What Is Internet of Things (IoT)?

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by John Caroline · 8 min read
What Is Internet of Things (IoT)?
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The Internet of Things (IoT) has become an essential concept in the world of rapidly developing technologies and devices. Here is a guide to help you understand better what it is about, its functions, and its impact on the general economy.

Nowadays, internet connectivity worms its way into many devices and machines giving feedback to users, engineers, designers and managers. Thanks to that, all the sectors of the world of manufacturing are developing incredibly fast becoming more effective and profitable.

As a result, a particular and expanding network dubbed the Internet of Things (IoT) appears, bringing us to a world of convenience, improved business efficiency, improved financial operations, and lots more.

In this guide, we will uncover what IoT means, its importance in the global economy, how it functions, and many other essential pieces of information.

Internet of Things (IoT) Defined

Basically, the Internet of Things (IoT) is all about connecting basic objects like devices, cars, and appliances using sensors and software, so that they can collect and share data.

It comprises a collection of devices or physical objects that have been designed to enable network connections. These objects do not include devices like the traditional computer.

Over the years, the fast-growing world of technology has seen the iteration of several innovations that have caused a technical upgrade in the functions of the physical objects we use daily. The massive adoption of IoT has made these advancements possible.

Notably, IoT covers various gadgets like smart fridges and thermostats, home security systems, webcams, printers, routers, smart speakers like Amazon Echo and Google Home, wearables like Apple Watches and Fitbits, and lots more.

History of IoT

The idea of the Internet of Things (IoT) was first introduced in 1999. The concept was first mentioned by Kevin Ashton, co-founder of the Auto-ID Center during a presentation at the Massachusetts Institute of Technology (MIT). The idea proposed a system where the internet will be featured in wireless devices and appliances so that data can be transmitted to them over a network.

Prior to Ashton’s presentation on IoT, an innovative Coke machine was built, serving as the very first internet-connected device. Despite not being a computer, the machine let programmers check if there were cold drinks inside.

Thereafter, the gradual recognition of IoT saw developers incorporating sensors and intelligence into basic objects that are often used daily. It built on the concept of M2M, where machines talked to each other without humans. M2M means linking a device to the cloud, managing it, and gathering data.

Nonetheless, in recent years, IoT has taken M2M further, creating a vast network of smart devices with sensors that gather and share data, connecting people, computers, and applications. M2M is like the building block that makes IoT possible.

Importance of IoT

The importance of IoT cannot be overemphasized as it has impacted several aspects of our lives including homes, offices, education, social activities, businesses and the global economy as a whole.

The inception of IoT makes our homes, offices, and vehicles a smarter and more interactive space than we could have imagined. It has introduced devices like Amazon’s Echo and Google Home which can be automated into carrying out activities like playing music and setting timers, thereby making our homes more fascinating.

It has also triggered the innovation of home security systems that help people to carefully observe operations within and outside their homes for the sake of safety. Examples are smart thermostats and lightbulbs that are capable of improving comfort and security.

IoT’s remarkable importance also extends to business dealings which has seen the efficiency of several business operations improve significantly. Businesses can now adopt the use of sensors and intelligent devices to automate processes, thereby reducing downtime and maintenance costs. All thanks to the iteration of the Internet of Things.

How Does IoT Work?

IoT works by connecting network-enabled smart objects together so that they can receive, provide and act on data for the basic use of their owners. These devices can be connected via software, sensors, and processors.

It is important to note that the way the web-connected devices interact with each other has a lot to do with the type of IoT application involved. Oftentimes, these devices interact with each other and make decisions without humans. Notably, some are also reliant on people setting them up, inputting data into them or giving them commands.

Nonetheless, IoT relies on sensors that detect things like temperature and actuators that make physical changes. Its devices use Wi-Fi, Bluetooth, and more to send data to the cloud. In the cloud, data gets stored and analyzed.

Economic Impact of IoT

Since its evolution, IoT has been making a significant impact on the economy as it basically offers businesses the potential to reduce expenses and increase productivity.

Moreso, its impact also extends to industries like the manufacturing industries where machine-to-machine communication has made their operations a lot easier while driving massive growth. Thus, IoT has an immeasurable weight on the performance of the global economy.

