Thanks to the distribution, enhanced encryption, and tracing features of blockchain, we can apply blockchain to Internet of Things (IoT) for automated transactions between "things". However, implementing this in the real world is complicated.
Currently, there are two methods to apply blockchain to IoT. The first is based on existing blockchain platforms (Ethereum and Hyperledger), and the second is a self-developed blockchain. The first method is feasible because the blockchain is originially intended to fix the inherent problems of IoT.
However, all the major blockchain technologies have problems, such as poor extensibility, low processing capability, and lack of dedicated technologies. Many people are doubtful whether blockchain can meet the requirements for IoT. Is it necessary to reform the blockchain to make it suitable for IoT?
The latest IOTA research indicates that the IoT indeed requires a dedicated "blockchain" technology, which is a distributed ledger technology getting rid of blocks and chains.
What Is IOTA?
IOTA is one of the major encrypted currencies in the world, with a market value of $11.8 billion. IOTA uses an interesting distributed ledger technology to implement decentralization. Different from standard blockchain technologies used by most companies, IOTA depends on a method called tangle.
As a new type of digital encrypted currency, IOTA is not as famous as Bitcoin and Ethereum; however, you should not underestimate its potential because it has given 5000 times ROI to investors. It performs well in the competitive world of digital assets. Also, IOTA uses the Directed Acyclic Graph (DAG)-based tangle structure, which is different from the structure of a typical blockchain. Conceptually speaking, it is similar to blockchain, but it does not have blocks or chains, which makes it interesting.
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In addition to the zero service fee, IOTA does not have a performance bottleneck unlike blockchain. The IOTA processing efficiency is proportional to the system size.
. Theoretically, when the network is more substantial, transaction confirmation is quicker, and the network is more secure.
Another fantastic feature of IOTA is the hash algorithm. Its Proof-of-Work (PoW) algorithm is called Curl. IOTA uses trio logic, not binary logic, i.e., it uses a three-state storage mechanism. This mechanism improves performance in some situations, but the triologic processor is not accessible. Therefore, before initiating the IOTA project, the IOTA team was developing a triologic processor named JINN. The group planned to create a microprocessor for edge computing and fog computing, which allows devices to process data locally, implementing the digital economy between devices.
JINN is still in the early R&D stages. However, the IOTA team is ambitious and has dreams in the design of architecture, algorithm, and processor. The IOTA team hopes that the JINN processor can be more efficient at processing the trio logic algorithm, and they want to integrate JINN to IoT devices to implement fast and secure value exchange between devices.
Byteball – A New Competitor to IOTA?
As an "archeological" enthusiast in the technology field, I'm curious about the source of IOTA idea. After I explained IOTA, a project named Byteball also used the DAG structure.
Byteball and IOTA are two types of innovative currencies based on DAG. Although they use the DAG structure, they differ in bottom technology and development trend. For the comparison, see the following table:
, and material currencies (such as US dollar and Euro) with Byteball.
As mentioned earlier, IOTA mainly applies IoT. For example, an energy company in Germany has worked with global electric vehicle charging pile companies to operate the charging piles over IOTA.
For the comparison of IOTA and other blockchain technologies applied to IoT, refer to the following table.
 Ethereum Hyperledger
Target Market IoT Smart locks Vertical industrial IoT market
Application Process Data market and intelligent charging system Ethereum smart locks N/A
Conclusion
IOTA is unusual in the world of blockchain due to its tangle structure and trio-logic PoW algorithm. However, IOTA's zero service fee, good extensibility, and close relationship with IoT makes it an irresistible trend. If the idea of IOTA can be fully implemented, the future of IoT can flourish.
Nonetheless, the development of IOTA can be tough. In September 2017, the DCI lab of MIT detected an encryption vulnerability in the hash function of IOTA. The price of IOTA was reduced by 15%. Although IOTA developers disputed the report and released a program to patch the system, the report still attracted much attention from social media.
Some people suspected that the competitors of IOTA, DAGlabs, and ZCash, were behind this event. There is a possibility of malicious competition and defamation. However, new technology is likely to face the similar events or need to fix vulnerabilities. The relevant people must be ready to cope with these situations.