What is IOTA and what are the potential usecases?
The past months the cryptocurrency market had tremendous rise and it wasn't only Bitcoin and Etheruem that was propelled to new heights, and lows.
An increased public attention to alternative cryptocurrencies occured and what previously had been small altcoin projects, had incredible growth rates alongside the big boys and received a lot of resources to grow even faster.
Amongst those, IOTA was one of the currencies which had a massive increase of value and the communities attention grew along.
Since then, a lot of open source projects and progress from the foundation has been made, which I will include in my discussion.
IOTA is a more than just a cryptocurrency... to clarify.
Let me begin with explaining what IOTA is, the technology behind it and how the usecases for it differentiates from blockchain technology.
IoT (internet of things) is undergoing a massive increase of development and future daily-life integration with the big industry companies like Bosch, VW group, Intel, Cisco, ARM and Ericsson building the infrastructure for it.
The team behind IOTA has built a new concept for cryptocurrencies using DAG (directed acyclic graph) that is both scalable and fee-less and has a big potential to become the standard mean of data distribution in IoT.
This is why the potential of IOTA is incredible, but it's not set in stone. To succeed it has to accomplish its potential.
To explain what IOTA is, I will begin with explaining how the distributed ledger technology behind it works.
IOTA uses something the developers called "the tangle":
To visualize, one cannot look at a row of blocks, like blockchains, but as a scalable and continuous network.
Each transaction in the DLT confirms two previous ones.
That is done by solving a hashfunction by a small amount of computational work.
Once these two transactions are confirmed as valid, the transaction becomes a "tip" (the gray ends in the picture) and is further on confirmed by the next transaction that choses next "tip" as one of its two transactions to approve.
This protocol creates one of the big benefits of IOTA, since it means that the tangle is scalable and self sufficient once the coordinator node is turned off. That will happen gradually while the network grows and doesn't depend on its protection since it can manage attacks by itself.
It also means that the tangle becomes faster and faster while more transactions are occuring and more nodes are connected to the tangle.
The next big benefit of IOTA is the absence of transaction fees. The original amount of iota tokens is set from the beginning and there is no direct fee for doing a transaction, no token value is taken from a transaction.
One IOTA out, one IOTA in.
The absence of transaction fees is also what makes no value data transactions possible on the network and at the same time, no data transactions benefit the network.
Why are data transactions important?
The data transactions offer a way to send secure and untamperable data between two entities for free, or to be sold for an amount of tokens.
This is where IOTA differentiates from many other cryptocurrencies and becomes the perfect candidate for the industrial world as a medium of buying and selling data whilst creating networks between machines. Primarily suited for IoT since the massive amount of data collected by sensors.
To elucidate the difference, cryptocurrencies did not have a good way to be implemented in the industrial world since they were always bottle-necked by the large amounts of transactions than the blockchains couldn't handle and the fees made micro and nano transactions unviable.
Being able to be used for buying and selling goods is one thing, but to be able to handle, sell and connect a projected amount of 30 billion IoT devices by 2020 is another. Is IOTA up to par for that task? Time will tell.
With the upcoming data marketplace the possibility of buying and selling data with the help of the tangle & IOTA will become reality and it's already being tested by a lot of big names in the industrial world.
The biggest one announced so far is Bosch & VW Group with more to follow shortly.
Examples of usecases that are underway or could be integrated in the tangle are:
- Ability to track supply chains.
- A more precise market for weather-sensor data.
- Track and optimize routes for cars and trucks.
- Pay for charging with exact amounts of energy.
- Sell overcapacity energy with adjustable pricing tables (based on supply and demand and production costs).
- Make a real time wallet between trucks and save fuel when caravan driving.
- Lend different tools/bikes/cars for an exact time-based payment to efficitivize the amount of tools/cars needed in our society.
- Get information from industrial machines for insurance and service purposes.
These are just a few ideas collected from the foundation and the community. Since the project is open-source anyone who has an idea can come up with and build a project for new usecases.
The newly announced IOTA Ecosystem Platform will serve as a platform to help and fund new projects to become reality.
Some community projects that are already under development:
Roman Semko and his team's incredible project of CarrIota and Bolero (Automatic node installation) & Nelson (Automatic node discovery).
Students from the University College of London with help of others are creating an user friendly wallet called the Trinity Wallet. With an active alpha version being tested and beta version which will be live soon, allowing a much more user friendly experience than the official Light Wallet.
I hope the article was helpful and can give an explanation of the usecases for IOTA
Any constructive criticism, upvotes, resteems and follows are greatly appreciated!
My iota wallet address: KZ9AHEXCDUEYXSETKXCYVCQHP9KHRPFRCRJHGCJSZVOSBGMG9NPBSNQRBPRJMMNCLBPLESLQKCVAC9MDBLGHEIWYMC