How machine-to-machine transactions are becoming essential for the digital era

Huang believes that if ongoing M2M payments represent the new electricity, then blockchains should be regarded as the new power grid.

We are progressing towards an economic framework where software and devices can conduct transactions independently of human intervention.

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Rather than merely processing transactions, machines will possess the capability to make decisions, collaborate with one another, and acquire resources in real time. Sensors and satellites will sell data streams every second. Factories will dynamically price electricity purchases based on supply and demand. Supply chains could potentially operate autonomously—reordering materials, arranging transport, paying customs fees, and rerouting shipments without any human supervision.

However, such an economic model cannot rely on large, infrequent payments. It must function on billions of small, ongoing transactions, performed autonomously at machine speed. Just as electricity pricing facilitated mass production, micro-transactions and machine-to-machine (M2M) payments will render complete automation economically feasible.

If continuous M2M payments represent the new electricity, then blockchains—the platforms on which these microtransactions will take place—should be viewed as the new power grid. They are an essential infrastructure component that enables new business models, innovative technologies, and ultimately, this emerging machine economy.

What will the trajectory of these advancements look like? The electrical revolution provides numerous insights.

A new revolution

Prior to electrification, power was localized, manual, inconsistent, and costly. Factories depended on steam engines or water wheels, limiting production locations and scalability. Power was something that needed to be integrated into each operation.

Electricity transformed this dynamic. Once power became standardized and perpetually accessible, it transitioned from being a mere feature to becoming the foundation of modern industry.

Current payment systems still resemble the pre-electricity era of power. They are sporadic, typically processed in batches, and heavily mediated by individuals and institutions. Even digital payments consist of individual events such as invoices, settlements, reconciliations, or billing cycles.

However, M2M payments (autonomous financial transactions between connected devices), when paired with micro-transactions (valued at just a few cents), transform value exchange into something ambient and infrastructure-like. Instead of pausing to make payments, machines can operate continuously, exchanging value as they utilize resources or deliver services.

Tech leaders have been discussing microtransactions since the early days of the Internet, but achieving that vision was unfeasible within the existing banking framework. Presently, blockchain technology allows for instantaneous value transfer globally at minimal cost. The infrastructure of the crypto sector is fundamental for the establishment of continuous M2M payments.

Just as electricity facilitated the development of computers and the Internet, M2M payments and micro-transactions will enable the emergence of an entirely new economy.

How electricity changed the world

The consistent power supplied by electricity enabled automation. Mass production did not arise from hiring more workers, but because machines could operate continuously and relatively independently.

Contemporary machines are technically autonomous but economically limited. An AI agent can make decisions, manage traffic, or optimize logistics, yet it cannot pay for computing resources in real-time. Economic friction necessitates human involvement in systems that would otherwise be independent. Nevertheless, M2M payments, coupled with micro-transactions, will furnish continuous economic power in the same manner that electricity provides continuous mechanical power.

Moreover, electricity unlocked industries that were previously unfeasible. M2M payments will possess the same capability, offering economic infrastructure for sectors that cannot operate without precise, real-time payments.

What could this entail? We may witness autonomous supply chains, where machines continuously coordinate purchases and logistics. Alternatively, AI services could emerge with pricing structures reflecting milliseconds of inference time. Global data markets might rely on pay-per-byte access. Infrastructure—from roads to charging stations—could continuously and automatically price access.

It is notable that transitioning to usage-based pricing also transformed electricity’s business models. Paying per kilowatt-hour allowed companies to scale without renegotiating contracts or investing in fixed capacity. You paid for what you consumed at the moment you used it. M2M payments will offer similar flexibility to 21st-century enterprises.

Lessons from the electrical revolution

During the initial phases of electrification, the emphasis was primarily on the development of generators. However, this was not the most crucial technological advancement. What truly mattered was transmission. Only when electricity could be delivered universally, affordably, and reliably did it reshape industry and society.

The same principle applies to M2M payments. The blockchain platforms facilitating these payments are significantly more important than the specific M2M payment applications (like Coinbase’s x402 protocol) being utilized. Therefore, the focus should be on creating the most efficient blockchains possible—chains with minimal fees, low latency, and predictable performance. In essence, M2M payments encounter the same challenges as standard stablecoin payments: they require top-notch underlying infrastructure to function effectively.

Furthermore, the blockchains designated for machine payments must be regarded as neutral infrastructure. They need to be interoperable across different vendors, jurisdictions, and devices. After all, machines cannot negotiate customized payment systems any more than appliances can negotiate voltage standards. This implies that decentralization may play a significant role in the expansion of the machine economy. In this context, public blockchains may hold advantages over private options.

If M2M payment infrastructures achieve this neutrality, they will become the coordination layer for autonomous systems, just as electricity serves as the coordination layer for physical power. At that point, innovation can confidently transition to establishing entirely new machine-driven industries.

The machine economy will become a reality when machines acquire the capability to transact continuously, autonomously, and discreetly, empowered by blockchain technology. M2M payments are not merely a feature of that future; they represent its electricity.