This article explains everything about the IOTA ecosystem. Valuable information about cryptocurrency and the future of the Internet can be found here for both beginners and advanced users. Since the article first deals with the future of the Internet and the blockchain technology itself and explains them in more detail, you are welcome to skip the first two sections if you are only interested in the cryptocurrency IOTA itself. The table of contents also serves as a guide and takes you directly to the paragraph you clicked on by clicking on the relevant heading.
Basis – You need to know these terms about the future of the Internet
Before we turn to the grand vision of the IOTA Foundation, everyone should educate themselves about the important fundamentals of the future of the internet. In the following chapters, these will be explained in detail and delved deep into the future of the Internet. This area therefore has little to do with the cryptocurrency IOTA itself. If you are only interested in the IOTA currency, you are welcome to skip this area. In addition, the part is very theoretical and IT knowledge is recommended for understanding. However, this part and the terms provide the basic basis for the IOTA ecosystem. Thus, reading is also recommended for beginners, despite the complexity.
The Internet of Things (IoT)
The Internet of Things (IoT) refers to the use of intelligently networked devices, systems and everyday objects. However, there is no general definition of the Internet of Things. Depending on the area of
Experts predict that technological advances will lead to an exponential growth rate and that IoT will spread rapidly in the coming years. According to forecasts, more than 50 billion devices will be networked in a few years. In a study , McKinsey & Company came to the conclusion that the IoT has a potential of up to 13 trillion US dollars by 2030.
In the future, the Internet of Things can thus develop a new dimension of services that have the potential to improve the quality of life for consumers. It can deliver more efficient solutions in many areas of daily life, affecting energy, banking, transportation, government, security, healthcare, education and many other aspects of daily life.
The Internet of Everything (IoE)
The Internet of Everything (IoE) is a concept that extends beyond the boundaries of the Internet of Things. Because in the IoT, communication runs purely from machine to machine (M2M) using sensor data only between various IoT devices. It’s different in the Internet of Everything. This is where people, processes, data and things are networked. The advantage of the IoE is that people, devices, processes, data and things can be connected to form an intelligent process. Thus, the limited possibilities of the IoT can be expanded again.
IoE also connects intelligent machines that can access a database and use extended network services. The application possibilities for IoE networks are expanding from sensor networks and electronic devices as well as devices in the consumer electronics and wellness industries to facilities in a smart city and the integration of motor vehicles and traffic systems. Such constellations offer an unprecedented high level of networking between people, processes and things.
Machine to Machine (M2M)
Machine to Machine (M2M) is a broad term that encompasses all technologies that enable connected devices to exchange information and perform actions without the need for manual human intervention. M2M technology links information and communication technology.
M2M solutions are used in every branch of the economy and help to increase productivity. In the case of the vending machine economy, for example, vending machines can independently report to a central computer that they need to be restocked. Regular trips by the machine operators can thus be avoided. Furthermore, downtime is avoided. The associated improvement in business processes and the resulting reduction in costs hold great market potential for industry and society.
Unfortunately, the current central systems do not yet offer sufficient security for devices or sensors in the IoT. Since data is currently stored in owner-managed databases, it is difficult to share this data with others. The goal of the IOTA Foundation is to create a level of trust for the Internet of Things that allows devices in the IoT to securely exchange immutable data and values.
IOTA’s communication techniques
Besides the well-known static internet, there are other ways to deliver the IOTA protocol. The future IoE will consequently use different technologies for data exchange. The different options are listed below:
The new 5G network
The 5G network will be to the Internet of Everything what broadband internet was to the World Wide Web. Even though billions of devices are already connected today, we are still in the early stages of IoE. This is not least due to the fact that the upcoming 5G network will be able to supply a large number of devices in one radio cell with the Internet at the same time. While 3G and 4G were mainly developed for smartphones, the 5G network can connect a large number of devices.
The new 5G network not only promises 100 times faster downloads or high-resolution video streams, it will also revolutionize our mobility. Autonomous driving can be possible for the first time with networked vehicles on a large scale. This is due to the fact that the latency times of the coming generation of mobile communications will be significantly shorter. Vehicles will be able to receive commands via smartphone app or to find out about dangerous situations at an early stage. Consequently, huge amounts of data have to be generated, which the 5G network will make possible.
