The IOTA Foundation, headquartered in Berlin, identifies itself as a non-profit organization. IOTA’s market capitalization has increased from approximately $4 billion to over $10 billion over the past couple of weeks (CoinMarketCap). A rise in its value is primarily due to the company’s announcement that it intends to create a decentralized data marketplace. For this project, IOTA will be collaborating with Microsoft, Deutsche Telekom, and Fujitsu.
So, how will this project be implemented? Basically, the company’s tokens are designed to be traded on the Internet of Things. The “things” are usually physical devices such as appliances or even vehicles. The information produced by the devices can be reliably, safely, and securely stored on a decentralized ledger. Once this data has been stored, it cannot be corrupted. If anyone wants to acquire this data, then they can easily do so via a seamless transaction with the owner of the data. There is also no transaction fee.
There are over 2.5 quintillion bytes of data are generated every 24 hours. Unfortunately, almost all of this data turns to “cyber waste” because there’s currently no effective way to monetize, sell, or distribute this data securely. With this new data marketplace project, a viable solution will be provided to harness the data.
Unlike the majority of cryptocurrencies that use a standard blockchain to conduct transactions, IOTA utilizes a “tangle”. The architects of tangle have based its design on a mathematical, directed, acyclic graph. A *tangle* is used instead of a regular blockchain because blockchain transactions have become very expensive. Furthermore, using a blockchain could create scalability issues as the IoT (Internet of Things) network grows larger.
On the IoT network, there are no miners. There’s no concept of mining. Instead, the entity that initiates a transaction does so by also validating two randomly chosen previous transactions. Both (previous) chosen transactions also refer to two additional previous transactions.
The founders of IOTA are quick to point out that the data marketplace is currently in its experimental or beta stages. Cryptocurrency researchers at MIT discovered certain faults in IOTA’s security. However, this issue has now been resolved. Relatively minor, fixable, and temporary issues or setbacks shouldn’t be too concerning. It’s best to look at the broader picture.
Another minor setback also came when there was some confusion regarding IOTA’s exact relationship with Microsoft and the other conglomerates. Initially, it was thought that IOTA had entered into proper and official partnerships with these companies, but this was clarified when it was learned that these companies had taken on the role of “participant” by deciding to test out IOTA’s data monetization project. When this was announced, IOTA’s price dropped but it’s still trading at levels which are significantly above those from last month (November, 2017).
Reports have surfaced that Samsung, Cisco, and Volkswagen will also be working cooperatively with IOTA on its decentralized data marketplace. While the bulk of attention is focused around bitcoin or ethereum, IOTA and Ripple’s XRP should also be noted for their commendable gains.