Have you ever heard of the Internet of Things? The founders of IOTA have taken this idea and run with it, combining blockchain technology with the idea of the Internet of Things. IOTA technically isn’t run on a blockchain but it utilizes its homegrown Tangle technology. This technology allows IOTA to be transaction fee free, grow without limitations and makes offline transactions possible. This may seem far fetched, but the reality is that IOTA and its Tangle technology could severely disrupt the way transactions are handled.
IOTA has consistently been in the top 10 cryptocurrencies in terms of market cap, indicating that investors understand its potential. Although the Internet of Things (IoT) is still in it’s early days of development and yet to be implemented on a large scale, experts agree that the IoT is going to be the next big thing — just as blockchain is the next big thing. IOTA’s slogan is “The backbone of the IoT is here” and to understand IOTA, first have to understand the Internet of Things.
Machine to machine economies: the Internet of Things
The Internet of Things is another upcoming technological evolution. How it operates under the hood is highly complex, but on the surface it’s quite easy to grasp. The IoT will essentially provide machine-to-machine communication, without human interference. Every object that is connected to the internet will be able to communicate with each other.
Picture this. You’re thirsty and you want to get a soda out of a vending machine. You’ll use your phone to pay and a can rolls out. Your phone automatically registers the transaction and upload this information to your daily budgeting app. The vending machine will process the payment and decrease its inventory by one can of the soda you bought. The electricity costs of the vending machine are already added to the cost of your soda, and if the can you ordered puts the total stock below a predefined threshold, a request for more cans will be sent to the supplier. The supplier’s system will receive the request and automatically prepare a delivery based on the provided data, send an autonomous car or drone to resupply the vending machine.
No human interaction is needed, and the cost of the products, services, electricity and fuel will all be incorporated in the price. A major problem with the IoT was the process of all of these micro transaction within these new machine-to-machine economies. How could these simultaneously be cost efficient and smooth at the same? IOTA and its Tangle technology are providing a method to make all of this happen, for free.
The Tangle: the first of its kind
By implementing their Tangle technology, transactions with IOTA are free. This is possible because transactions occur on a peer-to-peer base. The ‘payment’ of your transaction is the confirmation of two previous transactions. This may sounds like a slow process, but within the IoT, thousands if not millions of transactions will occur per second, meaning the the network will constantly send and verify transactions. These verifications are spread through the network at random, so one node will verify any two transactions from the entire network when sending a transaction, meaning the network is completely tangled.
The reason for the absence of transaction fees — peer-to-peer verification — is the same reason why there are no scalability problems with IOTA. In contrast to blockchains, the more people use IOTA, the faster the network will become and the more transactions can be verified. When you want to make one transaction, you have to verify two, meaning that the speed increases exponentially. This does create some challenges, as the whole IOTA ledger will have to be constantly verified by the decentralised network in order to be completely secure. With an infinitely large number of possible future transactions, the ledger will become infinitely large and time-consuming to verify. The core developers are working on advancements to tackle this future problem before it can occur.
Before the world is ready for a full scale implementation of the IoT, we have to make sure it’s completely quantum computing proof. Many developers have already addressed a major future problem with blockchains: their cryptographic security could be penetrable by quantum computers that may be able to decrypt them in ways we cannot fully comprehend yet. To give an example of what quantum computers can potentially do, it is estimated that a quantum computer would be 17 billion times more efficient in mining bitcoins than anything we have today. If we want all of our technological interactions to happen without human intervention, it’s extremely important to make sure the operating system for this is unbreachable. IOTA also anticipated this problem by creating and implementing the quantum-resistant algorithm called the Winternitz One-Time Signature scheme. Here you can find more information about this algorithm the technicalities of Tangle.
The IOTA team has been actively developing blockchain technology since 2011, and created the IOTA foundation and company in 2016. Since its emergence, the team has been continuously growing and has been able to attract exceptional talent from around the world. David Sønstebø , IOTA’s CEO, has been praised for his conservative marketing approach. His strategy seems to focus on establishing sustainable growth and a strong strategic network instead of the PR circus seen in many other cryptocurrency projects. David has been handling IOTA’s blogging and PR activities himself, both in line with this perceived strategy. The IOTA team is made up of a variety of talented individuals with a diverse range of expertise. Moreover, IOTA places a unique focus on attracting academics.
For now, IOTA has mostly established partnerships with Universities such as the Imperial College London, UCL and UC Berkeley. In 2016, IOTA announced a partnership with Microsoft and rumours have been spreading that they will soon announce an official alliance with the Volkswagen group.
How to buy and store IOTA
You can buy IOTA on the following exchanges: Bitfinex, Binance, IOTA exchange and Bit520. Important to know is that the price indicated on both Bitfinex and Binance isn’t for one IOTA, but for one MIOTA. A MIOTA is a million IOTA. On Coinmarketcap IOTA is listed as both IOTA and MIOTA which can be confusing, but they always refer to a million IOTA. If you engage in peer-to-peer trading, always be aware of this so you don’t end up spending a million times too much on IOTA’s. Your IOTA’s can be stored in the wallet created by the IOTA team.
Building towards the future
Globally, about 1 billion objects are expected to be connected to the IoT by 2020. The IoT is coming and IOTA has created a cryptocurrency that can aid this innovation. The IOTA team have introduced the Tangle technology and are the first to guarantee zero transaction fees. The team is already working on tackling any potential issue IOTA could encounter, which communicates a focus on a sustainable strategy for the long run. It seems like IOTA attracts new talent on a weekly basis and their focus on creating a highly innovative network signals their think outside the box strategy. Another indicator of this is their humble marketing approach and low-hype announcement strategy. They are focussed on keeping expectations realistic and attracting long term investors. Keep in mind that IOTA is still a future solution and it could be a while before machine-to-machine communication is adopted on a large scale. Nonetheless, with IOTA’s Tangle, we are able to get a glimpse of what the future of our world could look like, and it’s pretty mind blowing.