Cryptocurrency Solutions to Enable Micro-payments in Consumer IoT

TL;DR

This paper reviews various cryptocurrency approaches for enabling scalable, low-cost micro-payments among consumer IoT devices, highlighting their advantages, limitations, and future research challenges.

Contribution

It provides a critical analysis of existing integration methods and cryptocurrency designs for consumer IoT micro-payments, categorizing solutions and discussing their trade-offs.

Findings

Offline payment channels enable instant, low-fee transactions.

Lightweight, semi-centralized cryptocurrencies improve scalability.

Trade-offs exist between decentralization and efficiency.

Abstract

The successful amalgamation of cryptocurrency and consumer Internet of Things (IoT) devices can pave the way for novel applications in machine-to-machine economy. However, the lack of scalability and heavy resource requirements of initial blockchain designs hinders the integration as they prioritized decentralization and security. Numerous solutions have been proposed since the emergence of Bitcoin to achieve this goal. However, none of them seem to dominate and thus it is unclear how consumer devices will be adopting these approaches. Therefore, in this paper, we critically review the existing integration approaches and cryptocurrency designs that strive to enable micro-payments among consumer devices. We identify and discuss solutions under three main categories; direct integration, payment channel network and new cryptocurrency design. The first approach utilizes a full node to interact with the payment system. Offline channel payment is suggested as a second layer solution to solve the scalability issue and enable instant payment with low fee. New designs converge to semi-centralized scheme and focuson lightweight consensus protocol that does not require highcomputation power which might mean loosening the initial designchoices in favor of scalability. We evaluate the pros and cons ofeach of these approaches and then point out future researchchallenges. Our goal is to help researchers and practitioners tobetter focus their efforts to facilitate micro-payment adoptions.