IOTA Will Revolutionize The World Of IoT : A Blockchainless Cryptocurrency
The 4th Industry Revolution has already begun with the concept of Internet of Things (IoT) at the forefront of it. IoT focuses on the idea that even non-network devices can and should be able to be connected to the internet. The only issue is that such a globalized network is always susceptible to DDoS attacks and certain vulnerabilities always exist despite all benefits this network chain offers.
Internet of Things (IoT) holds a potential for changing life as we know it. It is on the path to become the fastest growing market in next couple years but the more important thing is that the development in related areas is interconnecting. When blockchain features into this picture, the opportunities become endless.
According to a paper by IBM, “Applying the blockchain concept to the world of IoT (Internet of Things) offers fascinating possibilities. Right from the time a product completes final assembly, it can be registered by the manufacturer into a universal blockchain representing its beginning of life. Once sold, a dealer or end customer can register it to a regional blockchain (a community, city or state). By creating and matching the supply and demand for physical assets in real time, the IoT will create new marketplaces“
We all believed that Blockchain would back IoT and the digital world would reach new heights. That was until, IOTA – A blockchainless cryptocurrency came into the picture.
IOTA – Cryptocurrency for the IoT Industry
IOTA calls itself the backbone of IoT. It is a scalable, decentralized and modular cryptocurrency having no transaction fees. The whitepaper says that this technology naturally succeeds the blockchain technology as its next evolutionary step and comes out with features required for micropayments conducted on a global scale.
Yes, you read that right. No transaction fees. Instead of the global blockchain, IOTA uses a protocol – Direct Acylic Graph (DAG), that is called Tangle instead of a regular blockchain, enabling various features like zero-cost transactions, infinite scalability or offline transactions.
By this IOTA combats the two major problems we face while using any blockchain-based cryptocurrency – current blockchain incarnations aren’t able to scale to a high number of transactions per second and at the same time provide stable infrastructure while running on a lightweight hardware. Moreover, with scaling there is always increase of transaction fees.
Before we proceed to discuss the benefits of IOTA, let’s have a look at some basic definitions of all the new terms we have been throwing around.
Direct Acylic Graph (DAG):
It is a finite directed graph with no directed cycles. According to the Graph theory, directed refers to the fact that the edges (connections) have directions. In the diagram, these directions are shown by the arrows. The opposite is an undirected graph, whose edges don’t specify directions. Acyclic means that, if you start from any arbitrary node X and walk through all possible edges, you cannot return to X without going back on an already-used edge.
As the website states, “The main innovation behind IOTA is the Tangle – a revolutionary new blockless distributed ledge which is scalable, lightweight and for the time ever makes it possible to transfer value without any fees.”
The transactions issued by nodes constitute the site set of the tangle (i.e., the tangle graph is the ledger for storing transactions). Its edge set is obtained in the following way: when a new transaction arrives, it must approve two previous transactions. This means that IOTA’s architecture is inherently decentralized on a level that no blockchain can match, due to the fact that users and validators are one and the same in Tangle.
Sites are the transactions represented on the tangle graph. The network is composed by nodes; that is, nodes are entities that issue transactions.
According to the White Paper, “The main idea is the following: to issue a transaction, users must work to approve other transactions, therefore contributing to the network’s security. It is assumed that the nodes check if the approved transactions are not conflicting and do not approve (directly or indirectly) conflicting transactions. As a transaction gets more and more (direct or indirect) approvals, it becomes more accepted by the system; in other words, it will be more difficult (or even practically impossible) to make the system accept a double-spending transaction.”
Also, one of the core features of IOTA involves the ability to transfer date through the Tangle. IOTA provides several options to establish a secure and authenticated communication channels between devices. Attacks are rendered impossible because all the data transferred is completely authenticated and tamper-proof to the core.
What’s revolutionizing is that there is no limit for scaling in this model. Once more and more people join and send transactions, IOTA will grow and scale smoothly since every new transaction verifies two new transactions in the network at zero cost!
In IOTA, scalability and adapting to high-throughput environments where devices make thousands of transactions is the norm. As such, IOTA is the first permissionless distributed ledger that achieves scalability, making Machine-to-Machine payments for the IoT possible.
Internet of Things to Internet of Everything
With IOTA in the picture, we have moved beyond the Internet of Things. Soon the world will see more machines than humans and an impeccable M2M communication system is the kind of interconnectivity we are in need of. This interconnectivity is the key for the new economy, undoubtedly. The foundation upon which IOTA has been built creates an environment for IoE. IOTA can be thought of as a bridge, across which machine interconnectivity grows and evolves. Devices can send and receive huge amounts of data in microseconds and all we have to do is set up a network which we can explicitly trust.
And is such a world, IOTA was born as an idea to create a compensation layer that will act as the building blocks of the Economy of Things where machines can trade resources effectively and securely on-demand.
According to an article on The Medium, “IOTA main network went live on 11th July 2016. The protocol and data transfer on the distributed and decentralized Tangle has been launched.
The first stage: IOTA core live, establishing the IOTA Foundation, moving the community’s chat over to Slack, completing some partnerships, IOTA on exchange market, spreading into the world.
The second stage: Extending IOTA’s utility, open IOTA to anyone that want to build on top of the IOTA network.
The third stage: development of hardware (project’s name is Jinn project), a brand new type of microprocessor for IoT, a hardware implementation hasher for IOTA’s ‘Curl hash function.’
IOTA already proceed till the end of 2016 over 3 million successful transactions. The number one IOTA priority of 2017 is to make the IOTA platform developer inviting and friendly. With this aim, the IOTA Sandbox was initiated:
“The IOTA Sandbox is here for developers and provides them tools, utilities and environment for “just code”. They don’t need to download anything, setting up their PC or app, they are not disturbed, they can just code. IOTA needs more developers who build core and apps to grow the ecosystem and make it world-wide.”
After BitFinex launched the official token on June 13 2017, the transaction volume quickly became so massive that the Bitfinex servers briefly went down. Within the first three hours of trading, 4.44 million mega IOTA were traded with the IOT/USD pair, an amount that increased by the second. CryptocoinsNews quoted “The first two hours of IOTA trading was more than double the USD volume and ten times greater than the BTC volume of the last token we released, Ripple, over the course of its full trading day.”
Should You Invest in IOTA?
IOTA is not a new cryptocurrency, contrary to what many presume. It was conceptualized first in 2015 and its development was started subsequently. Months of negotiation and clever strategic management of the IOTA-CORE, especially David Sonstebo’s efforts and Dominik Schiener’s participations in meaningful IoT-conferences, lead to tons of collaborations and partnerings between IOTA and real companies.
Also, it is supported by Outlier Ventures, a venture fund led by Jamie Burke. It is their first investment in tokens — given that Burke was quoted four months ago saying that 99% of blockchain startup are bullshit. IOTA is obviously different.
Though crypto-experts say that it is far away from mass-adoption, it has been repeatedly covered by leading news firms like CoinTelegraph, CIO, TechCrunch, VentureBeat, Forbes et cetera. And with IoT connections expected to reach more than 1 billion by 2020, the need for a secure, cheap and scalable micro-billing mechanism is apparent to everyone.
At ItsBlockchain we believe, this is where IOTA comes into play, and investing in it seems like a good idea. It has been gaining enough momentum over the last two years, and will take off any moment. Especially once a series of exchange listings is announced, as currently the price of IOTA is rising on just the anticipation of other exchange launches.
There is always volatility posing as a huge risk when it comes to new tokens, and IOTA has had its fair share of roller coaster ups and downs. But, where there is long term strategic investment, IOTA is a name you can trust to make large profits.