You may have heard of the term “internet of things” or IoT, which describes an ecosystem of internet-connected devices. It is a concept that is easy to imagine considering that more consumer devices are becoming connected and it is certainly a trajectory that the world is headed towards. But what if IoT crosses paths with the rapidly developing internet of value? This is the kind of logic that led to the creation of IOTA.
What is IOTA?
It is a project that built the first decentralized ledger technology for the internet of things. It explores the idea that IoT devices will not only be able to communicate with each other in the future, but also conduct transactions with each other. IOTA is the first project to pursue the IoT direction and currently the only one doing so, making it a unique project.
IOTA’s uniqueness also extends to the fact that it does not have a blockchain like many other crypto projects, and instead uses a decentralized ledger technology called the Tangle. The latter is built using a mathematical concept called the Directed Acyclic Graph that functions as a ledger for tracking transactions on the network. However, it does not have blocks or chains and instead takes a different approach where the user is also the validator.
The project’s unique approach eliminates the need for transaction fees. Moreover, it leverages the computing power of the user’s device to process transactions. IOTA believes that data will be the most valuable resource in the Internet of Things and that a medium of exchanging that resource will be necessary thus the reason for its creation.
IOTA’s approach is forward-thinking because handling a huge amount of data such as the data generated by IoT would overwhelm most blockchain networks out there. For reference, current predictions suggest that there will be roughly 100 billion IoT devices in existence by 2025, which is equivalent to roughly 12 devices for every person on earth. IOTA’s approach towards developing a lightweight protocol that can host every IoT device, and fee-less approach makes it appealing for many industries because it allows every sensor to participate in the network.
An example of IOTA’s application
Autonomous vehicles are a great example of how IOTA can be integrated into the IoT segment. For example, an autonomous car will have its own wallet and can process transactions when it carries passengers when paying parking fees, charging, and more, autonomously. The vehicle can potentially sell road information to the relevant authorities, such as information on damaged segments of the road. IOTA aims to act as the settlement protocol that facilitates this kind of a future.
IOTA’s role in the grand scheme of things
IOTA is also the native cryptocurrency on its network and it will facilitate transactions between all the IoT devices connected to its network. It is currently trading at $0.911 with a $2.53 billion market cap and a circulating supply of 2.77 billion IOTA.
IOTA has had quite an interesting performance in 2021 considering that it traded as low as $0.31 in January. However, it is heavily discounted from its all-time high of $2.67 which it achieved in April this year.
IOTA is currently one of the most promising crypto projects, whose performance is limited by the slow pace of IoT developments. Smart cities and smart autonomous vehicles are still some way off, and it will likely take some more time before such a future is achieved. However, once it is realized, the demand for IOTA will likely escalate, leading to potentially higher prices. IOTA uniquely positions itself as the only project focused on a machine economy, and one that will play an important role in the next industrial revolution.