More interestingly, this technology is not limited to manufacturing; it extends to sectors like healthcare and retail, enhancing competitiveness. Even in developing nations, IoT adoption is feasible and cost-effective, attracting businesses seeking cost savings. Governments can further benefit by encouraging IoT adoption, boosting industrial competitiveness and tax revenue.

Provably, IoT revolutionizes business operations, leading to increased efficiency and reduced manual labour. It also introduces innovative business models, such as subscription services and predictive maintenance.

IoT Applications

While IoT has become applicable to almost all aspects of our lives, its use cases have been classified into several categories depending on the aspects they have been designed to function and the tasks they are meant to perform.

  • Home. Serving as the basic ground on which the concept was formed, IoT is very much applicable to the physical appliances and objects usable in the home. Notably, homeowners can use IoT for voice assistants, automated vacuums, security systems, and lots more.
  • Vehicles. Vehicle firms are one of the major sectors that have adopted the most use of IoT. This is because IoT aids in maintenance, design based on usage, and analytics for cars, trucks, ships, planes, and trains.
  • Health system. IoT is often applied to the health industry as it allows for innovations like wearable devices and ingestible sensors that monitor health, manage diseases like diabetes, and promote wellness. This can be interpreted as an advanced medium of saving lives.
  • Manufacturing/production. In places like factories, hospitals, and farms, IoT enhances efficiency and equipment management. Notably, its devices enhance manufacturing by monitoring machines, detecting failures, optimizing processes, ensuring ideal conditions, tracking inventory, managing supply chains, and monitoring product quality.

Pros & Cons

Apparently, IoT has added an extra layer of fancy to homes, businesses, health systems and lots more. This implies that there are several advantages IoT has provided to its users over the years.

Nonetheless, it has been observed that IoT also comes with its downsides and risks. As such, let’s take a look at the pros and cons of IoT.

Firstly, IoT’s advantage is its ability to simplify operations while improving efficiency. Secondly, it helps make informed decisions on potential investments and market trends. Further, IoT reduces costs and fosters sustainability. Finally, it helps provide safety in various environments.

Among the cons of IoT to mention, IoT devices are vulnerable to hackers and other cyber threats. Hence they can put users’ data at risk. Besides, in cases of malfunction, privacy may become compromised. Finally, IoT can be expensive to implement, which is also a significant drawback.

What Is Next for IoT?

As technology advances, more IoT devices keep flooding the market and they are becoming affordable. Most companies are still in the early stages of experimenting with IoT due to evolving sensor tech, like 5G, and machine learning. Hence, this predicts that more massive IoT-inclined products will soon be setting in.

The ecosystem of IoT initiatives is crowded with various platforms and standards, making it uncertain who will dominate. However, without a unified standard and with ongoing security concerns, we may encounter more IoT security issues ahead.

With tendencies for security and privacy trade-offs, our surroundings will be filled with smart products as the number of connected devices increases.


There is no doubt that the Internet of Things has ushered the world into an era of smart transformation as it revolutionizes the way we live, work, and interact with the world around us.

The ability of IoT to connect and empower devices has opened the door to remarkable opportunities for efficiency, convenience, and innovation. However, it is important to note that with these advancements come significant responsibilities.

Users have to activate more consciousness to safeguard security and privacy, address the challenges of scalability and interoperability, and ensure that the ethical implications are carefully considered.



What is Internet of Things?

Internet of Things (IoT) is defined as the connection of basic objects like devices, cars, and appliances using sensors and software, so that they can collect and share data.

Why is IoT important nowadays?

Nowadays, IoT is important because it has impacted several aspects of our lives including homes, offices, education, social activities, and businesses by making our daily operations a lot easier.

How does IoT work?

IoT works by connecting network-enabled smart objects together so that they can receive, provide and act on data for the basic use of their owners.

Which industries can benefit from IoT?

Industries that benefit from IoT include agriculture, health care, manufacturing, etc.

What are the examples of IoT applications?

Examples of IoT applications include solar systems, smart watches, automated vacuums and many more.

What are the main benefits of IoT?

The benefits offered by IoT include improved efficiency, cost reduction and sustainability, time-saving, and increased productivity.

What are the potential risks of IoT?

Among the risks of IoT are complex regulatory compliance, privacy breaches, and being prone to hackers.

Where does IoT go next?

The future of IoT holds big and massive developments as it awaits the release of 5G and several other potential innovations.

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