IOTA is a special kind of cryptocurrency designed for the Internet of Things and it’s something that doesn’t use the famous concept of blockchain. It was launched in 2015 and till now it has produced several promising results for its supporters.
Interestingly, the technology that powers IOTA coin, is called Directed Acyclic Graph or DAG, which is much more decentralized than Blockchain and provides infrastructure for feeless and variable micropayments.
If you have an Alexa home speaker or RFID cards at workplace, you would know that these technologies work in a connected environment of devices, that we call the Internet of Things.
IOTA utilizes cryptocoins for enabling a monetized IoT, where these coins will be able to exchange resources among each other and increase the overall efficiency of the system.
What are the implications of IOTA and how it can help your business become future-ready are two questions that this article will try to address.
Welcome to a Decentralized Future
We all were exposed to the concept of decentralization with the popularisation of bitcoin – a digital token, that works on Distributed Ledger Technology (DLT).
Apart from the becoming a money-making commodity, Bitcoin (worth more than $17,000 per unit) has the potential to change how the world around us works.
Thanks to the underlying principle of decentralization that will allow us to gain individual rights over our data, hardware, and other things that are in the hands centralized authorities till now. Cryptocurrency is just the first prominent use case of such a technology.
But what is Decentralization and why is it so important?
Decentralization, essentially means taking the supreme control of a system from an epicentre of authority and distributing it among its various participants. In technological terms, decentralization refers to systems like Blockchain, that are not under the command of a single governing entity and their control is openly distributed among its users.
The need for decentralization can be figuratively demonstrated by the popular proverb – “Don’t put all of your eggs in a single basket”, as doing so, you are making yourself vulnerable to a total wipeout, if a critical attack takes place.
Also, the systems that operate under a single authority always carry the risk of being compromised even if the governing authority doesn’t intend or wish to do so. And if it does, there’s not much you can do about it, you’ll have to face consequences.
Impacts of IOTA on Information Technology
Decentralized systems provide a deep level of security for information that is exchanged between various endpoints in a network – something without an IT organization can’t operate.
The information is shared in a highly encrypted format that is next-to-impossible to manipulate. For organisations that use heavy duty CRMs with sensitive customer data, such a technology can ensure high reliability and great customer trust.
As Nasdaq reports, “Data breaches totaled 1,540 worldwide in 2014 — up 46 percent from the year before — and led to the compromise of more than one billion data records.”, this is a matter of serious concern.
In a typical, IT company, the biggest challenge is to increase the workflow efficiency and decrease operating costs. This is something truly difficult because there are a large number of electronic devices that are always connected to the internet and are busy hogging resources.
In a decentralized network, you can share resources such as computational power, data storage and even electricity in a smart way. This can be elucidated by imagining a workplace that allows the employees to share their CPU power with one another without creating an overload on a single workstation whenever the need arises.
Blockchain and decentralized tech can convert your office into the workplace of future with the inclusion of IoT.
Just recently, the city of Taipei, announced the inclusion of IOTA in realizing a number of their ‘Smart City Projects’. One of which is TangleID, a smart card solution that will keep personally identifiable data such as voter ID, personal details etc in the safe hands of a decentralised network.
“With Taipei City always thinking ahead and with IOTA’s technology, this partnership is a strategic move to usher in the era of smart cities to the citizens of Taipei,” said Wei-bin Lee, Commissioner of the Department of Information Technology in the Taipei City Government, in a press release.”
A Few Pitfalls Down The Line
The working principle of IOTA is a new concept that needs maturation. It works on a ternary system of units (rather than binary) and there have been reports of it being inefficient in reality.
There have been reports of vulnerabilities in its hash function as well, (a cryptography method that generates a code for information units on IOTA network). A particular one from Neha Narula from MIT that was published on Coindesk states that;
“When we noticed that the IOTA developers had written their own hash function, it was a huge red flag. It should probably have been a huge red flag for anyone involved with IOTA.”
So, amidst the possibilities that IOTA offers and the ruckus that it had created in the crypto world, it still enjoys a market cap of over 1 billion dollars. Will it be enough or will IOTA go down like tons of cryptocurrency project do each day. Only time will tell, but we sure are excited to consider the technical advancement the coin promises and we have a close watch on it.
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