The little known crypto that trades as (Miota) is up 152% since announcing the deal with Microsoft last week. The chart has quite literally gone vertical as the coin has surged 873% this month.
It is currently trading at AU$5.27 on Coinspot.
One month ago, it had a market cap of US$1 billion. Now it is just shy of US$8 billion.
The Internet of Things (IoT)
The Internet of Things is going to be huge. Basically, all physical objects will be connected by the internet with the ability for devices to speak to each other.
A link between the physical and digital world.
As an example, your fridge could automatically detect that you are low on eggs and milk. No problem. It would then order more from the supermarket. The fridge could even compare supermarket offers so that you’re getting the best deal.
Devices will be speaking to each other and organising themselves independently of human command.
These communication devices will be known as ‘sensors’.
These sensors will store all the data of the orders they execute.
Why are Microsoft, Samsung and Fujitsu so Interested?
On 28 November, IOTA announced it had launched a market place for this data, in partnership with 20 of the biggest companies in the world.
The idea is to monetise data, which is the ‘oil’ of the IoT economy.
IOTA co-founder, David Sonstebo explains:
‘Any kind of data can be monetised…
‘If you have a weather station collecting wind, temperature, humidity, and barometric data, for instance, you can sell that to an entity that is doing climatic research.’
The idea is that any connected sensor can grab data from an open marketplace, for a micro-fee.
The market place is letting firms sell data to create incentive to share this data that would otherwise be wasted.
The marketplace is currently on trial. Examples of data being shared included weather and air quality data.
Imagine it this way…
If you download some data, you pay a small fee. If you contribute data, you’ll be paid a small fee.
Now, imagine all the worlds’ data in one place working within this system. That is what IOTA is creating.
Tangle not Blockchain
For starters, it does not use the blockchain.
It uses another system called tangle.
Source: Tangle Whitepaper
Theoretically, Tangle is superior for a few reasons. The primary one is that there are no transactions fees.
This is because there is no need for miners on tangle.
If you make a transaction, you validate two others. Thus, by taking part in the network, you actually speed it up.
Ethereum core developer Nick Johnson, is not so sure. In September, he penned an open critique of the architecture of IOTA.
As you can imagine, this was not well received and a small Twitter argument between the two companies took place.
Let’s just say neither thinks much of the other.
Why it Could Be a Superior System
‘IOTA has resolved the three major issues of blockchain — fees, scaling limitations and centralisation — and built up real-world partnerships and projects with world-leading companies since 2015.’
This is of course, the opinion of its co-founder Sonstebo, so it does have to be reviewed critically.
However, he does raise a fair point.
- Fees: This is an objective truth at this point, Tangle’s system does not have any fees for any transactions.
- Scaling: Once again, this comes back to the tangle system where each transaction solves two more. If true, this is revolutionary — as scalability is a massive issue for the other networks.
- Centralisation : This is an interesting one as most would consider that bitcoin and other coins are already ‘de-centralised’. But this isn’t necessarily true.
This graph from June this year shows that eight mining pools account for 75% of the mined blocks of a standard week for bitcoin:
This in principle is no different to how the banks function, so it is not a true representation of ‘decentralisation’.
IOTA and ethereum both avoid this situation by different validation processes.
Once again, if true, the Tangle system is a better method for decentralisation.
At the very least, this project should be watched closely.
If it does all that it says, it could be considered the next generation of blockchain companies.
Ethereum making public comments is a reflection of this.
Time will tell who has the superior system.
But rest assured, these two groups of people are competing at the very forefront of the digital economy.
Junior Analyst, Money Morning
PS: Want to find out more about the secret world of bitcoin? Click here.