The transmission technology LiFi
LiFi stands for “Light Fidelty” (light reproduction) and, unlike WLAN, does not work with radio frequencies but with light signals. It works something like this: A microchip is integrated into LED lights, which modulates the light for data transmission, which enables the light source to be switched on and off quickly. In this case, people do not perceive any changes in their environment, since the human eye does not notice this very rapid change.
In the binary system, the switch-on signal is 1 and the switch-off signal is 0. The resulting series of switch-on and switch-off signals is now processed into usable data sets via a photo sensor on a terminal device. With this principle, the speeds of current WLAN signals can be exceeded by a factor of 100. Studies determined that speeds of several gigabits per second could already be achieved. This would mean that a full HD movie (2-5 gigabits) can be downloaded from the Internet in a second using LiFi technology.
IOTA and the use of LiFi technology
With this technology, the economy has a wider range of transmission possibilities of the IOTA protocol and is no longer limited to radio transmissions. A simple luminous flux is now sufficient to transmit the protocol at a very high speed.
With this technology, the industry would no longer need expensive WLAN networks. Instead, LED light sources can be used as new network access points, connecting all machines to each other and to the internet via light. As a result, street lamps can be used in smart cities, for example, to enable faster Internet access, but also to collect and evaluate data from passing cars.
LoRaWAN stands for Long Range Wide Area Network and means or enables energy-efficient transmission of data over long distances. This is specifically designed for the Internet of Things. The LoRaWAN specification is defined by the LoRa Alliance Foundation . The technology is freely available and uses a patented transmission method.
LoRaWAN is therefore a radio technology (similar to WLAN, Bluetooth or LTE), which aims to generate the lowest possible logging effort and at the same time to achieve a large range with low energy consumption and low operating costs. The protocol is designed for mobile and secure communication and ensures reliable message transmission. It not only enables data acquisition, but also the active control of devices. The standard also ensures compatibility with other LoRaWAN networks around the world.
What does this mean for IOTA?
With this highly efficient and resource-saving technology, cost-effective use of large-scale sensor networks is possible for the first time. This is an important piece of the puzzle for the future Internet of Things. The areas of application in connection with IOTA are obvious, e.g. all sensor queries of a smart city could be processed via LoRaWAN, supply chains could be monitored, etc.
LoRaWAN and IOTA: Proof of Concept for Real-Time Data Storage
Developer Harm van den Brink has already created a Proof of Concept (PoC) with IOTA using LoRaWAN. This PoC demonstrates real-time storage of data, thus providing the user with an immutable way to store data. The PoC is kept very simple.
Im Folgenden erklären wir diesen: Eine Nachricht wird über LoRaWAN gesendet und das IoT-Netzwerk wird mit einer bestimmten Anwendung, dem MQTT (Message Queuing Telemetry Transport ist ein Open-Source-Nachrichtenprotokoll für die M2M-Kommunikation, das die Übertragung von Nachrichten zwischen Geräten ermöglicht) abgehört. Die Nachricht wird mit dem Dienst “Proof of work” von powsrv.io mit hoher Geschwindigkeit empfangen und gesendet
German scientist Andreas Baumgartner from TU Chemnitz has also successfully implemented IOTA streams in his code. You can read about it on his blog (with video). However, there is already the first problem: “Since an IOTA packet is much larger than the maximum packet size of LoRaWAN, we have to fragment the IOTA packet into several LoRaWAN packets to make it fit.”
This method is not allowed in most LoRaWAN low-power networks, such as the “ thethingsnetwork ”, as it would otherwise take too long. Each bit of a transmission costs energy and an IOTA transaction consumes more energy than just sending raw data. Therefore, further research on IOTA transaction size is needed to meet the data packet size specifications of LoRaWAN networks.
DLT Basis – This is what you need to know about the blockchain
To understand the advantages of IOTA’s distributed ledger technology (DLT) over the classic blockchain, it is first necessary to understand how the blockchain works in general and why the current disadvantages disqualify the blockchain for use in the future IoT. In this section, we will therefore go into the basis of DLT technology and how IOTA uses it.
What problem does the blockchain solve? – The dilemma of the Byzantine generals
This question is best illustrated with the “Byzantine generals” trust issue. According to legend, in 1453, during the siege of Constantinople, Byzantine generals had a communication problem. Since Constantinople had a strong defense, it was necessary to attack the city from several sides at once. The generals could communicate with each other through messengers. A few of the generals, however, were traitors and collaborated with the sultan in Constantinople. So it was difficult to set an exact time for the attack since the traitors could spread false information about the messengers. The problem here is that you can only conquer Constantinople if there is an attack at the same time. However, they were actually able to solve the tricky situation.
