Applications of IoT in financial services 

In February 2021, JPMorgan Chase initiated a project to explore the intersection of blockchain technology and IoT in outer space. The primary motivation for the initiative was enabling secure and efficient financial transactions between objects in space; a task which is complicated by the limited computing power available on space devices and their intermittent communications with Earth. 

To address these challenges, J.P. Morgan collaborated with Danish satellite company GOMspace. The pair first adapted an existing blockchain, ConsenSys’ Quorum, to operate effectively on devices with minimal memory resources. This adaptation allowed for the successful transfer of digital tokens from Earth to the satellite, demonstrating the viability of conducting transactions in space. 

Building on this success, the project advanced to the deployment of an ERC-20 contract, a standard in the Ethereum blockchain, to represent tokenised value on the same satellite network. The critical test was whether this network could maintain its integrity as satellites moved in orbit and experienced intermittent connections with ground stations.  

The pivotal achievement was therefore the successful execution of a transaction between two satellites in space, validating the concept of a decentralised network capable of functioning independently in the space environment.  

The project's success in executing transactions between satellites showcased the potential of blockchain technology to facilitate common communication and payment protocols among satellite providers. 

Unlike traditional indemnity insurance, parametric insurance policyholders pay a premium and receive a pre-determined payout when pre-agreed conditions are met. Historically, parametric insurance was only available for large corporations or governments. Policies were designed to pay out hundreds of millions of dollars and were backed by a small number of expensive measuring stations and legacy data systems. 

FloodFlash is the first insurer to offer parametric insurance to small and medium-sized enterprises (SMEs). It uses IoT sensors which are connected to the AWS cloud to provide insurance coverage and payouts to SMEs at scale. The business that is looking for cover sets a pre-agreed water height (or several levels) and then sets the payment amount it wants to receive should floodwater reach that height on the property. 

FloodFlash installs IoT sensors on the client’s premises to monitor water levels. When it reaches the pre-agreed limit, the policy is automatically triggered, and payment is released. Each flood sensor has the AWS IoT Device software development kit (SDK) installed and periodically opens a secure connection to the AWS IoT Core platform. Temporal water depth data is uploaded to AWS and can be analyzed by FloodFlash’s data science or claims teams. Using IoT and cloud computing eliminates the time and costs associated with loss adjustments and other claims-related admin. 

FloodFlash claims the fastest it has ever made a payment is nine hours and 44 minutes (and says it completes most within 48 hours), helping business owners to begin the recovery from damages almost immediately. In January 2023, FloodFlash announced its expansion into the US insurance market after securing $15 million in Series A funding in February 2022. 

Traditional networks, such as Wi-Fi and cellular, are ill-suited to low-bandwidth, long-range IoT devices due to cost constraints, bandwidth issues, and limited coverage. Additionally, an issue commonly known as the ‘cold start problem’ hinders the initial development of public goods like wireless networks, as there is a reluctance among participants to take unilateral risks without incentives. 

Helium Network was formed in response to this challenge and in search of a decentralised alternative to network coverage. Helium introduced a blockchain-powered network that incentivises individuals, referred to as miners, to purchase and deploy $500 physical IoT hotspots in strategic locations. Miners are rewarded with Helium's native cryptocurrency, HNT, for contributing to network coverage.  

The project launched in 2013 as a traditional technology startup seeking to provide network coverage for innate objects like dog collars or parking meters. The company nearly went bankrupt in 2019 before deciding to rebrand itself as a crypto project that incentivises organic growth through tokenised rewards. Blockchain technology serves as the project’s backbone, facilitating a two-sided marketplace between data providers (miners) and consumers. 

Helium created a proof-of-coverage (PoC) consensus mechanism to replace the traditional proof-of-work mechanism used by bitcoin, ensuring that hotspots genuinely contribute to the network's coverage, preventing network attacks, and ensuring fair distribution of rewards. PoC ensures hotspots are doing their job and are where they claim to be. There are three key players in the process: 

• Challengers. Acting as investigators. 
  
• Transmitters. The ones being investigated. 
  
• Witnesses. Bystanders observing the process. 

The challengers send out encrypted challenges in layers that only the transmitters can unlock. Once the outer layer is unlocked, the transmitters share the challenge with the witnesses i.e., the surrounding verified hotspots. The witnesses, estimate the distance to the transmitter by observing the signal strength. They then confirm that the transmitter is in the location it claims to be in by decrypting the inner layer of the challenge. This method contributes to the reliability of the network. Both passing and witnessing tests will qualify a user to earn HNT. 

Since adopting a rewards business model in mid-2019, Helium has expanded from under 30,000 hotspots to over half a million. However, reports have raised concerns about Helium’s distribution of tokens.  

The current split of HNT rewards between Helium investors, hotspot enablers, and network data transfer is 35%, 35%, and 30%, respectively. Therefore, users claim that a significant portion goes to insiders. This has led to dissatisfaction among some hotspot owners who expected more substantial returns. Furthermore, the $ price of HNT has declined since November 2021 due to headwinds that impacted the broader crypto industry.  

From November 14, 2021, to June 18, 2023, the price of HNT fell 97.7%. One user told Forbes that their hotspot took more than six months to arrive and only generated $5 worth of HNT tokens after three months of deployment. This in turn has limited the further growth of the Helium Network.  

Salesforce and Lime were once listed as users of Helium until news reports circulated in mid-2022 that the partnerships were exaggerated and misrepresented, after which Helium removed these companies from its website.