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IOTA and the Internet of Things


What is IOTA?

IOTA is a revolutionary new transactional environment and data integrity layer for the “Internet of Things”. It’s based on a new invented architecture concept called the Tangle, which gets rid of the inefficient ways of handling the current Blockchain designs and introduces a new way of reaching consensus in a decentralized peer to peer system. For the first time ever, through IOTA people can transfer money without any fees / costs. This means that even infinitesimally small nanopayments can be made through IOTA.

Check out IOTA.org for more infomration and details about the project.

If you want so then IOTA is the missing puzzle piece for the Machine Economy to fully emerge and reach its desired potential. I envision IOTA to be the public, permissionless backbone for the Internet of Things that enables true interoperability between all devices.

One of the biggest possibilities for human life transformation is the Internet of Things (IoT). As a matter of fact, it could be the most rapid developing market in the next few years but the one thing that should be seriously considered is that there is interconnection in the development of related areas. Cryptocurrencies have proven that they also will be part of our daily lives in a pretty near future. Ever since the release of IOTA, a new perspective has been introduced not only for the Internet of Things but also for the Industry 4.0 itself.

Decentralization is now considered to be essential due to the intense growth of the cryptocurrency market and eventually, we will come to embrace that fact earlier than expected. It has been a long-term belief that a groundbreaking system called blockchain will not only change the lifes of the people around the globe but also the current banking system. IOTA will start where the blockchain ends.

This article is all about the relevant information on how IOTA will modify the economy of the Internet of Things. It has been common and popular for many of us talking about driving cars, smart fridges, and even highly advanced drones but very few have knowledge on what happens in the background or internally.

The Internet of Things (IOT)

The Internet of Things had to surpass many challenges and obstacles to become an incorporated part of our every days life. Right now, its contributions can be seen and experienced through the use of fitness trackers, smart watches that collect data from our morning routine until late at night and even while you sleep. But in just a few years, it will evolve and you will see that almost all of devices we use and all the machines that are deemed useful will be interconnected and will correspond to each other. With the idea that everything is intertwined and is able to communicate with each other, the dilemma in establishing an efficient infrastructure and hardware/software standards arises. This means that scaling can lead to different problems.

The cryptocurrency market won’t be an exception and also fully affected by the interconnectivity of machines (devices).

Breaking the Tradition    

Central payment processors process millions of transactions always with a fee and that is also the way on how most of the banks earn their money today. That is also what we have grown accustomed to. But what brought change to this kind of dynamics is the micro-transaction that was mostly based on blockchains. When a guy named Satoshi Nakamoto developed Bitcoin, the world has beheld lots of different cryptocurrencies and projects that discuss various problems of the economy and society but there have been no discussions so far when it comes to machine to machine transactions.

This is because most of these currencies founded on blockchains and mostly are associated to Bitcoin or Etherium growth. The dilemma is that block chains manifestations fail to scale an extraordinary amount of dealings per second and at the same time they give steady groundwork and function on a lightweight hardware. Furthermore, higher fees go along with scaling. The good news is that IOTA creates a genuine difference it is a new kind of cryptocurrency that is leaning towards Machine-2-Machine dealings/transactions. The main solution of IOTA is to serve the machine economy by making it possible to have free M2M payments.

Internet of Things infographic

Wonders of IOTA

The beauty in IOTA is that it goes beyond blockchain. In other words it is the first cryptocurrency that gives environment based on block less blockchain. IOTA provides resourceful, safe, lightweight, real time micro-transactions for free. It is also considered as an open and decentralized cryptocurrency that is engineered particularly for the Internet of Things. The real-time micro transactions provide a totally new environment that is disposed and adaptable for scale. Another reasons why IOTA is considered an astounding innovation are the facts that it has no transaction costs, provides potential for unlimited scalability, and offers offline transactions.

The Tangle

IOTA is also known as a substitute coin or more commonly as altcoin to many people. However, in fact IOTA provides more than simply that. It is an extension of blockchain ecosystem. IOTA is actually based on the Tangle rather than of the blockchain logic.

But what is this Tangle? The Tangle, to put it simply, retains the block chain qualities of the dispensed archive and secure transactions but it does not work with blocks. The Tangle uses something that is called a Directed Acyclic Graph.

Directed Acyclic Graph

Many consider directed acyclic graph (DAG) is better than the blockchain. This is due to the fact that DAG provides various qualities like no transactions, unlimited scalability, and even offers offline transactions that blockchain based systems simply don’t provide.

Blockchains simply work where numerous transaction are shoved in each block and after that, miners verify them. This means that with the rise of transaction, there is a chance for miners to get more jobs. This is contrary to Bitcoins since with bitcoins, the more transactions there are, the higher the transaction fees will get.

On the other hand, the Tangle works in a way where each deal forms a new block that is proven by it. To be able to complete the verification, there are two indiscriminately chosen dealings in the network that must be verified. IOTA’s structure is innately distributed on a level where no blockchain can mat. This is because the users and validators are performed by one in Tangle.

The costs involve usually in these kinds of transactions is the verification. If the Tangle verifies itself, then there is no need for transaction fees. IOTA creates a self-dependent economy that is founded on demand. Another benefit of the Tangle is its limitless scaling. Since scalability is one thing that we need to address in cryptocurrency is scalability. The IOTA network has countless of scalability because in every transaction proves two new dealings in the network. If a user joins the IOTA network and tries to do a transactions, IOTA will grow and even scale smoothly.

