IOTA’s Qubic update: Potential Impact

On the 3th of May, the IOTA Foundation unveiled the meaning of their secretive project: Qubic. The project had been a rumour for a long time under the name Q, which was hyped as a very important and big upgrade on top of the IOTA cryptocurrency.

With Qubic, the IOTA Foundation confirmed the addition of Smart contracts, Oracles and outsourced computation to the IOTA platform. Individually, all of them where expected to be added to IOTA eventually, but the fact that they are going to be released in a single upgrade is exciting news. In this blog I will go through the unveiled technologies and speculate about their usage.

For the uninitiated, IOTA is a Distributed Ledger protocol, which includes a cryptocurrency. While almost all other cryptocurrencies are using blockchain technology, IOTA uses a Directed Acyclic Graph(DAG) algorithm. Their implementation of the DAG is called the Tangle and it has different properties then a Blockchain based cryptocurrency. Two of the biggest issues with Blockchain technology are scaling and fees. The Tangle has neither a scaling problem, nor requires a fee per transaction. Instead, users of the Tangle need to support the network before they can send a transaction. The user is required to confirm two other transactions that are on the Tangle, before they can send their own transaction. For more information about the working of IOTA and the Tangle, I recommend going to

Smart contracts
Now, what does the unveiling of Qubic really mean for IOTA? As you have noticed, IOTA has some definitive upsides over blockchain in terms of scaling and fees. However, IOTA has not been shining yet, due to the lack of smart contracts. Smart contracts are the biggest selling point of the Ethereum blockchain, which is the second biggest cryptocurrency, and many other blockchains. It allows developers to add logic, in the form of code, to money and data. Without smart contracts, IOTA is a lot more difficult to use in projects.

On Ethereum, smart contracts costs money to execute. Even though those costs can be very small, it does add another difficulty layer before smart contracts can go mainstream. Every user that wants to write data to a smart contract will require an Ethereum wallet with funding. Not many people would want to send money to an exchange to buy ETH, then send that ETH to a wallet in order to use a small application. IOTA may get smart contracts that do not costs anything to execute. This lowers the barrier of entry for users to use decentralized application or spend tokens.

Speaking of tokens, Ethereum has also become popular due to their infamous Initial Coin Offerings (ICO). These crowdfunding smart contracts create tradeable tokens that are promised to be integrated in the final product. The IOTA community has already been excited about the Peaq project, which promises tokens on the Tangle, but with smart contracts we might be able to create tokens in a more elegant way and spend them without fee’s. Although we can’t be sure yet that smart contracts will be completely feeless, nor do we know if it will support token creation. The general architecture of the Tangle definitely hints towards this.

Secondly, Oracles are coming to IOTA. Oracles are not as popular a topic as smart contracts in the cryptocurrency communities but they are very useful. Currently, blockchains are closed off from the outside world. They can only read and write data towards the blockchain, but can’t integrate outside information into their calculations. IOTA wants to become the backbone of the Internet of Things, which are often small sensors that register data from the outside world and put them on the Tangle. This already made IOTA a lot less isolated. However, Oracles will completely remove this isolation. Oracles allows IOTA smart contracts to read (and maybe write?) data outside of the Tangle.

For example, you made a bet about a football match and put it in an IOTA smart contract. The winner takes all, but how do you determine in a fair way which team has won? A set of Oracle sources could allow you to accurately get the final score in a decentralized and fair manner. In addition, we might see other blockchains become connected to IOTA through an Oracle. This might allow IOTA to interact with other blockchains, which could allow IOTA to become the backbone for highspeed cryptocurrency swapping (Atomic swap). Especially, since you can accurately determine the price of both currencies through Oracles that read the data from all the exchanges combined!

Outsourced Computation
Lastly, part of the Qubic reveal was a way to outsource your computational needs through the Tangle. This could be the technology that might make IOTA smart contracts possible as it might use verifiable computation through replication. This means that the IOTA smart contracts are executed on many outsourced computers, and the results are verified by looking at the outcome of all the computers. In addition, this feature might be useful for small IoT devices that carry little computational power. These devices could rent computational power in order to solve problems that would take them too long to compute. It could also be useful for scientific research.

The combined power of Qubic
The features of Qubic combined might be something very powerful. If IOTA would connect via an Oracle to Siacoin for example, we would have computational power, information and storage. That are all the components for a massive decentralized global computer. Could this be the dream for an artificial intelligence platform? All the components are there to allow the Tangle to have services that are continuously improved through learning. On the 3th of June we can expect more news about Qubic.

Additional updates: Ledger integration & ION
I would also like to mention some small updates that where shared on the Dutch IOTA meet up. Peter Willemsen, main developer of the integration of IOTA on the Ledger Nano S, performed a live transaction from the Ledger to a user, which means that Ledger integration is in finalisation. Moving IOTA another step closer to a secure currency.

In addition, he announced a small library he is creating called ION. He created a simple but elegant solution for Flash Channel users to establish a peer-to-peer connection, by finding each other through the Tangle, rather then a centralized server. It might not have the highest impact, but small improvements to the protocol like this adds to the decentralized nature of the platform and makes Flash Channels more useful.

In sum, the IOTA foundation has revealed a very exciting set of features that will greatly increase the possibilities with IOTA. Smart contracts and Oracles will add a lot of functionalities to IOTA that blockchains may have already had, but IOTA combines these concepts on a scalable and cheap platform. Outsourced computation could be very useful for IoT and combined with the rest of Qubic could potentially lead to some interesting Artificial Intelligence projects.

IOTA’s Qubic update: Potential Impact was originally published on The IOTA-News Community curates, examines, and summarizes news from external services while producing its own original material. Copyrights from external sources will be credited as they pertain to their corresponding owners. The purpose is to make use of 3rd party content or pictures as either allusion or promotional endorsement of mentioned sites. If you have a claim of copyright infringement with respect to material, please mail to support[at] is a community run website and is NOT affiliated with the IOTA Foundation in any way.

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