M2M Economy

By Jake Frankenfield
Updated January 20, 2021
Reviewed by Eric Estevez
Fact checked by
Katrina Munichiello
Katrina Avila Munichiello
Fact checked by Katrina Munichiello
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M2M Economy

Investopedia / Michela Buttignol

What Is the Economy?

The M2M, or machine-to-machine, economy is one where the smart, autonomous, networked and economically independent machines or devices act as the participants, carrying on the necessary activities of production, distribution, and allocation with little to no human intervention. This evolving ecosystem will be made possible by the growing number of Internet of Things (IoT) devices.

Key Takeaways

  • The M2M (machine-to-machine) economy refers to a system of interdependent, networked devices that appear to carry out some sort of economic activity autonomously.
  • M2M economy is an important concept in understanding the development of the internet of things (IoT) and blockchain-based platforms that need a means to allocate and distribute network and processing bandwidth.
  • While still in its infancy, industry experts predict that the M2M economy will become a trillion dollar pursuit in the years and decades to come.

Understanding the M2M Economy

The internet has changed the way we exchange information and communicate with each other, as well as with machines. It has also enabled a whole new ecosystem to flourish where physical objects—such as home appliances, automobiles, industrial machinery and infrastructure equipped with smart sensors, actuators, memory modules and processors—are capable of exchanging real-time information across systems and networks. Thanks to the concept of IoT, such an M2M ecosystem will result in increased efficiency, economic benefits and limited need for human intervention to carry on many major activities.

The number of IoT devices reached more than 22 billion by 2018 and the figure is estimated to hit the mark of 38.6 billion devices by 2025. The global market annual revenue of IoT is projected to reach $1.5 trillion by 2030 which indicates the growing potential of M2M economy. Another report by McKinsey Global Institute suggests that IoT has the potential to create an economic impact of $2.7 to $6.2 trillion annually by 2025, reports Entrepreneur.

How IoT Devices Help Run the M2M Economy

The processing power of such IoT devices and the heaps of data generated by them can be of great value.

For instance, an individual having a water purifier fitted in his home no longer needs to worry about the intricacies and step-by-step monitoring of the purifying process. Depending upon the hardness of the incoming water, the microprocessor-fitted purifier can schedule the purifying cycle and let the water be treated to a specified level of hardness. The same device can also be equipped with sensors to assess the residual quality of the purifying cartridge and is also capable of sending alerts to the service center to request a replacement.

Additionally, the data generated by such devices offers great value. It can assist in assessing consumption behavior and usage patterns and will also serves to inform macro-level tasks like city planning and assessing the quality and demand of water across a region. Additionally, device owners can willingly sell selected data points for monetary rewards.

Beyond such basic workings of the device and automated communication across a network comprised of installed devices, many blockchain-based projects are being launched to harness the power of such commonly used appliances. For instance, the processors and memory modules fitting in these IoT devices can be utilized for cryptocurrency mining and transaction authentication activities. Projects like IOTA, IoT Chain, and IOTW are attempting to harness the power and resources for their blockchain projects, which otherwise lies idle much of the time.

Investing in cryptocurrencies and Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns no cryptocurrencies.

Article Sources
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  1. Statista. "Number of Internet of Things (IoT) Connected Devices Worldwide in 2018, 2025, and 2030." Accessed Jan. 20, 2021.

  2. IoT Now. "Global IoT Market to Grow to $1.5 Trillion Annual Revenue by 2030." Accessed Jan. 20, 2021.

  3. Entrepreneur. "Make Your Business Thrive with Internet of Things." Accessed Jan. 20, 2021.

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