Over the past couple of weeks, we’ve watched Bitcoin continue to drop in value. Perhaps it’s temporary or perhaps the public is simply losing interest. Regardless of the fact that experts with various backgrounds could debate all day about Bitcoin’s future, we’re here to talk about another cryptocurrency: IOTA.
In technical terms, IOTA is the cryptocurrency and distributed ledger without blockchain. But what does all of that mean to the non-developers of the world, and how does it differ from the other cryptocurrencies?
1. No Mining
With IOTA, the first thing to take note of is that there’s no mining. IOTA allows users to handle their own proof-of-work (PoW). In effect, every IOTA that will ever be discovered is already on the network and in someone’s wallet. This makes IOTA very energy-efficient as there’s no costly graphic cards warehouses of crunching numbers.
2. No Fees
Since you do your own PoW, there’s no fees. Fees are incentives for miners to validate your transaction, but since you’re doing all that work, you don’t have to pay out a cut when you want to send IOTA. This avoids a lot of complications that other cryptocurrencies have when it comes high fees. This makes for an extremely attractive use-case for the public considering transactions currently are at the cost of the consumer or a business.
3. Faster Networks
In order to process a transaction, there is a confirmation of two other transactions. The more the users, the network faster. This tackles the scaling issues that Bitcoin and Ethereum are facing. About a week ago, some Ethereum transactions were taking 8 hours to process due to the network congestion related to Crypto Kitties. Both Bitcoin and Ethereum have plans to address the scaling issues, but IOTA’s technology is already 20x more transactions per minute than both Bitcoin and Ethereum combined.
4. IoT and more
IOTA is most commonly looked at for Internet of Things technologies. Why? Because it is perfect for machine-to-machine transactions. Devices are becoming more connected with each other every day. Some are even deriving their own value, such as computer hosts.
This becomes interesting when machines can begin bartering with each other based on preferences or needs. An example of this could be one self-driving car paying another self-driving car to overtake its’ position on the road, based on a user’s preference for a “slow or profitable ride”.
5. Data Validation and Security
Since there’s no penalty to “write data” to the network. It’s perfect for validated data streams. Consider being able to authenticate data that came from a specific source. This allows for decentralizing and validating critical data. For example, you can have your phone write to the network “unlock my house” and now your house can process that command without having to go through a middle-man service like your security provider; this means there’s less points of vulnerability.
While there are many strengths to integrating IOTA into our current technologies, there are some issues that have to get solved.
- Right now, it’s very difficult to discover new servers to send your traffic too. This leaves a lot of users using the default servers and as a result sometimes these servers get overwhelmed.
- IOTA also currently uses a “coordinator” to prevent network attacks. IOTA claims this is necessary until the network is large enough to provide the necessary security against double spending. Double spending is a cryptocurrency attack where the same funds can be used more than once. This means that for the time being, the network isn’t truly “decentralized” as it has a supervising agent.
- The wallet also is not very friendly to use, and is made more for developers than the greater public. This will change after UCL releases their new wallet for IOTA: https://medium.com/iota-ucl/iota-wallet-refresh-onboarding-2f5ccd5e467a
All in all, it will be an exciting year for IOTA. It is clear that IOTA has been an underdog in the cryptocurrency race.
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