Whilst Bitcoin has been making the headlines, IOTA has quietly been moving up the crypto ranks, with an increase of more than 600% in market cap since it was first listed on exchanges in June 2017.
What is it?
The term IoT (internet of things) refers to devices connected to the internet, these devices communicate with humans, applications and each other. IOTA is a company looking to make a breakthrough in the IoT industry by 'making every technological resource a potential service'. In layman terms, your car, computer, printer, bicycle or any other device (with a chip) can be monetised by leasing it out to someone when you're not using that particular device.
Blockchains are good, but are they good enough, now?
The Bitcoin blockchain has come under much scrutiny for its inability to scale and handle more than 4 tps (transactions per second). It's becoming apparent that Bitcoin is increasingly being viewed as a store of value, like gold, rather then a payment method. Ethereum which many have viewed as the heir to the throne has also had its own problems with its network slowing down significantly by virtual kittens... The crypto network which boasts a throughput of 15tps was slowed down significantly by the 'cryptokitty' game that only launched on the 28th of November. This puts into question its viability as a scalable platform moving forward.
The blockchains structure of its rigid blocks result in a modest throughput limit, so how does IOTA tackle this problem? IOTA operates on an alternative distributed ledger called the 'tangle'. The tangle works with the users validating the two previous transactions, unlike the bitcoin blockchain which requires miners to validate transactions by solving mathematical equations. This means there are no transaction fees, and a faster throughput as the network is not influenced by the miner workload. The tangle network works like a snowball effect, the more people that use the network the quicker the network becomes, with the blockchain this is the opposite. The graph below depicts the congruent relation between the network capacity and transactions.
The potential of the tangle network has been recognised by big players such as Samsung, Microsoft, Volkswagen, Cisco and many other established names as they have chosen to participate in IOTAs launch of its data marketplace demo which will run for the next 2 months. This is a big vote of confidence for IOTA from some of the biggest names in the world of business. Since this news announcement was published on Nov 28th, the price has surged more than 200% with many investors going through the FOMO (Fear of Missing Out). This surge may retrospectively be viewed as the beginning of the IOTA surge to the top if the data marketplace demo is successful. Subject to a successful demo, this should inevitably lead to partnerships and further adoption of IOTA as a cryptocurrency in 2018. Keep an eye out on the demo results.
IoT - Unleash the data
In a report by McKinsey & Co in 2015, the notion regarding the obstacle of 'data silos' was introduced. This is data that is closed off and not available freely. McKinsey reported that over 99% of data which is within this 'data silos' is lost to the void. This is data that may be extremely valuable to many industries and people. We are in an era where data is the new oil, and a breakthrough to this data silos is highly valuable, especially for corporations who can financially benefit from IOTAs 'data-lake'. This is the reason why IOTAs data marketplace demo has received a lot of attention from these reputable companies. IOTA has unlocked the ability to move data around with no fees and at speed through its unique tangle structure. As the Deutsche Bank stated in their recent report "IOTA has solved the fundamental problems of blockchain, because it is scalable and does not cause any costs.". With this sort of corporate vote of confidence, there will be an increase of demand for IOTA as a service and for long-term investment purposes.
Graph (Statista): The number of IoT connected devices are projected to increase by 51% inside the next 3 years to 30,73 billion.
With the IoT still a relatively fresh concept, the opportunity is still ripe for companies such as IOTA to grab a foothold and be at the forefront of the IoT revolution. According to Statista the IoT market is worth more than one billion U.S. dollars in 2017. With the revolution of blockchain technology and the introduction of entities such as IOTA, this should propel the IoT market into exponential growth. Statista projects the market to increase by 270% inside the next 8 years, although this figure seems conservative when considering the appeal this market has already garnered by companies such as Microsoft and IBM. Dominik Schiener (Co-founder of IOTA) stated yesterday that IOTA are currently establishing sensors that will allow 'Microsoft to sell their data directly on the IOTA marketplace'. If companies such as Microsoft are preparing themselves for the breakthrough of the IoT market, the market cap of IoT could catapult in the coming years.
Investor confidence growing
IOTA was first listed on exchange in June 2017. IOTAs price has surged more than 1000%+ in the space of 7 months. This is an incredible achievement for a coin thats not even a year old.
If we look at the number of IOTA addresses with positive balances, we can see exponential growth. This is a sign of a coin that is generating excitement amongst the crypto investment community.
There is no reason why IOTA cannot keep increasing at this rate, especially with the data marketplace demo expected to provide conclusive results regarding the IOTA platform.
The security dilemma: Tangle vs Blockchain
The rise of the blockchain phenomena can be credited to its impressive cryptographic algorithm. Users on the blockchain have a public and private key, public key is what is used to receive/send cryptos, with the private key storing the cryptos. With the current computer technology, it is practically impossible to couple a public and private key, even if hackers tried it would take so much computer power and time that it would not be worth it. However, technology doesn't stand still, especially when it comes to computers. In steps quantum computing, which many suggest is the biggest threat to the blockchain. For example, Google has been running a quantum-computing project alongside NASA for the past few years now, and they have developed a quantum computing machine which is on average 100,000,000 times faster than the average user laptop. This example alone showcases the exponential increase in power that quantum computing possesses. As quantum computers become readily available to more people in the next 5-10 years, the threat towards deciphering public/private keys becomes more realistic. This does not mean that the blockchain technology will not develop to combat quantum computing but we're yet to see the blockchains solution to the incoming threat.
On the other hand, IOTA has been described as 'quantum-proof', and regards this as one of their USPs. Unlike other cryptocurrencies, IOTA uses a quantum-resistant algorithm, the 'Winternitz One-Time Signature Scheme' (WOTSS). Any quantum attacks towards WOTSS cannot compromise the security of IOTA transactions, thus giving IOTA a security advantage over many other cryptos. This is a factor that will be taken into consideration with potential future partnerships, especially where there is data involved.
IOTA still has a way to go
IOTA is still behind when it comes to its infrastructure. There is still not a notable IOTA wallet worth discussing. The 'centre of blockchain technologies' of UCL (University College London) are currently working on an IOTA wallet which will be available on desktop and android/IOS. Below is a snapshot of what the wallet-in-development will look like once it has been released.
Once IOTA has a stable and recognised wallet, this will give investors more confidence to 1) Invest in IOTA and 2) Hold on to their IOTA. The wallet is due for launch latest Q1 of 2018.
Limited access to IOTA
IOTA is yet to be listed on a number of major exchanges. It is currently listed on notable exchanges such as Bitfinex and Binance, however, it has yet to be listed on Bithumb (the biggest cryptocurrency exchange) which would open up the IOTA market to South Korea. Not to forget, Bittrex is also yet to list IOTA on its exchange. With the rate that IOTA is growing, there is a very high chance that these two exchanges will list IOTA in 2018. Once IOTA is listed on these two exchanges, we should see more money flooding in from the Asian and American markets.
Overall, my bullish perspective on IOTA is not so much garnered by the 'speculative mania' of the crypto market. My positive outlook on IOTAs future is based on the understanding that data is now one of the most valuable commodities. IOTA is the only genuine crypto that is promising to create this data-lake where data moves quickly and freely, opening up an abundance of opportunities for all industries.
Satoshi Nakamoto created Bitcoin with the idea of giving the power back to the people through decentralisation. Unfortunately, with transaction fees surging and mining pools becoming more centralised, it feels to me that IOTA is the one of the few sticking to the 'roots' of decentralised cryptocurrency through its fee-less and a miner-less structure.
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