Understanding the concept of DePIN and how it works

Greetings dear friends it's another day of the week and I'm delighted to share another interesting topic with us all. I believe many may have heard about it before whereas others may be hearing about it for the first time.

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Which ever category you fall, you should spent a little more time to read through this blog today as you will still have one or two things to learn from the article today. Without further ado, let's go into the topic of discussion.

Concept of DePIN (What is it?)

The word DePIN is an acronym which stands for Decentralized Physical Infrastructure Network. The blockchain network that connect infrastructure providers with their customers at any point and time, is what we call DePIN. Infrastructure such as the vehicle, routers etc are provided by this network for customers.

Now let's look at a better explanation as to how this DePIN works better using the case of Uber operation. Uber here acts as the network that connect drivers to their customers. When a driver registered with Uber and a customer needs a drive he will contact Uber and Uber will connect the driver to the customer and that is how DePIN operates.

So in this scenario above the Uber is the physical infrastructure network that connect the driver and their customers which explains the acronym DePIN so both the driver and Uber receive certain rewards. Here everyone involve gains without interference. DePIN here is a decentralised network which bridges the gap of a third party interference.

These makes this network even more beautiful because it uses the blockchain technology making transaction transparent for everyone to see and removing the gap between providers and consumers of the network.

DePIN project is divided into two parts namely:-

• Physical Resource Networks

• Digital Resource Networks

Physical Resource Networks: As the name suggest physical resource network, this is a type of DePIN network that provide infrastructure that you and I can see and touch i.e the hardware part of the network such as vehicle as in the case of the Uber example I gave above.

Digital Resource Networks: Similarly as the name suggest Digital Resource Networks, this is a type of DePIN network that provide infrastructure digitally these is more like the software part of network since we can't touch it and a good example is the provision of storage.

How Does DePIN Work?

DePIN is based on physical network hence it operate under the concept of IoT i.e internet of things. This means it uses things around to connect people together. Since the technology is built on blockchain it mean that it uses cryptocurrency and being a decentralised network it means that it has eliminated third party interference.

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For DePIN to effectively work correctly there exist 4 components that makes the whole process more effective and these components are seen and explained briefly below.

Physical Infrastructure: Every DePIN network requires physical components such as routers, medem etc, these physical device helps to connect providers and customers together without the interference of a third party. Without physical device as such there will be no connection and that is the reason physical device are the most important in such a network.

Off-chain Computing Infrastructure: Since we have hardware as physical structure we also need software computing to make the whole equation balance as the softelware will work with the hardware and provide what the end users really want. So in this case data is what we use here to feed the hardware and get a good result.

Token Incentives: Always when people are working on a project, there should be an incentive that will keep them motivate to do more. In Steemit, people remain consistent in posting content when they keep getting rewards immediately the reward disappear you will notice that they will stop working.

End Users: The last components of DePIN is the end users. Once the whole network has been established, end users will always pay to make use of the service and that is what makes this aspect the last.

Some Notable DePIN Projects in 2024

Filecoin (FIL): One of the most notable DePIN project in 2024 is the File coin. Here the various users pay to store their files and as you know already payment here is via cryptocurrency and the currency use in this DePIN project is the FIL token. So users here store their files on blockchain with FIL token as a means of payment.

^{Market movement of FIL}

Today we also have some initiative as such in Steemit where you see people come up with business and say they are accepting Steem as a means of payment. This is not the same though but it is closely alike and that is why I brought it as an example.

Storj (STORJ): Is similar to the Filecoin we explained above. Here this is a cloud storage system where users stored their data in the blockchain and the also pay using the STORJ token just like in the case of Filecoin where we use the FIL token as a means of payment.

^{Market movement of STORJ}

Theta Network (THETA): This is another DePIN project that focuses on users who are involved in content creation. So all those who stream their content online have this blockchain to support their project as it will promote transparency in they way the activities are done.

Conclusion

The word DePIN is an acronym which stands for Decentralized Physical Infrastructure Network, this means those devices that connect us to the blockchain network such as our routers WiFi, hotspot and many more are all under this type of network.

We have also seen real life use case where the this devices are used connecting the provider and their customers. The case of the Uber system we discuss is a live example on how this blockchain technology operate.

Finally, I want to thank you all for reading through my post today. If you have any questions or contributions, please do well to use the comment section of this post. See you all in my next publication.

Disclaimer: ^{This post is made as an education and not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your research and consult a financial advisor.}

NB: All images except otherwise stated are mine and taken from the coinmarketcap website.