There is a mathematical solution for this, but it only works if no more than a third of the generals are traitors. However, since a mathematical fact is necessary for this solution, we neglect it. Because there is also a solution that works independently of the number of traitors, blockchain technology.
Let’s assume the attack is scheduled for Wednesday at 5 p.m. Any general can be a traitor. The messenger transports the message in an envelope but does not recognize it.
Unsuccessful Strategy – This is how the attack fails
General 1 sends his messenger with a message to General 2. He reads and confirms the message that the attack will be on Wednesday at 5 p.m. Then, he sends the message to General 3. General 1 is the traitor. He writes a new note with a different time, eg that the attack will take place at 7 p.m. on Monday. All other generals will get the wrong time and the attack will fail.
Successful Strategy – How to capture Constantinople
In order for the attack to be successful, rules must be established beforehand. For one thing, each general must be 10 minutes with the confirmation for it to be valid. On the other hand, each general must add the confirmation received so far to his confirmation, so that history is created.
If the messenger goes to General 1, General 2 works exactly 10 minutes on the confirmation and adds it to the first message. The messenger’s envelope now contains two papers that relate to one another or are linked. If the third general now tries to write a different time on his confirmation, this initially takes 10 minutes. Fake the other messages would also take another 10 minutes. The messenger can now detect the fraud, as a message normally only takes 10 minutes. Furthermore, the first general would notice if the messenger came back later than expected.
This variant ensures that nobody in the chain cheats. The resulting message chain is comparable to a chain of information blocks (blockchain).
Benefits of blockchain technology
This results in several advantages that speak in favor of blockchain technology. Any user on a classic blockchain network can now track all transactions. It is therefore a completely transparent system. Furthermore, blockchain transactions take much less time than transactions that require some sort of middleman since they are self-validating. In addition, no central manager is required since the system works decentrally.
The problem of “double spending” is also solved: since digital money is just a computer file, it is easy to counterfeit by simply copying it. Without the blockchain, banks keep track of the money in their accounts, so no one can spend the same money twice. Blockchain technology can now solve this problem. It makes all transactions and accounts public through pseudonymous addresses, making it obvious when money is used twice.
The blockchain is also tamper-proof. There are separate validation and authorization mechanisms throughout the network. Tamper-proof mathematical hashing methods make the data on the blockchain trustworthy. Integrity is provided by the thousands of nodes on the blockchain that validate every blockchain transaction. Any unauthorized change on the network will be exposed directly, so you can be absolutely sure if it is correct or wrong.
Disadvantages of the classic blockchain in the case of Bitcoin
The classic blockchain technology also has some disadvantages. Transaction costs are incurred for each transaction. These can be volatile depending on the time and day. In addition, high electricity costs (per Bitcoin) are incurred for computationally intensive mining. This is the reason why so many miners are based in countries with very low electricity costs.
Furthermore, a Bitcoin transaction on the Layer1 network takes several minutes (without Lightning). Running a Bitcoin full node also requires a lot of memory, as the entire blockchain is over 400 GB in size. Gigantic mining pools can also endanger decentralization (3 pools together have over 51% hash power -> probability of a 51% attack increases).
Conclusion – Current blockchains are unsuitable for the IoT
The traditional blockchain is therefore currently completely unsuitable for the Internet of Things due to the disadvantages listed above. What it will look like in the future, only time will tell, as development does not stop. However, the internet industry already relies heavily on private, centralized blockchains like Hyperledger.
These blockchains mainly serve the internal workflow and work without coins. The blockchain achieves significantly higher transaction times because it is centralized. From the perspective of the IoT and IoE industry, it is important to always have control over the internal workflows, even if you have to trust a vendor, in this case, Hyperledger.
The solution from IOTA – The Tangle
As a solution to the above problem, the developers of the cryptocurrency IOTA invented the Tangle. The word tangle comes from English and means something like confusion. Because IOTA does not need its own blockchain, like the conventional cryptocurrencies Bitcoin, Ethereum, or Litecoin. Instead, each user must confirm at least two other transactions before their own transaction is made.
This section explains how the cryptocurrency IOTA works. So in a way, it’s a little anticipatory, but understanding how the currency actually works is essential. This is the only way to understand why the currency was programmed as follows.
