The Internet of Things: How Does it Work?

Cyber Security

The Internet of Things: How Does it Work?

The Internet of Things (IoT) refers to a network of Internet-enabled, intelligent devices. These devices communicate with each other, automate processes, and measure, collect, and analyze data. However, the interfaces within machine communication pose worrisome data protection and IT security risks.

Definition: What exactly is the Internet of things?

Providing a completely strict definition is impossible, as the term includes a wide range of technologies. In most cases, however, IoT describes a network that enables machines to communicate. The term must be distinguished from the conventional Internet (social Internet), through which primarily people communicate with other people or machines (e.g., servers or bots). The Internet of Things in its current form has only become possible through technological progress in the last two decades and is rapidly developing.

Internet of Things in the private sector

IoT devices, which are accessible to everyone, are primarily intended to make everyday life easier. To this end, Internet-enabled devices or applications are linked with each other and thus made controllable. These can be all components of a smart home, for example. Through the IoT, users can receive a notification when certain events occur, such as when the room temperature falls below a certain level or you press too hard on your teeth with your electric toothbrush. But IoT smart sensors can also work by themselves – for example, without human intervention, a rolling shutter can automatically darken a window when a room gets too bright.

The terms „smart city“ and „smart environment“ also come up in connection with IoT. They refer to the creation and use of the IoT to optimize one’s environment, an entire city, or region.

Industrial Internet of Things (IIoT)

The Industrial Internet of Things can be distinguished from the private IoT. Here, individual machines or entire plants are networked with each other.  This networking is intended to increase efficiency through:

  • Communication/information exchange between machines, vehicles, containers, automats (M2M)
  • A high degree of automation
  • Optimization of processes
  • Early problem detection (self-diagnostics)
  • Avoidance of failures
  • Resource-saving production

The basic building block for this new level of technology was radio-frequency identification (RFID, for short). It enabled a receiver device to identify and locate a transmitter during contactless transmission.

The IIoT is often equated with the term Industry 4.0, but this is incorrect. The latter term refers to a digitization project that will only be fully implementable in the future. The prerequisites for this fourth industrial revolution include the Internet of Things, cloud computing and artificial intelligence (AI).

The use of an IIoT is constantly expanding to new sectors of the economy. In addition to the automotive, logistics, transportation, and energy sectors, hospitals and the public sector are already taking advantage of the benefits of an all-in-one network: With the help of the collected data, for example, inventories can be monitored, traffic flows can be controlled, and bottlenecks can be prevented.

Examples of the Internet of Things

In the private sector, so-called smart devices are part of the IoT:

  • Smartphones, tablets, and phablets
  • Smartwatches, smart bands, and fitness trackers
  • Smart cars
  • Smart homes
  • Doorbells, cameras, safes and locks
  • Security systems
  • Refrigerators
  • Thermostats/sensors that regulate temperature, humidity, sunlight, and lighting
  • Smart speakers and virtual assistants (e.g., Siri, Alexa and Cortana)

What technologies is the Internet of Things based on?

The Internet of Things is based on several technologies that interact with each other:

  • Connectivity: Various wireless protocols such as Wi-Fi, 3G, Bluetooth, NFC, etc. enable network communication.
  • Cloud computing: used to aggregate data and services in a central data center
  • Smart sensor technology: innovations in sensor technology enable smaller models and their low-cost production
  • Artificial intelligence: Natural language processing technology enables verbal communication with machines
  • Machine learning: By using algorithms in statistical models, machines can recognize regularities based on patterns and thus build knowledge independently

IoT: How „smart“ are smart devices?

IoT devices are very popular: According to an IDC study, a double-digit growth rate in global spending on IoT is expected. Consumers are expected to spend over $1 trillion per year on smart devices as early as 2022. Consumers hope that everyday tasks can be made easier or even completely automated. At the same time, the use of IoT devices is expected to reduce energy waste. But is this actually the case?

Benefit vs. Environment

Consumers are rightly increasingly asking whether the design, consumption, and service life of IoT devices make sense from a sustainability perspective. As reported by Welt, sustainable electronics is “not an easy topic” for the industry. At least, that’s how the consumer technology officer at the German IT industry association Bitkom put it.

Due to their permanent connections to power and WiFi, some smart devices consume more energy than they can save through their use. Even though the connected devices can often remain in standby mode, the cloud servers through which the home network is operated permanently consume power. Furthermore, the energy consumed in themanufacturing and disposal of smart devices is another aspect to consider in this calculation. How long an IoT device must be used to offset this expense is often out of proportion to its average lifespan. Ultimately, only the consumer saves in this way – and by no means always. The overall energy balance is not accounted in these statistics.

Economic total loss: New purchase instead of repair

The software of IoT devices often does not allow holistic updates. This means that their technology simply becomes outdated after some time. A new device is needed to continue using all functions.

The installed hardware can be another argument against the environmental friendliness of smart devices. Not only is the use of materials an irritant for many environmentalists, but also their construction. One example from everyday life is new types of smoke detectors, whose batteries are impossible to replace. In the same way, many smartphones cannot be repaired at all in the event of a defect. If a malfunction occurs, they often become garbage − and that pleases the manufacturers in particular.

But consumers also bear responsibility here. If investing in repairing an old device isn’t an option, demand will remain for products with ever shorter life cycles. And this means there will be no incentive to manufacture more sustainable devices.

IT risks around the Internet of Things

Almost everyone is familiar with the headlines surrounding smart devices and surveillance:

“Is Alexa a spy? What is Amazon’s speaker is listening in on?” or “Hey Siri, how many people are listening in?” But the suspicious that our data is being used for advertising purposes is only one of the less frightening concerns.

Home surveillance

The Amazon subsidiary Ring has repeatedly been the subject of much discussion. The smart home manufacturer hit the headlines in 2018 after camera recordings were allegedly transmitted unencrypted and could be viewed in real time by employees. About a year later, the next scandal followed: hackers were able to gain access to user accounts due to a security vulnerability, watch camera recordings live, and even address house residents directly via a speaker function. In January 2020, the non-profit Electronic Frontier Foundation reported that Ring’s app continued to transfer the personal data of its customers to third-party providers for analysis and marketing purposes.

Security gaps are profitable

The telecommunications provider Telenet was also a victim of cyber attacks in January 2020. Hackers offered a list of nearly half a million access data files for routers and IoT devices in forums. While the publication of this data list was already public, such lists are usually traded in forums and sold at profitable prices.

IIoT in transition

According to a new IoT study by Computerwoche, more and more German companies are using the Internet of Things to their advantage. AI, blockchain, and robotics are the most common applications. At the same time, hacker attacks on clouds, denial of service attacks, and malware gaining access to the IoT via smart devices are just some of the challenges posed by the increasing connectivity in industry.



IDC Forecasts Worldwide Spending on the Internet of Things to Reach $745 Billion in 2019, Led by the Manufacturing, Consumer, Transportation, and Utilities Sectors, 3. Januar 2019 []