A currency for the Internet of Things (IOT)
As I mentioned in my introduction post I try to keep up on the world of crypto currency and one the last few days in particular is catching my attention, IOTA.
Below: Even Chocobos stop to appreciate technology!
What does IOTA aim to do that makes it interesting
IOTA is a new currency system designed for IOT devices (hence the IOT in IOTA) and aiming to make small micro-transactions between IOT devices a possibility. Enabling this IOTA also rides on a fee free transaction system. Probably the coolest part is the Tangle ledger the IOTA protocol uses, which helps ensure the network base is not reliant on groups dedicated to mining to validate work in the chain but instead distributes the validation with proof of work to all nodes. Also interestingly enough, the Tangle allows offline nodes to form sub-chains off the main Tangle ledger to provide data validation which is pretty significant considering some of these devices could have spotty internet connections and loss of backhaul is not outside the question. In this event devices could still communicate via some form of low power PAN or WAN tech to validate transactions.
A side note that is fun, IOTA actually implements Quantum resistant hashing, meaning they are looking forward to the future and what Quantum computers could do and using a method to future proof their protocol and the Tangle network.
How is IOTA going to pull all this off?
Messing with IOT and sensor based devices myself before I know that many of these devices are low end on the compute area and power is usually always a factor. That being said, all nodes in the network need to take part in validation of two transactions when taking part in another send/receive. The power and resources needed to do so are minimal especially compared to the hashing power needed to calculate a normal bitcoin type blockchain operation, thus staying in line with the fact that IOTA was designed with IOT in mind. With this sort of crowd based validation it makes sense that the larger the network gets the more efficient it will become as there are more devices validating transactions.
A personal example of the benefits I can see
There was an situation recently that really made IOTA stand out more to me which I will cover in a future post, however the experience really made me think about the mining process and the large mining pools that dominate the transactions. The power hasn't been abused before but if transactions can hang waiting for blockchain miners to validate for minutes to even hours (ouch, I've seen it happen), this presents a real issue for business scale applications or even small IOT deployments where as an example of IOT use for IOTA a sensor may use IOTA transfers to buy additional throughput or bandwidth as needed.
Imagine a real time or near real time platform that could need additional capacity in storage or any other resource as it bursts trying to use a blockchain that could delay the request substantially. This just wouldn't scale or work.
Takeaway
IOTA has the potential to really shine in the IOT space, and with the growth in that area and the new opportunities a lightweight, scalable and reliable protocol and currency will be a requirement to enable machine to machine transactions.
The coin itself will be available in tiers, almost akin to the way data storage exists as bytes, kilobytes, megabytes, etc... Remember that the large number of total available tokens is due to the nature of this protocol being able to transfer small payments between nodes if needed even down to the level of say a penny or possibly less depending on the service.
The tiers of storage with the total number of IOTA that will exist at the top
Bitfinex will be beginning to trade IOTA on 6/13/2017 (TODAY!) and it already has grabbed up some really impressive market cap around 500 million. It will be interesting to see what IOTA does and where it will land on the coinmarketcap list of coins as well.
Let me know what you think of IOTA and if you will be investing, and if I missed anything cool let me know as well. Also any upvotes and follows are always appreciated!
Until next time,
Doug