Difference between the blockchain around the Tangle
As mentioned above, the Tangle is not a blockchain. A blockchain always needs three different participants (users, nodes, miners) for its existence. In this case, the users are the people who send coins from one wallet to another wallet. In the background, the miners do the work and validate the transactions of all users. The nodes save what is happening and serve as a control instance.
With the Tangle, on the other hand, there are only two participants (users, nodes). The innovation of the IOTA Tangle is that there is mining despite everything. However, the mining process is now not carried out by special miners, but automatically by our people. The hardware of the user is completely sufficient for this, it does not matter whether it is a PC or a smartphone.
In addition, the Tangle includes a proof-of-work consensus mechanism. As mentioned above, each user must confirm two more before executing their own transaction. This means that many users who execute transactions automatically confirm random transactions on the network.
Thus, the Tangle data structure is a directed acyclic graph (DAG). Each transaction can have up to eight previous transactions appended to it. These can also be attached to any transaction in the Tangle, resulting in a chaotic order (jumble) in which all transactions are executed in parallel. If you want to see the principle in detail, you can visit tangle.glumb.de . This demonstrates the links of the IOTA tangle and shows the connections between the individual transactions.
This way of working allows it to openly scale up as the number of transactions increases. Confirmation rates are also increasing, rather than going in exactly the opposite direction as is currently the case with classic blockchains.
How does a transaction work via the IOTA Tangle?
The process of a transaction in the IOTA Tangle is described below. First, a user signs his wallet with a private key or a private key. So he releases the cryptocurrencies and can send them to another wallet. Next, it validates two randomly selected transactions and links them together. Only then is your own transaction finally completed. Thus, the user automatically executes a proof-of-work consensus mechanism and sends the transaction through the tangle.
IOTA Basis – This is what you need to know about the project
On the one hand, you have now understood the basis of the future of the Internet and, on the other hand, you have learned important basics about blockchain technology. Furthermore, you now know why the IOTA Tangle was invented and how it works. Therefore, it is now time to explain the cryptocurrency IOTA itself.
What is IOTA?
As mentioned in the previous sections, IOTA is not strictly a blockchain. It is a scalable open source tokenized communication protocol. The intended use is the transfer of values. The IOTA Foundation (foundation under German law) based in Berlin develops the protocol on a non-profit basis and makes it available.
Origin of the name IOTA
The name IOTA comes from the ancient Greek alphabet and means “something small”. The iota is the 9th letter of the ancient Greek alphabet and is pronounced the same as today’s “i”. The Latin letter “i” is also derived from it. In the IOTA communication protocol, the “i” stands for 1 IOTA and is the smallest tradable unit of value on the network.
The goal of the IOTA Foundation
The goal of the IOTA Foundation is to create a layer of trust for the Internet of Everything. This should enable devices to exchange data and values
IOTA must meet these requirements
In order to achieve the above goals, the following features of the IOTA ecosystem are essential. The network must be highly scalable to handle a significant number of transactions per second. In addition, the network must not have high requirements so that low-power devices are also able to participate directly in the network.
But the most important thing about the network is that transactions can be sent without paying network fees. In other words, if you send 50 MIOTA, the currency of the ecosystem, exactly 50 MIOTA should reach the recipient.
IOTA 2.0 Development Network – First step to the goal
In June 2021, after numerous tests, the IOTA 2.0 Development Network (DevNet) was launched. This is the first fully decentralized, scalable, and fee-free IOTA network, as envisaged when the project was founded in 2015. So DevNet 2.0 includes no more fees, no blocks, no chain, no miners, no waste of energy, no censorship, and no centralization (without a coordinator).
Partnerships of the IOTA project
The IOTA Foundation is working with many partners to make IOTA a standard in distributed ledger technology. In particular, the focus is on standardization and truly error-free communication between all users and industries. The most important partnerships are listed below.
Object Management Group (OMG)
The OMG is an international, open, non-profit technology standards consortium. The group develops enterprise standards for a variety of technologies to enable true software interoperability. In addition, the Object Management Group holds four technical meetings per year for members and interested non-members. This is intended to create a neutral forum for discussion, development, and acceptance of technical standards. The OMG is one of the most important partners of the IOTA Foundation.
Industrial Internet Consortium (IIC)
The Industrial Internet Consortium is part of the Object Management Group and is the world’s leading organization helping companies to transform into the Internet of Things. The task of the consortium is to promote technologies that accelerate the growth of the industrial internet. Members are small and large technology innovators, market leaders, researchers, universities, and government organizations.
