There's growing buzz around so-called Decentralized Physical Infrastructure Networks (DePIN). Their unique way of extending existing infrastructure networks in a decentralized way could play a central role in helping artificial intelligence (AI) technology scale to new heights.
The term "DePIN" refers to systems in which physical infrastructure such as energy networks, computing power or bandwidth is organized decentrally. Blockchain technology is generally used to enable peer-to-peer transactions and coordination without centralized control. A report by Messari suggests that DePIN could add $10T to global GDP in the next decade and is seen as a game changer for global resource distribution of data.
What exactly is DePIN?
Decentralized Physical Infrastructure Networks (DePIN) projects use blockchain for decentralized data storage and transaction verification. These networks run on physical hardware and have a wide range, such as sensors, wireless infrastructure, energy grids, and more. Typically, a DePIN has its own native cryptocurrency to incentivize participants to secure the network and facilitate peer-to-peer (P2P) transactions. A well-known example is the Helium project, which experienced massive popularity during the 2021 crypto frenzy.
Helium is a decentralized 5G wireless network, built by individuals who set up hotspots with specialized hardware. Individuals are incentivized by rewards paid to the hotspot host. In the past, building and operating such an infrastructure would have been very expensive and challenging, only possible for well-established companies or governments.
These types of networks hold promise as a new approach to building large-scale base-layer infrastructure. DePIN networks span multiple industries and contribute to the overall Internet of Things (IoT). So far, DePIN has been implemented for data storage, sensors, digital networks, energy networks, or geolocation / mapping. The goal is to create a distributed and transparent system that increases the scalability and efficiency of traditional infrastructure.
Artificial intelligence and DePIN
Already groundbreaking artificial intelligence (AI) technology, such as ChatGPT, which launched in late 2022, has tremendous potential when combined with DePIN. AI models learn from massive data sets to identify patterns, classify information, predict outcomes, generate new content, and optimize decision-making processes. The field of generative AI will see massive development in 2023, allowing for the creation of images and even videos through text input. We're in a hyperbolic phase of technology development, where breakthrough innovations are achieved in very short periods of time.
The intersection of AI and DePIN is a new step in the ongoing AI revolution. These two fields together would create a dynamic digital ecosystem and drive the rapidly growing Web3 space. This means that in the future, applications such as ChatGPT could be hosted by a decentralized network and not owned by a controlling company or group. AI would provide the data aspect and DePIN would provide an incentive-driven and decentralized infrastructure.
Early-stage concepts like these offer a democratized and accessible alternative to the current centralized models that dominate the tech industry. Such a network coupled with AI could contribute to a fully open source version of ChatGPT that is not controlled by a single entity, but rather by a large collective of network contributors and token holders. The currently leading project in that regard is Bittensor (TAO) with numerous daughter chains ("subnets") building out decentralized AI applications. Other competitors with their own cryptocurrencies also boast multi-billion dollar market capitalizations.
Does DePIN also have influence on crypto niches such as NFTs?
Filecoin is a decentralized infrastructure storage system and thus falls under the DePIN category. Filecoin ensures the accessibility of digital assets such as the images behind non-fungible tokens (NFTs). Multiple nodes host copies of the same data within the network, which makes tampering with the data very hard and impractical. A hacker would have to hack and replace data on a multitude of running nodes simultaneously to be able to alter the system.
In conctext with DePIN, NFTs find increased application in the gaming space, where the non-fungible tokens represent in game assets. Making in game assets an actual item that can be traded and owned by a user create a new economical benefit for players and gaming platforms alike. This combination also transforms games into a DePIN with in game NFT driving new avenues for monetization, trading, and customization. DePIN coupled with a NFT-based ecosystem offers opens new opportunities for innovation in the gaming sector.
