The IOTA Economy
The full article was originally published by Dan Simerman on Medium. Read the full article here.
IOT, or the Internet Of Things, is often confined to a specific group of companies and technologies. In this article, I ask that you expand your view of what is possible in the upcoming Machine Economy, and explore how your business or organization might benefit by thinking of products or services that support a new user: the device.
We tend to believe the IOT revolution will allow us to gather better data about the products and services we own. While true, this is a somewhat limited view. In reality, devices will be able to interact with one another as their own economic agents, transacting in their own communication protocol and currency. In this new economy, machines will engage with us as well as one another.
This will create a Cambrian explosion of products and services to enable cooperation between devices (m2m), people (p2p), and devices and people (m2p).
This is the lense through which it helps to understand the vision of IOTA and the IOTA Economy.
IOTA is an open source distributed ledger designed to support communication between devices in the Internet Of Things. IOTA carries three characteristics that position it well for the Internet Of Things: It is scalable, fast and feeless.
Why is it important to build something like IOTA?
It would be difficult for a global network of IOT devices to communicate and transact using a blockchain like Ethereum because a) Current blockchain designs are not flexible enough to scale as a network grows and b) It is impractical and expensive for machines to pay the network (via miners or staking) for small transactions. IOTA solves this problem by offering a feeless transaction layer for data and value. The only ‘cost’ associated with the IOTA distributed ledger is that a transaction must verify two other transactions on the network.
This is an important issue to solve because we expect 75 billion smart devices to come online within the next decade. That’s