World Wide Web Consortium (W3C)
The World Wide Web Consortium is the main international standardization organization for the World Wide Web. The inventor of the Internet, Tim Berners-Lee, founded the consortium on October 1, 1994, at the MIT Laboratory for Computer Science in Cambridge . The W3C is a membership organization that helps develop standards for the World Wide Web.
The IOTA Token – You need to know that before investing
Now that you know all the information about the project, you can now address the question of whether it is worth investing in the ecosystem. In this section, we clarify all questions about the token MIOTA. The name of the token results from the fact that you cannot buy the smallest unit of IOTA on the exchanges, but only 1 million IOTA, hence MIOTA (1 MIOTA = 1 million IOTA).
How many MIOTA tokens are there?
The number of existing MIOTA tokens is currently 2,779,530,283. All tokens were already sold in a crowd sale in 2015. Thus, the company of the IOTA Foundation was able to earn the equivalent of 434,511.63 US dollars. A positive aspect of the project is that the IOTA tokens were issued fairly. There were no blocked tokens, no early-stage corporate investors, and no tokens were issued to the founders. Thus, the reasons bought their tokens with their private assets. Furthermore, the community donated 5% of the tokens to the IOTA Foundation to ensure the sustainability of the project.
Can MIOTA’s token count be changed?
It is extremely important for the IOTA ecosystem that the price per token is kept rather low. The goal is to use the tokens for micropayments between machines, so a high price is a hindrance. Therefore, in the distant future, it may be necessary to increase the maximum number of tokens. This is possible with a simple trick: the decimal point can be easily moved.
What does this mean for token holders?
Increasing the maximum number of tokens is usually bad for the owners. Consequently, when more tokens are in circulation, the price decreases as the supply and demand quantity shifts. In the case of the IOTA ecosystem, however, this is not the case.
The following example serves to explain: Let’s say you own 1 IOTA. This can be divided into 1000 MicroIOTA. If you now decide to increase the tokens of MIOTA, this does not refer to the total amount, but there are now simply smaller units. Practically, this means for the user that if they had 1 IOTA in their wallet before the decimal point shift, they still have 1 IOTA in their wallet after the decimal point shift. However, the smallest unit is no longer IOTA, but in this case MicroIOTA. In concrete terms, this means that a new unit, in this case, MicroITA, is added to the IOTA unit system. This has no consequences for the price and for the user.
Why is it necessary to increase the number of tokens?
By 2022, researchers expect that more than 50 billion devices will be networked in the IoT. The goal is for machines to pay for services with small amounts of IOTA tokens. There are currently approximately 2.78 billion MIOTA. Now imagine the following example: the majority of IoT devices receive the equivalent of 1 USD in IOTA for service on average. This scenario means that there is no doubt that the price of an IOTA must increase due to the scarcity. As a result, in due course, a split into smaller units is required in order to continue to grow. New applications may also require an increase in the future.
This is how much 1 MOITA costs
The price of a MIOTA on August 10, 2022, is $0.345, which results in a market capitalization of almost 960 million euros. The all-time high was 5 years ago and was $5.69.
How do I buy MIOTA?
How do I store IOTA?
There are several ways to do this. The most important thing is, no matter what form of storage you use, that no third party can gain access to the coins.
The simplest method is the in-house smartphone wallet, called Firefly Wallet. This can be downloaded directly from the respective app stores. For security reasons, however, this wallet should only be used to store small amounts, since a cell phone offers a high potential for hackers to attack. The download link for the Android app can be found here , for iOS here .
Another possibility is a browser extension, eg Metamask. A tutorial for the installation can be found here . However, only small amounts should be kept here, as the risks are similar to those of a smartphone wallet.
The safest method is to keep your MIOTA on a hardware wallet. The hardware wallet stores the user’s private keys offline and securely. This reduces the risk of losing your coins to a hacker attack to almost zero. So it makes the most sense to keep large amounts on a hardware wallet.
IOTA use cases
In order to be able to make a rational decision on whether to invest in the project, it is of paramount importance to have a better understanding of IOTA’s use cases. Because this not only shows the potential of the project, but also shows the real benefit.
In general, it can be said that almost every industry will be connected to the IoT in the future and will benefit from it. IOTA can thus be used universally and thus achieve extreme usage rates in the future. The most important industries are then examined in more detail and the potential in them for IOTA is explained. (In order to understand most use cases, it is necessary to know the terms IoT, IoE, M2M, LiFi and LoRaWAN, which are explained in the first section of the article. If you cannot define them yet, it is advisable to read the first paragraph first).
