These days, anyone doing business has to inevitably put trust in an institution or an individual. In the future, the process of building trust will also take place digitally – mathematically calculated and reproducible as required. This requires comprehensive systems that generate trust through transparency as well as data immutability: distributed ledger technologies (DLT).
DLTs are networks which are managed in a decentralised way. One of the most promising is IOTA. It is the open source technology that is being developed by the Berlin-based IOTA Foundation.
IOTA is way ahead of classic DLTs – such as the Blockchain – as it expands the possible scenarios in which it can be used many times over. The so-called Tangle, which is the network on which IOTA is based, is designed in such a way that its performance grows with the number of its users: exactly the other way around than in the Blockchain. This diagram shows IOTA’s efficiency in contrast to the Blockchain:
The Tangle is a complex structure consisting of nodes referencing each other. All data contained therein is cryptographically secured, stored unchangeably and is thus protected against manipulation.
For IOTA, one main area of application is the IOT (Internet of Things) or the IIOT (Industrial Internet of Things). This open-source technology can be used in all places where machines and devices communicate with one another. IOTA is so lightweight that even low-performance hardware can handle transactions without any problems. Additionally, not even a large number of microtransactions puts a strain on the system in its entirety.
© IOTA Foundation
What is more, IOTA is also completely free of charge. There are no transaction fees or other costs. This feature makes for a stark contrast to other DLTs, where fees have to be paid for every transaction regardless of their respective value. This property makes IOTA ideal for microtransactions, for instance in the world of IOT or IIOT.
With the absence of transaction fees, IOTA makes certain use cases possible at all: The Tangle can not only be used for transmission of values, but also for manipulation-proof, high-availability data provision. IOTA thus opens up a multitude of new possibilities for the implementation of new projects in the digital transformation of progressive companies.