Machine Economy

The machine economy will experience massive growth over the next few years. Between 2018 and 2021 it is expected that the number of machine-to-machine (M2M) connections worldwide will grow from 1.5 billion U.S. dollars to 3.3 billion U.S. dollars. The global M2M industry is estimated to grow from 102.95 Billion U.S. dollars to 199.6 Billion U.S. dollars in the next four years.

Machine-to-Machine (M2M) Micro Transactions

In the M2M economy machines will be autonomous participants. This will require them to have their own means to store ‘money’ and send it to other machines. Traditional payment systems aren’t fast enough, and are too centralised to function efficiently. In the machine economy there is no time to wait for centralised services to carry out manual transaction reviews as we see in banks, credit card companies and Paypal.

Blockchain is too slow and congested for micro transactions whereas DAG (Directed Acyclic Graph) structures offer the perfect solution. Bitcoin can take hours to confirm transactions and in the machine economy small transactions between machines will need to be carried out in high volumes, very quickly. Other blockchains such as Ethereum are more efficient, but their fees are still too high for micro transactions and they are not fast enough to really facilitate M2M communication to an optimal degree. And in addition, there are also the issues of scalability and network congestion these blockchains have.

The peaq DAG structure will be capable of near-instant and low-fee transactions. This will allow machines to send high volumes of extremely small transactions to other machines that would not be economically feasible with traditional payment systems or blockchains. Due to the decentralized nature of DAGs, transactional trust issues are also eliminated which will further facilitate autonomous micro transactions in the machine economy.

M2M communication Security

peaq is a solution to the security and monitoring challenges many M2M communications will face. With a secure DAG architecture, communications established between machines will be irrevocably confirmed as authentic on the peaq DAG structure. Every communication and transaction made between machines can be verified on the DAG by any of the entities involved. Because the peaq DAG is not controlled by a centralized entity, there are no single points of failure. Anyone is able to join the network and confirm the authenticity of the DAG structure and authenticity of communications and transactions on the peaq network is guaranteed. Additionally, DAG structures are proven to be extremely efficient at detecting network intrusions.

M2M Protocol Fragmentation

Wireless M2M communication has grown rapidly over the last years. Prices for hardware and data transmission have come down, increasing the amount of connected devices. Currently there are many different M2M communication protocols in use. The industry thus faces numerous implementation challenges as most M2M solutions are highly fragmented.

Standardisation of M2M protocols will let machine makers reduce variants and increase competitiveness. Currently different M2M system silos are using various protocols which are not necessarily compatible with each other. Interconnecting “M2M system silos” will become possible through standardisation.

The machine economy could thus greatly benefit from adopting an efficient DLT network which incorporates smart contracts, as is the case with peaq, to standardise M2M protocols and increase interoperability across machines. When there is a high degree of interoperability, autonomous machines have the ability to seamlessly communicate and transact within the context of a global machine economy.

Lack of Transparency

Currently, many M2M solutions are not transparent enough. If the machine economy keeps expanding interoperability between machines is going to be necessary to scale these autonomous M2M systems. M2M communication currently takes place on a specific local cloud network, but it is currently difficult for machines to autonomously communicate with other machines that are not included in their own network.

The peaq DAG can help to increase transparency between machines, as every machine will be able to confirm whether the machine it wants to communicate with is trustworthy enough. Since the M2M economy will keep growing and will continue to require higher bandwidth, an infinitely scalable DAG structure would be optimal. Records stored in DAG structures are computationally almost impossible to alter, leading to complete verification and transparency for all parties involved in a transaction.


For the machine economy to scale properly and function efficiently, interoperability across machines is going to be extremely important to ensure the autonomous machines will be able to communicate effectively. With peaq and its implementation of smart contracts, a secure and scalable communication protocol can be established across all machines allowing the interoperability that is necessary for the machine economy to function.

peaq is secure and effective at detecting intruders, making it increasingly hard for hackers to target individual machines as every communication and transaction is broadcast to the whole network. Any malicious M2M communication will be rejected from the DAG structure. In combination with the DAG structure peaq uses smart contracts as a base-layer, a perfect solution to increase trust and remove the potential for disputes between machines.

Smart contracts will enable applications to embed the contractual logic of each transaction on the network. The logic will be executed independently and automatically by every node on the network using the data provided on the DAG which reduces the need for trust and involvement of third parties in each transaction.

Scalability of M2M Communications

The global number of M2M connections will grow exponentially. This underscores the need for a secure, scalable network through which machines will be able to communicate and send transactions to each other. The issue with blockchains such as Bitcoin and Ethereum is that they are simply not efficient enough for high volume data exchange. DAGs are scalable alternatives to blockchain. Rather than slowing down as transaction volume increases, they speed up.


Longevity is another challenge for the machine economy. Machines will have to function autonomously for long periods of time. These autonomous machines might still be in use after their owners cease to maintain them. The applications which allow the machines to communicate are often developed in vertical silos, where a centralized entity controls communication protocols. Many machines will cease to function when the cloud services are no longer maintained.


See figure 1, an example of a smart vehicle interacting with a smart gasoline pump, the vehicle is not able to autonomously fill its tank without communicating through a centralized cloud network operated by the vendor. A decentralized DAG structure does not need to be operated by a centralized entity, which means that it will always be online and available for autonomous machines to use as long as there are nodes on the network. Since M2M communication is constantly taking place, this is virtually guaranteed provided the peaq DAG structure is in use.