The automotive industry
There have been many innovations in the automotive industry for decades. Last but not least, we are facing a major revolution with the introduction of the electric motor as the new standard drive type. But almost all systems in a car are affected, which is why there are many new opportunities in a digitally networked world. IOTA can aim to become the new standard for transactions and data exchange for affordable and sustainable traffic. The cryptocurrency IOTA can be used in the field of charging and selling energy and offering microtransactions without a central intermediary. Furthermore, IOTA can develop into an important technology for autonomous driving and can automatically calculate traffic routes in the future.
At CEBIT 2018, the then Chief Digital Officer of Volkswagen AG, Johann Jungwirth, assessed the potential as follows: “The cars of the future will have to trade billions of times. The cryptocurrency IOTA can be optimally used for this purpose, which is why VW is very interested in IOTA technology.”
The financial sector
The potential of IOTA is also huge in the financial sector. With normal financial transactions, there is always the problem of having to trust a third party. With the rise of cybercrime, dependency on a third party has always come with some risk and has become an obstacle to building a free economy.
The cryptocurrency IOTA one is now able to distribute and synchronize data and cash books in secure, distributed, decentralized and permission-free environments. The elimination of the previously necessary third party creates enormous gains in efficiency, opportunities for innovation and new value chains.
The Tangle is ideal for the creation of decentralized communication services due to the previously mentioned properties (e.g. decentralized, scalable, free of charge, encrypted…). The new IOTA services can become dangerous competition for today’s large central services such as Instagram, WhatsApp, etc. Thus, IOTA can help to overcome the dependency on them and give users back their privacy since personal data can no longer be stored.
However, this does not only offer advantages. For example, there would no longer be moderators in chats who could delete offensive texts, on the other hand, this would mean that immense freedom of expression could develop without restrictions.
Other possible areas of application
As mentioned above, IoE and IoT have applications in almost every industry. Thus, the possibilities for IOTA use cases are almost unlimited. Thus, possible areas of application could be, for example, the gaming industry, Industry 4.0, eHealth, digital identities, traceability of products, smart cities or increasing sustainability.
Potential – Should I invest in Project IOTA?
In this paragraph we want to clarify the question of whether it is worth investing in the IOTA project. For this we will look at the price development of the last few years and also address the problems that IOTA has had and still has.
Price development – This is how the IOTA course has been in recent years
As already mentioned, IOTA’s all-time high was already 5 years ago. As a result, IOTA was no longer able to keep up with the high hype in the years that followed. This was mainly because the Foundation did not deliver on the big promises that the concept of a cryptocurrency for the IoT and the technical possibilities of the Tangle brought with it.
IOTA received some attention in December 2021 when the network launched the assembly and Shimmer token airdrops . The assembly network is the own network for smart contracts. Shimmer is a test network, which is supposed to be the precursor to the IOTA 2.0 update.
The IOTA update should finally make the network decentralized and thus competitive with other networks. IOTA 2.0 has been promised by developers for a long time and is intended to replace the central coordinator that prevents the fundamental principle of decentralization.
Criticism of IOTA – The currency has these problems
First, one should consider that IOTA is still in the alpha phase. So it will still take a lot of time and programming work before a final product is on the market. As a result, the points of criticism addressed below can be eliminated in the future. Furthermore, you should consider two things when making an investment. IOTA is a product that is not yet finished. You also have to realize that the higher the probability that criticism cannot be solved, the higher the return on solving the problem. Thus, everyone has to make a risk assessment for themselves and weigh up personally whether they see a chance of solving the problems in the future.
IOTA has significant scaling problems
At this point in time, IOTA’s scaling is not yet at the desired level. It is currently not enough to become the market leader for IoT and IoE services in a few years. However, this performance is not currently required and is therefore not a problem today. The Tangle is still relatively early in its development and will become larger and faster with increasing utilization.
The coordinator centralizes IOTA
To mitigate the problem of a malicious attacker, the IOTA Foundation deploys a proprietary shield called the Coordinator. This coordinator is completely centralized and is a temporary alternate consensus mechanism for the Tangle.
The update to IOTA 2.0 should fix this problem. As already mentioned in “4.5 IOTA 2.0 Development Network – First step to the goal”, the testnet is already live. In the near future, IOTA 2.0 is to be taken over into the mainstream, but when that will be is still unclear.
