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Yes, sensor monitoring (movement, heat, wind) is just simple IO handling and I'm sure managing a SQLite database would be in it's capabilities. If a C64 is capable of all if this then it can be done.

Even chat is possible for example between two buildings where radio might not penetrate the walls. But sure, at that point if you can lay down cables, then it's simpler to just build a telephone.

SQLite assumes quite a bit more resources than a Z80 has.

There were databases that ran on 8 bit computers. They were not as powerful as SQLite, but they could do the job.

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