monetized data-sharing between trustless parties (as already happens at another of our portfolio companies, Aggregion).
In a nutshell, this is precisely what Nodle has managed to pull off, using its own blockchain (based on Parity Substrate in the Polkadot ecosystem). What’s more, the startup has done it in a stunningly smart way that we could never have predicted.
“Nodle has built a decentralized wireless network on Polkadot that will provide data liquidity for billions of IoT devices that normally sit in isolation. Leveraging this massive amount of data for actionable insights will eventually create an ocean of awareness,” Micha Benoliel, Nodle’s CEO and Cofounder, shared with us.
How Nodle works
Firstly, Nodle converts millions of smartphones (or mobile apps, plus some routers) in the hands of ordinary users into a decentralized and pervasive “Citizen Network.” Any Nodle-supported IoT device — even one that is on the move — can then communicate with any other, so long as there’s a facilitating smartphone within range.
Next, companies who need IoT data insights from this network pay for access, creating the rewards which go back to the smartphone users, as an incentive for being a node.
Finally, the whole system rests on a blockchain, the Nodle Chain, that is secured through decentralized validation by many independent validator nodes. They recently announced their first official validator node will be Blockchain.com Ventures, the venture arm of Blockchain.com, the world’s oldest and most widely used crypto wallet (also an early investor in Nodle).
A recipe for rapid adoption
Thanks to its incentivization and ease of use, the Nodle network already connects to hundreds of millions of devices every week and adds 6,000 new base stations a day. But Benoliel is clear that future growth of the decentralized network will make even these figures seem tiny:
“Most consulting firms always think about IoT in a boring way and often identify the industry with consumer electronic devices and more industrial appliances.”
“In reality, there’s a revolution going on to unlock the real power of IoT, to connect and secure the next trillions of things to the internet. Almost anything can be connected — and it’s is happening now. We believe that every device and fungible device is about to have its own identity and wireless interface whether it’s connected all the time or not.”
We keep saying it, maybe to the point of getting repetitive, but this is the pattern we keep seeing the successful projects we’ve invested in, and which we demand in all future investments: blockchain being used to reinvent processes so that they become better in multiple ways all at once, often including ways that are unexpected, rather than blockchain just being tacked on to improve some aspect of existing processes. After Nodle, there’s no going back to the old IoT.
