Infrastructure Inversion: IOTA and the IoT

The full article was originally published by Matthew Bianchi on Medium. Read the full article here.

What the hell is Infrastructure Inversion?

Throughout history, technology always manages to plateau. The point at which the current systems can no longer support the evolving needs of our technologically astute society. When this happens, there is typically a shift that takes place, an inversion of sorts where a new infrastructure is built to support the technologies of tomorrow. This typically takes place due to limitations of the present infrastructure that no longer allow for innovation. Humanity has seen this take place countless times over the years and it continues to happen at an even greater pace today. When the incumbent infrastructure reaches its potential, there is always a new technology that paves the way for a brand-new infrastructure, allowing for innovation and invention to flourish once again.

To illustrate this concept a little more clearly, let’s look back at what infrastructure inversions have taken place in more recent times. Cars and paved roads are a very interesting example. When the automobile was first invented, there was no simple way to use it. Most roads at the time were nothing more than dirt paths — originally intended for horses — on which cars struggled to operate efficiently. Initially, the public scoffed at the idea of the automobile; it was clunky, loud, inefficient, and often got stuck on dirt roads. However, the solution was not to make the car more dirt road-friendly, but to build an entirely new infrastructure to support them, which are the paved roads we know today. Paved roads didn’t just allow for the automobile to experience widespread adoption but allowed for entirely new technological innovations simply due to its inception. Soon, we would have skateboards, bikes, segways, motorcycles, etc. The “old” technology was made new and created an opportunity for innovation once again.

Recently, we have seen this concept shown with the introduction of the Internet. If you’re old enough to remember, the internet used to be a cumbersome and slow technology that frequently frustrated consumers. This is because the earliest versions of the internet were built to operate through phone lines; which nearly everyone had connected to their homes. Since so much data was attempting to be crammed through these lines, the internet was largely inefficient, which, much like the automobile, caused the public to raise concerns. “It’s too slow.” “What’s a Google?” “The internet is a place for weirdos.” These were common complaints and questions at the dawn of the internet age. However, as the internet grew, so did the need for dedicated internet technology. New infrastructure for the internet caused a massive boom in technological and societal innovation. People started communicating, shopping, reading, and doing nearly everything online. The internet gave people the tools to design and innovate on their own, like a child with access to crayons and a sheet a paper, people started to create.

You might say, “Well, the internet is already here, so what could possibly be next?” The answer, in my opinion, is the blockchain revolution, and the dawn of what are known as Distributed Ledger Technologies, or DLT. It appears as though we are reaching a new plateau of sorts with what the Internet is capable of, and we will need advanced solutions to continue to innovate and grow. It is not uncommon to have heard of “blockchain technology” these days. Popular cryptocurrencies like Ethereum and Bitcoin are utilizing this technology to create new ways to exchange data. However, it is becoming clear that there are still some very serious limitations to these technologies that will need to be addressed if they wish to succeed. Currently, much like the automobile, or early versions of the internet, many DLTs are reliant on the Internet to make them useful. But, like the early internet, the current iterations of the many blockchain and DLT projects are inefficient and will lead to serious complications in the future. While all projects are focused on their own vision of what the future looks like, a groundbreaking project called IOTA seeks to create the robust infrastructure the people of tomorrow will need.

What makes IOTA so special?

IOTA is a cryptocurrency/DLT that seeks to solve the current inefficiencies of the blockchain. Blockchain is a technology that was created by Satoshi Nakamoto in 2008 that debuted with the popular cryptocurrency, Bitcoin. In recent years, it has become apparent that there are many issues preventing the widespread adoption of cryptocurrency and DLT tech. Scalability limitations, slow transactions times, high transaction fees, consensus, and security are large issues that cryptographers around the world are seeking to solve. IOTA’s new DLT, known as the “Tangle,” claims to have mitigated many of these concerns, which is why it lends to be the most lucrative technology for the coming “Internet of Things.” The Tangle works in a slightly different way from blockchain technology. There are no blocks, no transaction fees, and an entirely different data structure known as a DAG (Directed Acyclic Graph). This means that the entire network can scale infinitely and will never cost users a penny to make transactions.

Scalability has been one of the primary concerns for projects like Bitcoin and Ethereum. As their networks grow, so does their carbon footprint. Most blockchain technologies rely on the existence of “miners,” or computers that process transactions and support their respective networks; this process is known as Proof-of-Work (PoW). These computers are incredibly energy-intensive, and the network can only scale so long as new computers are being added to the networks. It’s not uncommon for high transaction volumes and new applications see “Crypto-Kitties to slow down the network significantly and cause is known as a “blockchain bottleneck.”


