IOTA

Summary

The machine age has already begun. Traditional payment systems were built for people, not machines. IOTA is a promising platform for efficient M2M payments and the machine age. There are several interesting IOTA ecosystem projects and rapidly growing patent applications. The crypto currency IOTA is still a very risky investment, but with great potential. The IOTA Foundation should focus on projects and activities that keep an eye on the growth of M2M / IoT payments and volumes.

?The machine age has already begun

For many years there have been significantly more machines than people on this earth. More than 20 billion machines are now connected to the Internet. And these machines are already talking to each other. In the event of a burglary, alarm systems report to the police, fire alarms to the fire brigade or blood pressure devices to the emergency medical services. Our direct debits for rent, our Netflix subscriptions and our electricity costs also independently book fixed or variable amounts monthly from our accounts or credit cards. With Amazon Dash Replenishment, there is a first platform with which our printers can independently order toner cartridge and our washing machines can reorder new washing powder - without our human intervention. This is also referred to as the “Internet of Things” (IoT). By 2025 there will be four times as many interconnected machines as people. The machine age has already begun. But we are only at the very beginning of these developments.

Traditional payment systems were built for people, not machines

Why, for example, do street lamps have to shine all night when there are no people nearby? And why does the general public have to pay for it? It would be much better if the street lamps only shine when the light is actually needed. And it would be fair if only those who use the light at night pay for it, and not everyone through tax contributions. - The corresponding sensor technology to enable the street lamp scenario already exists. One of the remaining questions is: can such a scenario be implemented efficiently with today's payment systems? Can people and cars be clearly identified at night and the associated light consumption billed efficiently? - Rather not.

Traditional payment systems were built for people, not machines, and charge costs from a few euro cents to many euros - depending on the type of transaction (transfer, direct debit, international payment, credit card payment, ...).  

Back to the street lamp scenario. In most cases, the respective costs for consumption will be very low - in the euro cent range or even fractions of a euro cent. The billing costs alone then exceed consumption. A new payment system with significantly lower transaction costs than today's systems is needed for such a scenario. And this is exactly where some new crypto platforms that specialize in machine-to-machine (M2M) payments come into play.

IOTA - a platform for efficient M2M payments and the machine age

IOTA is an excellent example of this. IOTA has set itself the goal of connecting the Internet of Things with the secure exchange of data and values. According to coinmarketcap.com, the associated cryptocurrency has a market capitalization of over one billion US dollars.

From a purely technical point of view, IOTA is not a blockchain application, but the so-called IOTA Tangle - a directed acyclic graph. IOTA is also not yet completely decentralized. Current developments want to make the IOTA platform completely decentralized. However, IOTA has known core elements for future banking platforms, such as node software for distributed operation, wallet software for the safekeeping of values (MIOTA), developer tools for building applications and an ecosystem for organizing and expanding the community. 

IOTA currently does not incur any transaction costs, which makes the platform ideal for M2M payments. Obviously this has already inspired some startups and research departments of large companies to develop new solutions based on IOTA.

One promising early-stage project for the IOTA ecosystem is Espiota. The German Espoita team is developing a micropayment device that specializes in receiving and sending IOTA in order to gain complete control over the time and energy consumption of devices.

Jaguar Land Rover is also already developing prototypes with IOTA. Drivers who share data on potholes and traffic jams, for example, should be rewarded with IOTA tokens. Car sharing can also be organized with IOTA. And an IOTA wallet connected to the vehicle can pay for parking tickets or recharging batteries completely automatically.

The innovative project "Society2" is working on the next generation of decentralized social media. The main features include protection of privacy, ownership of personal data and digital identity. Society2 expands the IOTA platform so that it serves as a toolbox for standard functions for social media.

Interesting IOTA ecosystem projects and rapidly growing patent applications

Further interesting projects can be found on the IOTA Foundation Ecosystem website. And the number of companies that refer to IOTA in their patent applications is also growing rapidly. As early as August 2020, more than 195 patent applications refer to IOTA. These include well-known companies such as Siemens, Bank of America, Alibaba, Sony, Daimler, Deutsche Telekom, Ford, Bosch and Intel.

Among other things, Bank of America applied for a US patent on distributed ledger pass-through processing for syndicated loans in July 2020. T-Mobile USA references IOTA in its patent application "Provision of edge devices as computing nodes in a cellular blockchain network". And Medici Ventures considers IOTA to be a suitable platform in its patent application “Context-based filtering within subsets of network nodes when implementing a trading system”.

The crypto currency IOTA is still a very risky investment, but with great potential

Nothing ventured nothing gained. And high profit prospects usually also involve high risks. In my opinion, this wisdom also applies to the crypto currency IOTA. In the past few weeks I have rated IOTA along the eight dimensions of “people”, “technology”, “tools”, “crypto exchanges”, “finances”, “business model”, “market potential” and “sales”. In doing so, I get a value of 3.25 on my rating scale (from 1 to 5). The value 5 means “very attractive”, 4 “attractive”, 3 “neutral”, 2 “not attractive” and 1 “very unattractive”. IOTA currently gives a very inconsistent picture. So not for the faint of heart, more suitable for enthusiasts.

From my point of view, the future of the IOTA platform and the associated cryptocurrency stands and falls with the growing number of M2M / IoT transactions and the M2M / IoT volume. These two key performance indicators (KPIs) provide objective, measurable and transparent information on the actual use and benefit for the various IOTA projects and initiatives.

The IOTA Foundation should therefore focus on projects and activities that keep an eye on the growth of M2M / IoT payments and volumes.

See also the respective Slideshare presentation: https://de.slideshare.net/ashridge/iota-238231076