The “Internet of Everything”

Internet of Things is multiplying like a virus and it is expanding incredibly. Every week, we witness start-ups introducing a new “SmartYouNameIt”. This is where technology is leading through and has been known to be revolutionary. As mentioned previously, it is highly possible to have a vast development where there will be smart transport, homes, finance, plans, and everything that has room for innovations. There are likely no limitations at all.

Smart Everything

The Internet of Things is not just mere rumors and not just all about a brand new hype. It has the potential to revolutionize the way things work in our world and daily lifes. The only challenge relies on the interaction level. Once it has been addressed, things can just start from there. If the world has the aptitude to communicate, all things will be just within reach and convenient. But this kind of idea brings the possibility of having more machines than humans. This is why we need to be able to communicate with machines and provide them a network to communicate with other devices as well.

IOTA can generate an environment for the Internet of everything. Its proposal can be offered as a link to link, correspond, and progress. The interconnectivity is the significant concept for our new economy to grow. With interconnectivity originates unbelievable vast quantity of data that devices direct and obtain every second. To make good use of IoT and IoE, we must learn how to link the cyber systems together.

If the Internet turns down, the entire system will likely to be paralyzed which could lead us into an economic and financial desaster. In fact we need to ensure a 24/7 stable communication. This means that the Internet has been the most effectual tool but it is just too expensive to sustain. Furthermore, if we’re to dependent on a single channel, things can end up in a catastrophe. IOTA established a procedure on which the machines can correspond through other stations, such as Bluetooth, Z-wave, ZigBee or LoRa – In other words -> Offline Transactions!


The market of Internet of Everything is swiftly rising. Sensors are the extent of a market that has substantial influence on our economy and social life. The amount of sensors is increasing tremendously due to the demand of people. Sending and receiving data is just the start of the sequence. There is no qualm we will demand on more power to compute. The large data in our new economy requires to be scrutinizing first and conveying as shortly as possible. Cloud storage, currently, cannot deliver us the real-time effects that we might expect or require. We require smart sensors that have computational capacity and able to work with other channels as well. Data will be restricted and there is a need of potential collaboration among companies and individuals. IOTA then, will offer the manifesto for exchange (data for money).

Once data has been gathered, it can be sold together with your free storage. Trading it means to get reimbursement with the IOTA currency. Bandwidth and energy will be distributed other than computing, data, and storage.

The upcoming challenge

With increasing amount of keen devices, there will be more data traffic. Data means information and information means money. Every IoT (IoE) statement must be encoded. One of the IOTA modules is known as Masked Authenticated Messaging that secures and encrypts all data streams. Only authorized parties will be able to read and renovate the streams. The most important factor to take note of is its security. With the rapid growth in technology, we become more susceptible to software or hardware breakdown or even hacker’s attacks. This is why security or cyber security should be one of the first topics when directing for a technological growth and change.

Quantum computation and mechanics instigate headaches to security engineers since in the next few years we can see probability of accessible quantum computers. This will interrupt most of cryptographic rules used today. In other words, our world can be prone to danger with quantum computers. No one is fully equipped to embrace the cybersecurity challenge. Fortunately, IOTA is capable in giving solutions because it utilizes 2 separate devices to protect against quantum risks.

Extension Interface

The method for developing IOTA is to design and engineer essential simple principles known as underlying edger protocol and then prolong its utility within the IOTA eXtension Interface (IXI). The good thing here is that anybody can create IXI for their own needs since it is considered a fast and adaptable explanation to quicken development. IXI sections are the reason why IOTA stays lightweight and enhanced.

The History of IOTA

IOTA in 2014 was first known when a small group industrialized a brand new type of microprocessors for IoT and distributed computing. The insistent setback in greater progress was absence of clear motivation for interoperability. Machine-2-Machine economy is and will be founded on micro-transaction. It is improving but we still encounter excessive fees, obstinacy, and uninterrupted complications with scalability in block chain development. IOTA was an impression to generate a reparation layer that will serve as the foundation of the Economy of Things where technologies can exchange supplies successfully and strongly on-demand.

IOTA in 2017

The year 2017 will be the first year when huge transformations regarding IOTA will start occurring. The number one IOTA importance of 2017 is to create the IOTA program developer appealing and responsive.

IOTA Sandbox

The IOTA Sandbox provides the developers gears, utilities, and environment for “just code”. Downloading is no longer necessary and they can just start coding. The Sandbox is significant since IOTA is an open source, so anybody can partake in the improvement. IOTA wants more developers who form core and apps to develop the ecosystem and brand it world-wide.


The IOTA Foundation is accountable for emerging and upholding the essential open source protocol IOTA. It is conveyed in Germany as an official non-profit Stiftung. Telecommunication companies to your home deliver the Internet connection. In order to get this done, you typically demand to bid the company, sign a contract and pay regular fee. This means with IOTA, you don’t need to pay monthly fee. In the forthcoming where IOTA yields place, your device will connect to the Internet and it will bandwidth data real-time as you browse the Internet.


Among the many of the collaborations of IOTA are Innogy and Canonical. Innogy — a spin-off company of RWE, the second largest energy company in Germany, working together on development of smart cities and energy mobility. Canonical — the company behind Ubuntu, working together on new telecom-focused applications.

Make sure to visit this great project and even think about the great opportunity to invest into IOTA!

Thorsten Burger
Thorsten Burgerhttps://thorstenburger.com
Digital transformation entrepreneur for about 20 years. Worked for big brands around the world as advisor, consultant, senior project lead and head within the financial industry, online banking, e-commerce and digital marketing. I am a digital asset & blockchain enthusiast living in Switzerland. All of my publications reflect my personal opinion and are no financial advise in any sense. Happy to connect via LinkedIn, Twitter


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