This is part three of my short series of
articles on crypto-currencies.
I could run through a whole list of interesting tokens such as
Stella Lumens, Selfkey and the like, but buying these is very
much a lottery. Which ones will go on to be household names? I
haven't a clue, and neither has anyone else. I bought Stella
Lumens because it was backed by IBM, which seemed as good a
reason as any. Also, it was effectively a bank share, and was
first issued at the price of one cent. I assumed it couldn't
go bankrupt, and if it only went to two cents I would double
my money, which seemed a fair bet. I won't annoy you by
telling you what the current price is.
There is another token which is currently at one cent. I may
bung a few pennies into that, but I don't think it has the
potential of Stella.
Fortunately there is one crypto-currency that is different
from all the rest. Let me introduce you to it. This will end
up sounding like a recommendation to buy, which wasn't my
original intention, but all I can say is that if any crypto is
going places, then this one jolly well ought to.
5G is being rolled out as we speak. Early next year the first
handsets will be in the shops, and that is going to kick the
bandwidth available right through the roof. That will give you
much better broadband, but that isn't really the point. The
real bonus is that it will usher in the Internet of Things
This is a technology where everything that can be automated
will be connected. Self driving cars, your fridge, traffic
lights, and so on will all be connected.
Let me quote you something from the company that is currently
at the head of this technology.
The number of connected devices that will be in
use is estimated to reach 75 billion by 2025. From tiny
sensors on roads and bridges to wearable electronics, mobile
phones, and more, every day the world is becoming more and
more interconnected. The amount of data being produced and
consumed by all these devices is already astronomical. By
the end of 2016, the run rate of IP traffic was 1.2
zettabytes per year - or enough data to fill over 9 billion
of the highest storage capacity iPhones available at the
time. Over the next five years, global IP traffic is
expected to increase five-fold where by 2021, monthly IP
traffic will reach a staggering 31 Gigabytes per capita.
The global data pipelines are becoming congested. It will
not be possible for all these devices to continuously
connect to centralized cloud silos for all the data they
will produce, nor will it be possible for analytic engines
in these clouds to respond back to the actuators to act on
the data in real time.
This is where ‘Fog’ and ‘Mist’ computing, storage,
bandwidth, electricity enters
the picture. One has to
distribute these resources all across the landscape, which
immediately brings up the question of how to do this in
practice with all the red tape in place when there are 10s,
100s or even 1000s of stakeholders involved in this new
This conundrum was the cause of the inception of IOTA.
Through zero fee transactions, these devices can share these
technological resources amongst one another in real time
locally in a distributed network, thus avoiding the
centralized points of failure, unclogging the resource
infrastructure and abide by the laws of physics.
Somewhere in that quote is today's magic word IOTA
is a third generation crypto. It operates on what
is called a DAG
, a directed acyclic graph
Never mind how that works, this isn't a maths lesson. What you
need to know is what it can do, and what it costs, and just
how useful it is going to be.
Here is just a small bit about a DAG
taken from the IOTA
White Paper. I hope it helps.
Instead of the global blockchain, there is a DAG
that we call the tangle. The transactions issued
constitute the site set of the tangle graph, which is the
ledger for storing transactions. The edge set of the tangle
is obtained in the following way: when a new transaction
arrives, it must approve two previous transactions. These
approvals are represented by directed edges, as shown in
Figure 12. If there is not a directed edge between
transaction A and transaction B, but there is a directed
path of length at least two from A to B, we say that A
indirectly approves B.
Alright, so much for a brief bit of technical language, now
let's get on to more understandable matters. First: IOTA
is free to use. Most of the transactions these IoT devices
send will be data or very small value payments.
At time of writing, the average fee on a bitcoin transaction
is $6, and the average fee on an Ethereum transaction is
If your IoT device is making micro transactions for $0.00001
per time, any fee, no matter how small, is going to massively
effect its cost and its economic model. This is why carmakers
such as Volkswagen and Jaguar Land Rover chose to work with IOTA
Driverless cars will be able to pick up and report traffic
congestion, accidents, potholes in the road, and anything else
required. They will be able to automatically pay motorway
fees, parking fees and so on, and these small payments will be
made across a free network.
The really big issue here is that this system is streets ahead
of any other token technology. Quite frankly if this all works
as expected then I have to wonder what all the other tokens
are going to be used for. They really won't have much value.
I recently read an interesting article on smart contracts for
insurance policies. These will put nine-tenths of the world
underwriters out of work, and make insurance much cheaper, and
payouts could be instant, but one thing these smart contracts
need is a method to check whether a clause in the contract has
indeed been triggered. In order to do that the contract will
search oracles for the data needed to confirm or deny whether
such a term has been triggered.
An oracle is a system that gathers information from various
sources, and checks it. IOTA
is in an ideal position
to be the oracle of oracles. With it being used to connect the
cities, motorways, and businesses of the future (and by the
future, I am talking about an adoption over the course of the
next five years) then IOTA
is going to be the go-to
In September 2018, Fujitsu
be the “new protocol standard” in its supply chain and audit
trails. Basically that means Fujitsu
will be using IOTA
to make its manufacturing processes more efficient and easier
does become the “new protocol standard” of
manufacture, as Fujitsu
seems to be banking on, this
will lead to a massive adoption of IOTA
is the leading Japanese information and
communication technology (ICT) company, and the world’s fifth
largest IT services provider.
So now IOTA
using it in their processes. Each of these
companies is a titan in its respective industry, and they are
all backing – and more importantly using – IOTA
Now, unlike blockchains, IOTA encourages all dApps to build on
its platform to use the IOTA network itself. Not to create
their own new tokens.
This means that more information is sent through the IOTA
network, which both speeds it up and brings more value to it.
Sending transactions on the IOTA
network is free. But
the tokens are not free to buy. They are sold on exchanges,
just like any other crypto. So if companies want to use the
network, then need to buy IOTA
tokens. This is a very
strong value proposition for its tokens.
This is a ridiculously short intrloduction to the subject. I
could write a book about this, and it would make fascinating
reading, even if most people thought it science fiction, but
in amongst my other activities I simply don't have the time to
write such a book. But if this short article whets your
appetite and encourages you to do a spot of research, then it
will have served its purpose.
Even if you don't want to invest in this token I would suggest
you read as much as you can about what this system can do. If
nothing else, it will provide you with a very interesting
window on the world that is maybe less than five years away.
It exists right now, and adoption is growing, but not all the
parts are yet in place. For instance, if you want the IoT and
smart highways and smart cities then you need 5G. That is
probably less than a year away. All the other parts are being
put in place right now. The next decade is going to change the
world. I am investing in the technology that is going to make
that new world function, because that's where the money is.