In-brief: Before the Internet of Things can really take off, there needs to be a way to securely transact and settle exchanges between the billions of connected endpoints and infrastructures. One nascent technology for doing so is called IOTA.
There’s an interesting profile of the IOTA project over at the website bitcoinist. In essence: IOTA is a blockchain like decentralized network for securely conducting and verifying (settling) transactions of various sorts -at massive scale.
Unlike bitcoin or related technologies, however, IOTA does not rely on blockchain, but on a related technology dubbed “Tangle,” which is described as a Directed Acyclic Graph shaping up a tangle.
According to IOTA’s David Sønstebø, Tangle is better suited than Blockchain to IoT use cases. From the interview:
IOTA is a very potent and effective technology that solves issues that are faced by IoT, first and foremost fee less, scalable transactional settlements and data transfer. AKA: machine-2-machine payments.
The goal is to create a decentralized financial ecosystem for the IoT that will support device-to-device payments at massive scale. From the article:
Once an IOTA transaction is broadcasted to the network, two previous transactions must be approved, and network nodes will need to make sure approved transactions are not conflicting.
Tangle will allow IOTA to be efficient, scalable, and lightweight and can communicate to blockchains, which allows for future collaboration between the Internet of Things and established digital currencies like Bitcoin.
This is early days, but its worth noting Sønstebø’s reflections on where things are headed. First and foremost, IOTA will be positioned as a kind of clearing house on which IoT players transact business”in real time, with out fees, without any central expensive and unreliable middle man bottleneck.”
Down the road, IOTA could expand well beyond the B2B space. From the article:
Other obvious areas are the sharing economy, first there was Uber and AirBnB, but soon there’ll be a sharing economy of everything from eBikes to power tools. I also see a role for this kind of payment be useful for real-time data from households and wearables where you sell your personal data in real time instead of filling out surveys.