All about IOTA: microtransactions and the IoT

Monday 09 November 2015

Heard of the Internet of Things? You ain't seen nothing yet, say the guys from IOTA.

The ‘Internet of Things’ (IoT), or wide-scale machine-to-machine communication, is often claimed as a perfect use case for bitcoin and microtransactions. And yet even bitcoin requires some tx fees, which will make high transaction volumes unviable. I asked David Sønstebø from the IOTA project about a whole new kind of IoT-focused crypto. Here's what he said.

The IoT label can be found virtually everywhere tech is being discussed these days, and while most agree that these vivid pictures being painted by futurists look great, it's hard to not become at least a bit skeptical of their fantastic promise.

It all boils down to the fact that there is quite a lot of infrastructure that is needed in place before we will see seamless communication and collaboration between these devices and systems making up IoT. Just like streaming and on-demand services started emerging once the infrastructure (p2p, bandwidth and storage) made it feasible, we see real-time microtransactions (IOTA) as one of these vital infrastructural building blocks that will enable IoT applications to blossom and become useful.

IoT

The Internet-of-Things is often touted as the obvious use-case for crypto, but few details have yet been forthcoming

Microtransactions

For me, the most interesting applications of IoT that relates to microtransactions and thus IOTA is real-time compensation for sharing of technological resources. One such resource is computational power. In the coming years we will see microprocessors being incorporated into all kinds of devices, literally billions of them, meaning that we'll all be surrounded by countless processors that are for the most part idle. Why not put them to good use and make their potential available to all? This is already relevant today and we see projects such as BOINC / @home greatly benefit from people donating their excess CPU power to research.

Cloud, Fog, Mist

Sharing of computational resources will be a central ingredient that is absolutely necessary for a functioning IoT world. As hundreds of billions of sensors that will be gathering all kinds of data will permeate cities and rural areas alike, there will need to be some way to process it in real time. Here Cloud solutions are out of the question - the latency and bandwidth issues are simply too great, and so the only solution is 'Fog computing'. Fog computing is about spreading the Cloud / processing stations, making the availability for this sensor-gathered data to be processed ubiquitous. But even Fog solutions aren't enough, for a complete and cohesive ecosystem: we need to go even further. Here is where 'Mist computing' comes in. It essentially spreads the Fog to the edge, so that there is computational power available for all practical purposes everywhere. Now of course the owners of these processors will be countless different parties, but for IoT to truly work it has to be interoperable and accessible to all, but there is no reason to expect companies to suddenly adopt an altruistic business strategy, hence the need for some method of real time compensation. This is where IOTA's reason for existing become obvious.

Compensation for resources

Computational resource sharing and trading is just one example, the same applies to electricity, storage, data, bandwidth and any other technological resource that will become ever more ubiquitous as IoT comes to fruition. IOTA enables the economy fueling this ecosystem.

There will always, or at least for the ascertainable future, be big central cloud services, but as tech evolves we will see these distributed solutions more and more. This will benefit not only society’s infrastructure, but also the common man. Wouldn't it be great if you could trade in some of your excess electricity for access to some additional GPU power to give you a better virtual reality experience, without having to deal with cloud latency, go through the tedious process of signing up, choosing your plans and so on with a central provider? We think so.

In the follow-up instalment, David describes the ‘Tangle’ - a new take on the blockchain - and why IOTA uses cryptography resistant to quantum computing.

To find out more, visit www.iotatoken.com


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