IOTA Technology: The Network for Micropayments and the Internet of Things
Under IOTA Technology, one of the most innovative technologies and in which most efforts are currently being invested, is the Internet of Things (IoT), which is the connection of any type of device to the Internet, from a washing machine to a light bulb or a lock.
At present, the IoT is constantly developing multiple applications, ranging from multimedia marketing to the management of intelligent cities, or, in its most usual form, the provision of intelligent houses.
As a very promising technology, it is estimated that by 2020 more than 50 billion devices will be connected in industry and in homes. But this expansion will depend on how many challenges are overcome, including generating a standard equipment identification system, a standard communication platform between different manufacturers, how many connected devices will be monitored, their performance for all types of applications, how their systems will be maintained and supported, and, one of the most important, how to improve security and privacy.
In addition, being connected to the Internet makes any electronic equipment vulnerable to attacks by DDoS, ransomware or others, as well as to filtrations of the information they share. To these problems, several experts have visualized possible solutions applying the blockchain technology to the IoT, to the point of calling it the “missing link” to solve the privacy and trust problems it currently has.
Its arguments are based on the fact that the blockchain is characterized by having a decentralized and public network; that it has an encrypted data transfer, that its nodes filter the information from the network and once it is accepted by all of them, it gets immutably recorded.
With this vision, multiple projects and consortia have been developed to create the union of both technologies. Among these projects is the IOTA technology, which provides an entire blockchain project focused on the IoT.
IOTA technology, a distributed Accounting technology different from blockchain
In the white book of the IOTA technology, they concentrate on their distributed accounting technology (DLT), which they call Tangle. This network has an acyclic directed graph structure (DAG); that in principal maintains the same characteristics of a blockchain, of being a distributed database, a peer-to-peer network, and that depends on a mechanism of agreement and validation of its transactions; but it differs from this by its DAG structure, a non-cyclic network, and its mechanism of agreement.
In Tangle there are no “blocks” containing a group of transactions; rather, these are the network itself, they are even the components that directly confirm the validiton of two previous movements and indirectly those of an entire sub-section of the chain. With this mechanism, the consensus on the information added to the network does not depend on a group of participants with an assigned function in it; as in Bitcoin the miners, but all the users are those who are involved in the approval of the transactions, validating more of them with their use.
In this way way, the president of IOTA Latino, Saul Ameliach, explains that the consensus is not separated from the process of making transfers; these are the ones that allow it to be a scalable network without any commission.
The process of a transaction in IOTA has 3 steps: Firm: the transaction with the issuer’s private key
- Tangle top selection: it uses the algorithm (MCMC), which makes a sampling of the movements not validated with a Markov process, defined by the Tangle; with the purpose of achieving a balanced distribution of validation. Once executed, it chooses two transfers carried out, which will be confirmed with another incoming one.
- Proof of work: in order for the transaction to be accepted on the network, the node that emits it must carry out some Proof of Work with the Hashcash algorithm, which seals the messages towards the network with an efficient consume of the CPU that executes it, in order to avoid saturation attacks of sent messages (spam) and groups of compromised nodes that try to modify the network (sybil attack). But this is a much lower consumption than that generated by Bitcoin’s PoW, since it only focuses on preventing attacks and not on mining.
- The current focus of IOTA technology has three main edges, which are: to be a platform for micropayment transfers without commissions, to protect the integrity of the information it records on your network and to operate as a system without scalability problems. According to its creators, these characteristics are what make it an excellent platform for the Internet of Things and can even work for other applications focusing on micropayments.
Progress in the development of the project
The project has been under development since 2015 and since then the entire Tangle protocol has been refined until their white book was published in April 2016. By July of the same year they launched their principal network, along with a repository of how to implement it written in Java, published in their GitHub. By May 10 of this year, they made public their test network where developers can generate multiple trials and this was combined with a bug bounty program, varying the payments to developers according to the severity of the error they get.
Since they have focused on providing the necessary tools to developers, they have been generating several applications, such as Tangle viewers, transaction and node browsers, as well as other services. They have also been testing the network by testing efforts on web services such as Amazon Web Services (AWS) and Microsoft Azure, achieving up to 182 transactions per second.
Even so; they continue testing their network at universities and are planning to carry; out larger trials to obtain the 1,000 transactions per second in it. With all the work they have done; by the month of May they managed to generate in their network transfers of more than $100 million; with no commissions on any of them.
All these activities and developments are being headed by the IOTA Foundation; made up of the founders of the project and new members who have been incorporating for all the necessary activities. This organization acts as a non-profit institution; which focuses on maintaining and promoting the vision of the project; as well as the Ethereum Foundation and Bitcoin Core do in their respective project.
Its establishment was achieved once the entire IOTA community financed it with 5% of the project’s total cryptocurrencies; and, with part of this percentage; the foundation has established a $10 million development fund for any team of collaborators; who wish to work on IOTA.
Initially, the IOTA Foundation team received all the proposals to receive funding; but since the volume of applications exceeded their capacity; they made an alliance with the F6S platform to carry out and organize the selection of candidates; who will receive support in their projects.
Behaviour of MIOTA, the cryptocurrencies of the project
The cryptocurrencies of the IOTA technology that is handled in the market is MIOTA; which becomes a Mega Iota (1,000,000 Iota). The top of the network is 2,779,530,283 Mega Iota coins; an incredible number of units designed for the use of micropayments.
Initially, it began to change for bitcoins with a semi-automatic system for a Slack channel enabled by the team; and by June 13 of this year; it was enabled by Bitfinex breaking into its first day in the 6th place of market capitalization; closing by that time at 0.59 $/MIOTA with a market value of $1.774 million.
By mid-July, its price fell to 1/4 of what was initially valued; a trend that was reversed and by August 22 its price rose by; 0.84 $/MIOTA with a market capitalization of $2,506 million; having a re-valuation of more than 42% since it began to be changed by Bitfinex. It manages almost all of its exchange volume (in USD, BTC and ETH).
Alliances formed with IOTA
The future applications that they are developing go hand; in hand with several alliances that have eforging the IOTA Foundation with different institutions.
A number of universities have been interested in studying the IOTA Tangle, with different approaches. Such is the case of the University of Lancaster together with the company Cybernetics, who study its uses as an electronic voting platform, as well as a community of students from the University of Berkeley, known as Blockchain at Berkeley, who have lent their support and collaboration for the development of the IOTA ecosystem.
There is also the alliance they formed with the software company Luxoft and the Polytechnic University of St. Petersburg; to supercomput their network and perform multiple simulations on it, thus subjecting it to stress tests to test its stability.