From $1.94 on 4th of December to above $5 on the 6th. A return of around 150% within 2 days. Sounds like another crypto-craze for people who are used to such surges in price.
Yet one wonders with each cryptocurrency: is this a truly new one that will set the scene for mass adoption? This article will explore the underlying differences from other cryptocurrencies, initial areas of application and what lies ahead for IOTA.
The Cryptocurrency Society Needs
IOTA is secure, scalable and fast. In a future world where most of the cryptocurrencies will be vulnerable to quantum computers, IOTA will be standing tall. And unlike most cryptocurrencies, the transaction speed increases as more users make transactions. This allows it to be scalable, where its speed increases with its scale. Yet these are not its main divergences from other cryptocurrencies.
No Fees – No Mining
The fundamental difference from most cryptocurrencies is that IOTA does not have transaction fees as there is no mining involved – IOTA does not use blockchain. Instead, it uses a Directed Acyclic Graph to store transactions, or as they have eloquently put, the tangle. In this system, “when a new transaction arrives, it must approve two previous transactions”, and when it does, the transaction is cleared.
They also stress that “all of the tokens were created in the genesis transaction. No tokens will be created in the future, and there will be no mining in the sense that miners receive monetary rewards”. In addition, since there are no fees, and the wallet costs nothing, one can send IOTA to a friend around the world for free.
Micro-transactions and IOTA
The no-fee concept is invaluable for a system that relies on continuous micro-transactions. Currently, one cannot buy a coffee with bitcoin, at least not without losing money, as the transaction fee is larger than the actual transaction amount. IOTA completely bypasses this system by having no fees. Then again, is all this commotion only for people to buy coffee and tea with cryptocurrencies?
What is the Added Value?
Most certainly not. The true added value comes from connecting users and companies by creating a data marketplace where users can sell and companies can purchase data. To quote them: “IOTA makes it possible to securely store, sell, and access data streams”. In a world where the new oil is data and new oil wells are IoT sensors that continuously collect data, one can see the driver behind IOTA’s value.
How Does it Work?
Although the framework on which IOTA is built is rather complex, the user interface is simplistic and accessible. Currently at its initial stages, the IOTA data market shows that one simply selects the desired data source, pay for the sensor and have access to the data stream thereafter. When mass adoption is underway, one can see how numerous companies would be interested in such a platform.
When the Major Players Reel In
All this is exciting, but the reason for the most recent price uptick came after the announcements that quoted major companies showing interest in IOTA. These include Microsoft, Cisco, Volkswagen, Samsung, Fujitsu, Accenture and many more. Omkar Naik of Microsoft said:
“This next-generation technology will accelerate the connected, intelligent world and go beyond blockchain that will foster innovation real-world solutions, applications and pilots for our customers”.
With such support that stretches across different sectors, IOTA is not another crypto-madness. So what do we see in the horizon at the moment?
The End Goal
The end goal is the mass adoption of IOTA and the creation of a network where data flows between machines, essentially creating a machine economy.
This has major applications in smart cities where energy efficiency, automated allocation of resources and communication plays an important role. Jan-Peter Doomernik, a senior business developer at a Dutch grid operator said, “As a grid company we believe in the power of sharing and open (free) data to co-create beneficial for society.” With increasing access and storage requests to data, such initiatives will be fueled by IOTA, driving humanity to a better future.
With its proposed system, IOTA will not only create an environment for the sharing economy to flourish, but also skyrocket. The idea goes beyond idle cars being shared by others while one is at work. A project under development by Rabobank, a Dutch bank, uses blockchain to create a system where assets are rented P2P. As an example given by Djuri Baars, co-lead of the Blockchain Team at Rabobank, one does not have to save money to buy the energy efficient washing machine; one simply rents it and pays per use.
Using IOTA in such a system, one could not only achieve the same purpose, but sell his/her usage data anonymously to whoever is willing to buy it. The key point here is that IOTA has no fees, hence micro-transactions such as washing clothes can be made without the worry of spending too much on fees.
When this is expanded to any other smart appliance in a house, it is possible to see how the sharing economy will expand fast.
Data From Everywhere
The influx of data need not come from only shared appliances in a house. Facilitating the movement of data, IOTA will also be the in the eyes of deep learning algorithms, which require vast amounts of dynamic data to improve themselves.
As data becomes more accessible and readily available, one should expect leaps in efficiency across multiple industries.
Seeing how Google, Facebook and other major tech companies utilized big data and AI, it is not difficult to predict that the development of IOTA will accelerate humanity’s transition into the fourth industrial revolution.
The stage is set for IOTA’s rise, and this is just the beginning of its story. How its price will develop in the future is set aside for the traders to figure out. Yet now, one can at least see an underlying reason behind its price.