When these networks experience high traffic, it all has be funneled through the blockchain and transactions can only be processed so quickly. This can result in high transactions fees and slow confirmation times. IOTA operates in a fundamentally different manner. Every IOTA transaction is feeless, but that doesn’t mean that it’s totally free. Every time an IOTA transaction is made, your device is required to do a very small amount of Proof-of-Work, validating two other transactions for your one. Because every user is required to validate transactions, the more users there are, the faster the network becomes. This makes IOTA infinitely scalable without the need to use miners, reducing their carbon footprint substantially.

As the network continues to scale, transaction speeds will become faster and faster, until they are nearly instant. This means that if I wanted to send $1,000,000, or $.001 anywhere in the world, I could do so instantly, and free of charge, giving way for an entirely new method for the transaction of value, as well as data. Additionally, the added Proof-of-Work from all transactions contributes substantially to the security of the network. Although traditional blockchain is fairly secure, they are still susceptible to a “51% attack”; an attack through which a party obtains a majority of the hashing power of the network, allowing them to “double-spend.” Currently, due to the existence of a central “coordinator,” IOTA cannot be subject to a 51% attack. This brings up issues of decentralization, but the IOTA Foundation has repeatedly asserted that the coordinator will be turned off once the network has grown large enough to prevent a 51% attack from every occurring. While the cost of a 51% attack on a traditional blockchain is likely to carry an extremely high price-tag, the cost of the same attack on IOTA’s network would be exponentially greater, as there will be far more devices connected to the network. IOTA appears to be solving many of the concerns that surround most DLTs today and will look to display their strengths in the coming “Internet of Things” economy.

Note: One of the other great concerns regarding blockchain and DLT is “Consensus.” However, this concept is a little more advanced and would require an abundance of additional explication, so I’ve omitted it from this article, if you wish to learn more, click here and read the section on “Consensus.”

WTF is the Internet of Things?! Pls Explain.

To put it simply, the “Internet of Things” or IoT is the idea that every single device with a chip in it, will be interconnected in some way, be it Bluetooth, wifi, radio, etc. Because they are so interconnected, they will be able to share data with each other in real-time, paving the way for an entirely new Machine-Economy. Most products in the future will be manufactured with the IoT in mind. Soon there will be a chip in nearly everything you own. Projections show that by 2025, the number of IoT devices will exceed 75 billion.[1] That’s roughly 10 IoT devices for every person on the planet.

These devices will need an efficient channel to communicate through, one that can handle an extremely high volume of transactions, in addition to low-cost microtransactions. In the IoT, millions of transactions will be taking place every second, with your devices selling data like temperatures, CO2 concentrations, air quality, and wind speed. Because of this, these transactions will have to come at an extremely low cost and will many will value at a fraction of a penny each. Current blockchain projects like Ethereum and Bitcoin would not be able to sustain this frequency of transactions — due to blockchain bottleneck — and the costs would be far to high for the Machine-Economy to be profitable. If the cost of a transaction is $1, or even $.50, it wouldn’t make sense to transact anything greater than those values. This is exactly why I believe IOTA has the greatest potential for the future of crypto and the IoT. Because IOTA’s “Tangle” is infinitely scalable, this means that each one of these devices would simply make the network faster, instead of bog it down. Not only that, but these would be extremely low-cost transactions, in fact, they would be entirely feeless. The cost to operate these transactions is literally zero, and the IOTA Foundation has assured that this will never change.

With the likes of Bosch, Volkswagen, and Fujistu, as partners and collaborators, it appears that IOTA has a very strong foundation to build upon, and the future looks very bright. Especially with the recent announcement of Qubic, which will enable smart-contract capabilities, as well as outsourced computing, and oracle machines. In the IoT world, things will look very different. Your devices will work for you, earning passive income and contributing to the growing network. Self-driving cars look to completely overhaul the way we transport both and products. Your car will go out and rideshare to earn you extra money while at work, it will be able to refuel itself, get washed, and even get serviced. This is because the backbone of the IoT — our new infrastructure — will be facilitating communication with these services, allowing our devices to transact with the world without having to lift a finger. IOTA looks like the clear frontrunner to build the underlying network to facilitate this entirely new economy. I am eager to see if IOTA can continue to deliver on their lofty goals and show that the “Tangle” is the most lucrative option for serving the IoT, creating the infrastructure we will need to propel the world into a new technological renaissance.

Thank you all for taking the time to read. I believe IOTA is a very interesting project and felt the urge to share my thoughts about its potential for the future. If you enjoyed the piece, please feel free to leave a comment or clap, and even a follow if you’re feeling frisky. Cheers!

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The full article was originally published by Matthew Bianchi on Medium, where people are continuing the conversation by highlighting and responding to this story.

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