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Market trends report
By Sofia Batchelor
By the end of 2020, there will be more than 20 billion IoT devices, says research and analysis firm Gartner. At home, these might be things like smart thermostats, smart speakers, and smart vending machines. The technology has also been trialled by logistics and manufacturing companies hoping to optimise supply chains. However, these advances don’t come without problems. Experts have questioned the security of IoT networks. The technology also requires a fast and reliable connection at all times.
IOTA is hoping to solve these problems. The new crypto token is designed specifically for IoT devices. Because IOTA doesn’t rely on the mining of ‘blocks’ to create its distributed ledger, secure data transfers are possible on a huge scale, all without incurring transaction fees. In June 2019, the price of IOTA jumped from $0.35, with a market cap of less than $1 billion USD, to $4.17, with a market cap of $11.6 billion USD. More than 3 million transactions had been processed by the platform at the end of 2016. IOTA’s developers hope this signals its future role as a ‘gold standard’ for machine-to-machine communications.
IOTA doesn’t rely on blockchain, like other crypto tokens. Instead, it uses a new data structure called Tangle. Tangle is a decentralised peer-to-peer network, which doesn’t use ‘blocks’ to create its distributed ledger, but instead, uses a new system called Distributed Acyclic Graphing (DAG). DAG allows payments to be validated in ‘clusters’, without the participation of the whole network. Each transaction is validated by two others. This system allows for greater efficiency, greater security, and, most importantly, no transaction fees. IoT devices would, therefore, be able to participate in vast numbers of micro-transactions without overburdening the system or running up transaction costs. It also means devices won’t need to be online all day.
IOTA’s creators hope that the technology will be key to developing the ‘smart cities’ of the future. The IOTA Foundation, a German non-profit, is forging corporate partnerships to work towards this goal. Partnerships with Cisco Systems and Samsung Electronics aim to create a “data marketplace,” which can be monetised as the technology advances. According to IOTA founder David Sostenbo, the eventual aim is to enable a “paradigm shift” to IoT by enabling a “de facto ledger of everything.”
Other partnerships involve trials of practical use cases for IOTA. In April 2018, Dutch developer ElaadNL released a charging station where payments can be made using IOTA. Phones can communicate with the charger, allowing instant machine-to-machine payments. ElaadNL’s managing director said the project showed “the ability of using real machine to machine communications and micropayments, with the use of IOTA as a secure ledger for these payments and data.” ElaadNL is also working on new technology for charging electric cars.
Jaguar Land Rover is trialling something called ‘smart wallets’, using IOTA’s Tangle for data and value transfers. The company hopes that cars equipped with smart wallets would be able to report road conditions and hazards to relevant city authorities and to be paid in IOTA tokens for the data they share. These tokens could, in turn, be used to pay for parking, tolls, and charging. Developers are hoping this lays the foundation for IOTA’s role in the market for autonomous vehicles. By 2040, sales of these are expected to surpass 33 million. The project also lays the groundwork for ‘smart cities’ where local authorities can rely on IoT data to optimise services.
IOTA’s technology has also been applied to manufacturing and logistics. Fujitsu, Japan’s largest IT company, is using IOTA technology to observe and improve automated factory lines. Rolf Werner, CEO of Fujitsu’s Central European division, said the possibilities for IOTAs use in this area were “immense,” and included supply chain monitoring and secure identity management.
Though the potential use cases for IOTA’s technology are vast, its development has not been without problems. In 2017 it was criticised in a study by MIT and Boston University. Researchers claimed they had identified a problem with the hash function of Tangle, IOTA’s data structure created security issues. MIT’s Media Lab went on to issue a broader criticism of IOTA, alleging that the token’s network is “not truly decentralised,” and that “to claim IOTA is free of fees is misleading.” The IOTA Foundation said they were able to fix the security problem quickly, but researchers at MIT continue to express concern.
With crypto technologies like IOTA, it can be difficult to discern the real potential for growth. Many will be unsure of the dynamic behind the token’s recent price surge. The Revain Platform makes things more transparent. Users can access authentic feedback from multiple authors. Revain is completely blockchain-based, which means all reviews are stored in blockchain and can’t be manipulated by any party in any way. Create an account to see feedback about IOTA, as well as other crypto tokens.
Simplifying the Internet of Things: Machine Economy was originally published in Revain on Medium, where people are continuing the conversation by highlighting and responding to this story.
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