- No theoretical limit on TPS.
- Can process any data, apart from financial transactions.
- No IOTA mining.
- Almost zero transaction charges.
- A very scalable network.
- Has tied up with some high profile brands.
- The coordinator protocol can compromise network safety level.
- The MIT research highlights major safety issues.
- No clarity on the project’s readiness.
- Far from a finished product.
- Faces completion from a few rivals in IoT sector.
The new generation cryptocurrencies are quite interesting though few can gain traction and retain it in the long run. Some of these crypto projects are well planned and they promise to address unexplored territories that can bring specific benefits to the end-users. One such example is IOTA.
The IOTA project was conceived and set up by Sergey Ivancheglo in 2015, along with Dominik Schiener, Serguei Popov, and David Sontesbo. After that launch, it has been managed by Germany based IOTA foundation. Much like other cryptocurrency projects, it wanted to develop a digital payment system enabling secure, cheaper, and faster transactions. IOTA, however, is not just about making financial transactions but it allows moving data from one device to another. The most notable thing about the IOTA coin project is there is no Blockchain technology powering it. It makes use of tangle- a unique consensus mechanism.
IOTA is a ground-breaking cryptocurrency with a focus on IoT- the Internet of Things. It relies on a directed acyclic graph and not a typical Blockchain. It enables the network to be highly scalable. The project aims to become the backbone powering the IoT ecosystem. The IOTA protocol will offer the IoT machines a cryptocurrency at near-zero cost.
What’s unique about the IOTA network? How does it work?
The basic working mechanism of IOTA is not hard to fathom. It’s about the transaction execution among IoT devices. The connected devices can transmit data using the network. It also supports the execution of complex transactions taking place between several devices in such IoT ecosystems.
Iota is based on Tangles and it does not rely on miners, unlike older crypto projects. It does not use the Proof-of-Work consensus mechanism. In the IOTA network, users willing to use the system for fund transfer have to contribute to it by confirming other’s transactions. So, in an example, A is sending funds to B. During the transfer, A has to confirm the transactions for C and D by using his computing power.
So, as more users use the IOTA system, its network becomes scalable. So, theoretically, there is no limit to TPS. It is therefore called an infinitely scalable network. Another benefit of Tangle is since there is no mining involved, transactions are almost free. The only cost incurred is a frugal amount of electricity. This can make it enticing to a lot of people.
Since the IOTA project is still new, no official transaction time has been set as such. Some factors determine how fast transactions are done. Those willing to send funds have to confirm two other transactions and they need to do a fast PoW action. It is not easy to say how fast a user can solve the PoW puzzle and how fast the PC is. The IOTA team has deployed a coordinator, a centralized protocol to ensure operational efficacy. Later, it may not be required. As of now, a transaction may need a minute or a little more. The team is developing a protocol named “Flash Channels” to speed up transaction execution.
How secure the IOTA network is?
When you invest in a crypto project it is necessary to know about its viability and safety. The IOTA coin project is not without its share of flaws. Since its inception, it has faced some hiccups and these made headlines too. The coordinator protocol is centralized and that itself is somewhat risky. If for any reason, it stops working, the entire network may be compromised. This has happened and the IOTA system once became unusable for days.
If the project becomes completely decentralized, the risk will not be there but it is unclear when that will happen. In 2017, MIT researchers unveiled an academic paper highlighting various security loopholes in the IOTA network. These developments cast a shadow on the credibility and safety of the project, for sure.
The project was criticized widely when an algorithm technical flow issue resulted in the theft of the currency worth $11.4 million in 2018. The majority of the amount was later recovered but the incident serves as a black patch in its track record.
What is MIOTA?
Nearly every crypto project has a utility token and IOTA has its own, too. It is called MIOTA. This is used for accounting for transactions, handling smart contracts. There will be a total of 27 quadrillion cryptos overall. It is now available on major crypto exchanges.
Usage cases for IOTA
The IoT-enabled devices are available but the technology is fast evolving and mass adoption is still some time away. However, crypto sector experts think IOTA will be useful in the near future when IoT-enabled devices will be used in many households and workplaces.
Listed below are some potential use cases for IOTA:
- Smart cities- While a number of Smart cities have been announced, the problem in setting them up is data integrity. IOTA seeks to solve this and it has tied up with Taipei with the aim to make it a smart city. It will be used to monitor air pollution in the city. IOTA usage will ensure more liberal data access. It will make relation between the residents and authorities easier.
- Automotive industry- The easy payment mechanism of IOTA will be useful for the automobile industry. Electric and solar powered vehicles can gain by using the cryptocurrency for parking, toll charges calculation etc.
- Smart Energy- IOTA can be used for promoting electric car usage. It has an alliance with a Dutch power company named Elaadnl for setting up smart charging stations. The crypto will be used in automatic payments post recharging.
- eHealth- Post covid, the importance of eHealth services has been understood by all. The healthcare sector has been using IoT tech for better data storage and research. So, the health care providers may use IOTA to enhance data safety.
Apart from these, IOTA can be used for dealing with wearable and mobile devices with embedded web access features. These devices are being embraced by millions of people and they share and exchange mammoth amounts of data every day. The cryptocurrency can be used to enhance data security. In the near future, such devices may come laden with payment options and that is another area IOTA can be used in.
What are the future prospects of IOTA?
The future prospect of any crypto project is usually assessed by its achievements and alliances with strategic partners. Despite the hiccups and hurdles faced by it, IOTA has managed to bag some coveted alliances with MNCs and tech behemoths. Some of the top IOTA partners comprise brands like Fujitsu, Jaguar Land Rover, and Volkswagen. Most of its allies are aiming to leverage IoT.
Like most promising crypto projects, IOTA has a thriving online community. It is especially active on Twitter with more than 130k followers. It also has a good presence on Reddit.
For quite some time, IOTA was the only IoT-based crypto project but that is no longer true. It now faces competition from a handful of contenders. The noteworthy rivals are IoTex, IoT chain, and Hedera Hasgraph.
Summing it up
IoT is a promising and thriving sector and it is undergoing rapid evolution too. A crypto project that focuses on IoT and enables charge-less transactions with immense scalability is worth looking into. It has already bagged some prestigious alliances. However, the IOTA project is not without its flaws. Certain security issues have to be ironed out. If the team manages to erase the few glitches, it will be a crypto project worth investing in.