The IOTA Foundation already presented this switch in a blog post in 2018.
Developer dispute at IOTA
In 2020, when IOTA was at its all-time low, there was a heated developer dispute. So developers Sergey Ivancheglo and David Sonstebo got into a public mud fight. This involved the amount of 25 million MIOTA that Sonstebo allegedly owed to Ivancheglo. Ivancheglo left the project back in 2019 but still had a score to settle.
Former IOTA developer Ivancheglo accuses Sonstebo of illegally taking MIOTA. This in turn accuses the other of having failed as a developer. So he did not manage to switch to IOTA 2.0 during his work
Although this dispute dates back more than 2 years, it still damages the project. So the IOTA Foundation made a radical change of leadership and is now trying a new attack.
Is an investment in IOTA worth it?
As already mentioned, the IOTA concept has massive potential and, according to many experts, could now be among the top 5 cryptocurrencies again. For this, however, the network must finally become decentralized and make the switch to IOTA 2.0. The lack of progress and the internal difficulties currently ensure that the MIOTA token is currently only ranked 55th among the most valuable coins by market capitalization.
Due to its very low price, however, an investment in the MIOTA token is a very good opportunity at the moment. The potential is definitely there and if you believe that the problems can be solved soon, it is worth an investment. Should the network make the step towards decentralization, a massive increase in value can occur in the next bull market.
What can I do with my IOTA tokens?
The last section of the guide is aimed at people who already own IOTA. Here we explain how you can stake your IOTA tokens and, if necessary, bridge them on the Binance Smart Chain (BSC).
IOTA Staking – How it works
IOTA introduced staking half a year ago. For this you freeze coins for a certain time and receive a certain return, which depends on the number of coins staked. Staking is intended to increase adoption of est’s recently launched Shimmer and Assembly networks.
How does IOTA staking work?
IOTA plans a token drop. Shimmer Token (SMR) and Assembly Token (ASMB) are paid out to IOTA users after a staking phase. This token drop has 2 phases. In the first phase, the IOTA token hodlers should transfer their MIOTA to the Firefly wallet. This is followed by a staking phase. By staking from the MIOTA, SMR and ASMB tokens are now created. An airdrop can also be obtained upon reaching certain staking goals. It is important that a staking phase always lasts 90 days.
The IOTA Foundation has published concrete instructions for pre-staking via its Twitter account .
This is how you bridge IOTA to the Binance Smart Chain
The IOTA Foundation recently announced in a statement that IOTA can now be bridged on the Binance Smart Chain. Here’s how IOTA holders can use the IOTA token to participate in DeFi applications on the Binance network. This step is seen as the first step in increasing liquidity while preparing for other assets to live on the IOTA network. The following explains the basics of the bridge.
What is the Binance Smart Chain?
The Binance Smart Chain is a blockchain developed by Binance to develop an ecosystem of decentralized applications, NFTs and digital assets. Similar to Ethereum, developers can deploy native smart contracts on BSC for significantly lower fees compared to other blockchains on the market today.
What is asset wrapping?
Asset wrapping is a process where an asset is taken off one network and allowed to live on another network. While there are multiple options for asset wrapping, it generally requires that a third party or group of decentralized parties be able to hold assets. Once an asset has been escrowed, a system is created to transparently display all tokens on a given network that are locked for wrapping. With this transparency, a network can then “imprint” a 1:1 representation of a token locked in custody.
The Binance Bridge
With the Binance Bridge , anyone can send IOTA tokens to the swapping service to exchange IOTA for Binance IOTA. The bridge works both ways and is the primary portal for IOTA token holders to create IOTA tokens for use in the Binance Smart Chain ecosystem. After the exchange is complete, the IOTA BEP20 token will be visible in the Binance wallet connected to the service.
Now you can do everything with the Binance IOTA that you can do with a BEP20 token. So you can use the IOTA token to stake, farm yield, earn and use all products and services of the BSC ecosystem.
Future of the IOTA ecosystem – This is planned
IOTA sees cross-chain liquidity as a pillar of any decentralized ecosystem. So if the switch to IOTA 2.0 works, the main task will be to make the IOTA liquidity available for other networks. Thus, the integration on the Binance Smart Chain is a first step to achieve this goal. At the same time, work is being done to ensure that other assets can soon exist in the IOTA network through bridging.
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