Tokenized Internet of Things (IoT): Cryptocurrency Terms Explained

The Internet of Things (IoT) is a system of interrelated computing devices, mechanical and digital machines, objects, animals or people that are provided with unique identifiers and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction. The concept of tokenization is a process of replacing sensitive data with unique identification symbols that retain all the essential information about the data without compromising its security. When these two concepts intersect, we get the tokenized Internet of Things (IoT), a revolutionary idea that has the potential to transform the way we interact with the world around us.

As the world of cryptocurrency continues to evolve, it’s important to understand the terminology associated with it. This glossary aims to provide a comprehensive understanding of the terms related to the tokenized IoT. These terms are crucial for anyone interested in the intersection of IoT and cryptocurrency, as they provide the necessary vocabulary to understand and participate in discussions about this rapidly evolving field.


Tokenization is a process that transforms sensitive data into a non-sensitive equivalent, referred to as a token, that has no extrinsic or exploitable meaning or value. The token is a reference or pointer to the original data, but cannot be used to guess those values. This process is used to prevent credit card fraud in online transactions and is now being applied to IoT devices to secure data and enable new business models.

Tokenization is not a new concept, but its application in the IoT space is relatively recent. By tokenizing IoT devices, we can create a secure environment where each device has a unique identity that can be managed and controlled. This not only improves security but also opens up new possibilities for monetization and control of IoT devices.

Tokenization in Cryptocurrency

In the context of cryptocurrency, tokenization can refer to the process of representing real-world assets on a blockchain. This means that ownership of these assets can be transferred and traded on the blockchain network. This process is often used to create tokens for crowdfunding projects, where the tokens represent a stake in the project or a right to a portion of the profits.

Tokenization in cryptocurrency also refers to the process of securing sensitive data on the blockchain. This is done by replacing the sensitive data with a non-sensitive equivalent, known as a token, that has no intrinsic or exploitable value. This process is used to prevent fraud and ensure the integrity of transactions on the blockchain.

Internet of Things (IoT)

The Internet of Things (IoT) is a concept that describes a network of physical objects (“things”) that are embedded with sensors, software, and other technologies for the purpose of connecting and exchanging data with other devices and systems over the internet. These devices range from ordinary household objects like refrigerators and thermostat systems to sophisticated industrial tools.

With more than 10 billion connected IoT devices today, it’s a rapidly growing technology that’s expected to impact every major industry from healthcare to agriculture. IoT devices generate a huge amount of data that can be used to improve services, make better decisions, and improve quality of life. However, managing and securing these devices and the data they produce is a significant challenge.

IoT in Cryptocurrency

IoT has found a natural ally in blockchain, the technology that underpins cryptocurrencies. Blockchain’s decentralized nature and security features make it an ideal solution for managing and securing IoT devices. By integrating IoT with blockchain, we can create a secure and efficient system where IoT devices can communicate and transact with each other without the need for a central authority.

For example, an IoT device in a supply chain can record and verify its location on a blockchain, creating a tamper-proof record that can be used to prevent fraud. Similarly, IoT devices in a smart home can use blockchain to securely manage and automate home functions.

Smart Contracts

Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They exist across a distributed, decentralized blockchain network and allow for transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism.

Smart contracts are a key component of many cryptocurrency systems. They automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss. They can also automate a workflow, triggering the next action when conditions are met.

Smart Contracts in IoT

Smart contracts have a wide range of potential uses in the IoT. For example, a smart contract could be used to automate the process of renting a car. When the renter agrees to the terms of the rental agreement, a smart contract could automatically unlock the car and start the rental period. When the rental period ends, the smart contract could automatically lock the car and process the payment.

Similarly, in a supply chain, a smart contract could automatically track and verify the movement of goods, triggering payment when the goods reach their destination. This could greatly increase efficiency and reduce the risk of fraud.

Decentralized Applications (DApps)

Decentralized applications (DApps) are applications that run on a P2P network of computers rather than a single computer. They are a type of software program designed to exist on the Internet in a way that is not controlled by any single entity. DApps have been popularized by distributed ledger technologies (DLT) such as the Ethereum Blockchain, where DApps are often referred to as smart contracts.

DApps have their backend code running on a decentralized peer-to-peer network, as opposed to typical applications where the backend code is running on centralized servers. A DApp can have frontend code and user interfaces written in any language that can make calls to its backend. Furthermore, its frontend can be hosted on decentralized storage such as Swarm or IPFS.

DApps in IoT

DApps have significant potential in the IoT. They can be used to create decentralized networks of IoT devices that can communicate and transact with each other without the need for a central authority. This could increase efficiency, reduce costs, and improve security.

For example, a DApp could be used to create a decentralized energy grid, where each device on the grid can buy and sell energy as needed. This could greatly improve the efficiency of the grid and reduce the need for central control.


Blockchain is a type of distributed ledger, comprised of unchangeable, digitally recorded data in packages called blocks. These blocks are stored in a linear chain. Each block in the chain contains data (e.g. bitcoin transaction), is cryptographically hashed. The blocks of hashed data draw upon the previous-block (which came before it) in the chain, ensuring all data in the overall โ€œblockchainโ€ has not been tampered with and has not been altered.

Blockchain is the technology that underpins cryptocurrencies, and it’s what allows them to operate without a central authority. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. This technology has the potential to disrupt many industries by making processes more democratic, secure, transparent, and efficient.

Blockchain in IoT

Blockchain has significant potential in the IoT. It can be used to create a secure and transparent system for managing and controlling IoT devices. Each device can be given a unique identity on the blockchain, and all interactions with the device can be recorded and verified.

For example, a blockchain could be used to create a secure and transparent supply chain, where each item in the supply chain is tracked and verified on the blockchain. This could greatly reduce the risk of fraud and improve efficiency.


The intersection of IoT and cryptocurrency represents a significant opportunity for innovation. By applying concepts like tokenization, smart contracts, DApps, and blockchain to IoT, we can create secure and efficient systems that have the potential to transform industries.

Understanding the terminology associated with this intersection is crucial for anyone interested in this field. This glossary provides a comprehensive overview of these terms, providing the necessary vocabulary to understand and participate in discussions about the tokenized IoT.