During its emergence to the widespread public over the last six months of 2017, many people had no idea what IOTA’s innovation actually was. And even months later, it is still common to find people confused about what the IoT actually entails.
Here, we’ll learn about area in which IOTA wants to disrupt. The Internet of Things (IoT).
IoT – what is it?
Essentially, IoT means that every “thing” is connected to the internet, thus allowing it to send data for various purposes. It doesn’t matter whether it is a sensor in your car, a GPS tracker in your keys, or the solar collector on your roof. Everything will have the technical ability to stream its data to the internet.
IoT – how is it useful?
The keyword here is data. Harm van den Brink, member of the IOTA Foundation, puts it like this:
Think of a car’s wiper blade. It’s probably the dumbest part of any car, it can only go from left to right. However, attach an IoT-sensor to it which just collects the movement data: Once the rain starts, the data is sent to a company, agency or similar. One wiper blade is not very useful, but if you have millions of cars sending this data, you get a very detailed real-time overview of where it is raining at the moment; a very interesting use case for any weather-related business.
And that’s just one of about 300 sensors which you can find in a modern car. To be clear, it doesn’t matter if it is a car, a fridge, or a cell phone. Data is generated everywhere, and IoT is the means to make it available to interested parties. At the moment, essentially all this data is lost, but a whole new economy is on the verge of being established here.
IoT – why is it attractive to the big companies?
A report from the McKinsey Global Institute estimates that the IoT could have an annual economic impact of $3.9 trillion to $11.1 trillion by 2025 across many different settings, including factories, cities, retail environments, and the human body:
IoT is not only about consumer goods, but especially about smart cities and factories. The terms Industry 4.0 (i.e. the fourth Industrial Revolution) and IIoT (Industrial Internet of Things) have recently gained importance.
Why do businesses invest in IoT?
“Data is the new oil” (Alibaba’s CEO), so a major facet of business interest is the ability to sell the data they collect. However, it’s much deeper than just selling data. The advantages delve into the likes of smart cities and smart factories:
- Better overall quality (through sensor-regulation, e.g. air quality, product quality…)
- Optimized production times (machine-to-machine payments, improved workflows…)
- Predictive maintenance to reduce costs (machines alerting about possible problems in advance)
- Quality control (through sensors)
- Supply chain optimization (tamper-proof and fast)
- Efficient mobility: autonomous driving enables new forms of car-sharing & reduces emissions
- Environment-friendly: wise management of natural resources (intelligent power grids and waste management…)
- Improved transparency (e-voting, e-governance, …)
What is IOTA’s role in all this?
In contrast to nearly all other DLT (distributed ledger) projects out there, IOTA was designed specifically for the IoT.
The issue with IoT is not that companies do not realize the need for it, but that there is yet to exist an IoT-layer on which all data and value transfers can be handled at business-friendly speed.
Think of all the sensors sending data – this is an incredible amount of traffic which must be completed in a tamper-proof fashion, since nobody wants manipulation, and in a very short amount of time to avoid waiting for finality.
The base protocol of today’s internet is called TCP/IP. Many people have never heard of it, but without it, internet connections wouldn’t be possible. The protocol is so useful that it was chosen by all the big institutions and industries to be the base layer of the internet – but it cannot handle the sheer amount of data which is set to kick in once the IoT gains traction. Thus, many companies have tried to come up with their own applications to enable more smart services for end-users. For example, think of Apple’s HomeKit which lets you turn your home into a smart home – but only with the respective Apple software and hardware.
But nobody wants a fragmented IoT. Instead, one common protocol is needed to handle all of the data. IOTA’s goal is to be the base protocol which every company can use to enable their IoT-devices to connect. The TCP/IP of IoT, if you will. As with TCP/IP, many people will use it without noticing it.
Here’s a short video that summarizes the talking points of the intersection of IoT and IOTA:
So IOTA is…
- Fast (1000 transaction per second is the goal for 2018, but there is theoretically no upper constraint)
- Free of charge (no fees, because there is no mining needed)
- Lightweight (can be used on smallest devices)
- Scalable (the more devices use it, the better it is):
So IOTA meets all the requirements of the Internet of Things.
Once it’s production ready, imagine what it would mean if all of the world’s companies chose IOTA as their “new TCP/IP”, as happened it happened with the “normal” internet. Hopefully you can see why this project is poised to disrupt the world as we know it.