IOTA: A Cryptocurrency for the IoT
The amount of data in the world is growing at a pace never seen before. Companies have been rushing to be the first ones to store and manage it efficiently. In fact, it’s created an entire industry: cloud storage.
Twenty years ago, when the internet was just starting out, nobody could have imagined that there would be buildings dedicated to housing giant servers full of data. At least, not at this scale. For example, there’s a data center being built in Nevada that will be 7.2 million square feet when it’s finished. That’s over twice as spacious as the world’s tallest building.
A lot of this data has been generated over the Internet of Things (IoT). The IoT is the network that is made up by devices “talking” to each other by sending data. This is the future, and it’s called the “machine-to-machine economy.”
Right now, there are over 20 billion devices connected in the IoT. And by 2025, that number is expected to grow to 75 billion. So, the amount of data in the world is only going to go up, and at an exponential rate.
The emergence of blockchain technology since the invention of bitcoin has taken security to a new level. And as blockchain has continued to prove itself, companies have been showing interest in somehow securing data in it. The appeal of blockchain is that it’s decentralized, and therefore extremely hard to hack.
Now the IoT is about to take its level of communication a step further. Soon, machines will be able to purchase data from each other using a new form of cryptocurrency called IOTA.
IOTA: Not Your Average Cryptocurrency
An example of IOTA being used would be a smart meter in a building selling its data on electric, gas and water usage to a utility provider. The buying/selling could be continuous or once a day. Or it could be a computer buying more cloud storage or computing power.
The transactions would be quick, and you wouldn’t have to do anything, hence the term “machine-to-machine (M2M) economy.”
And for a transaction to get confirmed, two other transactions that preceded it need to be confirmed before it. So, as it gets used more, there will be more transactions to reference, and the speed of payments, or “scalability,” will continue to get faster.
IOTA does not use blockchain technology. It’s on a different platform called Tangle. Without getting into the technical side of how they differ, an extremely important feature of Tangle is that there are no transaction fees.
These payments between devices will be a few cents at most. So having a transaction fee, which is part of doing any sort of buying/selling on a blockchain, wouldn’t make sense. Tangle is the first alternative to blockchain, which gives IOTA an extreme advantage.
In fact, the IOTA Foundation, which created Tangle, recently formed a partnership with some pretty big names. Companies like Microsoft, Bosch, Cisco and Samsung are giving IOTA a test run right now in the “data marketplace.”
A Limited Resource
The IOTA Foundation has a display on its website that lets you see all of the data sources currently participating on Tangle here. If you click on the locations on the map, you may notice that the prices are hundreds to thousands of IOTA.
If you look at the price of an IOTA online, it’s several dollars. So, to clear up any confusion, the price you see online is for a MIOTA, which is 1 million IOTA. Now the prices on the map look a lot smaller. If a MIOTA is $4, that means 2,500 IOTA is worth one cent.
Another feature that sets it apart from the rest of the cryptocurrencies out there is that there will never be any more IOTA coins “released.”
With typical cryptocurrencies, a fraction is sent out to the public at the beginning of its existence, and the rest are “mined” into existence over the course of years. But whenever a resource becomes more plentiful, it dilutes the price. As the demand for IOTA goes up, but the number of outstanding coins stays the same, the price will keep going up.
Thankfully, there is an easy way to invest in this cryptocurrency. To see a step-by-step guide on how to buy IOTA, click here.
Right now, IOTA is already the fifth-largest cryptocurrency in the world, with a total value of over $12 billion. But if it can capture a monopoly on the micropayments industry, it could grow substantially.
Internal Analyst, Banyan Hill Publishing
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