IOTA: fulfilling a promise
Intro
After some rough and turbulent times, the IOTA Foundation’s hard work seems to be finally paying off. They have found a clear path towards fulfilling their initial promise: to build a backbone for the machine-to-machine economy, and solve the blockchain trilemma. Dubbed “A new dawn”, the IOTA Foundation is about to upgrade and release a complete re-write of the core protocol on April 28th. This is the first domino of a series of big upgrades coming this year. In this article I will cover some of the IOTA basics, misconceptions, and the road ahead. I’ll try to keep the paragraphs short and concise wherever possible.
What is IOTA?
For those unfamiliar with IOTA, let me describe it in a few sentences:
IOTA is a permissionless, open-source distributed ledger protocol that can transfer both value and data. In contrast to most other cryptocurrencies, it uses a directed acyclic graph (DAG) instead of a blockchain. The benefit of using a DAG are high transfer speeds, good scalability and zero transaction fees. All of this contributes to the fact that IOTA is designed to become a backbone for the Internet of Things (IoT), allowing for separate or simultaneous transfer of both data and value between machines. Because IOTA is feeless and can send both data and/or value transactions, companies can launch data-based applications independent of thinking or worrying about owning cryptocurrency. The IOTA network is called the Tangle.
Supply misconceptions (Bitcoin comparison)
I’m often met with the argument that the IOTA supply is very big. People are quick to point out that Bitcoin has a “small” supply of 21 Million BTC, whereas IOTA has an “enormous” supply of 2.779.530.283 MIOTA. It’s easy to see why people might think this, however, the reality is different, because you have to look at the smallest divisible unit. The smallest divisible unit for Bitcoin is known as a ‘Sathoshi’, one BTC consists of 100.000.000 Satoshi. This is different for IOTA because they are sold as MIOTA, which stands for Mega IOTA. One MIOTA consists of 1.000.000 IOTA, which already is the smallest divisible unit.
A quick calculation (dividing the difference by the total Bitcoin supply in Satoshi) will tell you that IOTA has a max supply that is about 32% larger than Bitcoin. Which is a lot smaller of a difference than you might have thought at first glance. Another important thing to note is that 100% of the IOTA supply is already in circulation, while the Bitcoin supply is still inflating.
Current price (Bitcoin comparison)
Okay, so the IOTA supply is not much larger than the Bitcoin supply, but what about the price? To calculate the normalized price compared to Bitcoin you’d need to multiply the current price of one MIOTA (which at the time of writing this article is $2,14) with the circulating MIOTA supply and then divide that by the circulating Bitcoin supply. The calculation is: ((2,14*2779530283)/18686800) = $318. This means that buying MIOTA today would be similar to buying Bitcoin when it was still $318 back in the day. There is huge amounts of room left for price growth in IOTA.
The road ahead
The IOTA Foundation has several major updates planned this year: Chrysalis, digital assets, smart contracts, and Coordicide. All of these updates successfully combined will result in a very versatile protocol that is feeless, scalable, secure, and decentralized. I’ll cover these updates one by one in the paragraphs below.
