Category: Background

Explaining Series: Fog Computing in the Internet of Things

Explaining Series: Fog Computing in the Internet of Things

Fog Computing -one of many new trendy terms that we see and read almost everywhere in this field.

What is it? -and how can IOTA enable the perfect fog-computing landscape, the IoT needs?

I give you a short explanation and good sources for a smooth heads-up.


Roundup:

This roundup is an experiment that aims for a better understanding of the greater picture. Some keywords before the actual article are meant as an information-index.

  • Internet of Things (IoT)= Term from the MIT, Kevin Ashton, 1999
  • Fog-Computing = Term from Cisco
  • Fog = Decentralized/Distributed
  • Cloud = Centralized
  • Realm = IoT + IIOT, B2B, M2M, IoE, Smart grids, Smarthome, Smart cities, interconnected world
  • Problem = Unused Sensor-Data, Need for a solution of a distributed network, Costs of cloud-computing, time
  • Application = Evolving Markets, Quality-as-a-service, Machine Communication, Scada
  • IoT Systems = Basically two groups: 1) Identification Group (sensors, data gathering) 2) Computational group (processing, data storage)
  • Limitations until now: Cloud computing (centralized, far away from consumers and devices)  doesn’t fit the requirements of the IoT (distributed, in need of close storage, computational resources, instant processing), Bandwidth
  • Connection Types: WiFi, Bluetooth, ZigBee, 2G/3G/4G/5G, Radio, Z-Wave, 6LowPan, Thread, Wifi, Cellular, NFC, Sigfox, Neul, LoraWan

The IoT

The vision of the Internet of Things is still in the making.

With the latest development in this interconnected world, new markets are emerging and a variety of requirements are born.

Wearables, smartphones, domestic devices like smart-home solutions for an intelligent household demand an interconnectivity solution that has yet to come.

It’s no secret that almost every company is also working on solutions to make it happen: a world, where data is a more valuable resource than oil. If not today, then in the near future.

This leads to a point, where technical barriers of today hinder progress for tomorrow.

The IoT, a distributed network around the world is more than the Internet.

A mesh-net that is connected with every possible connection type. Where devices work in local clusters, it’s obvious that centralized components, sometimes on a different continent, don’t fit in the greater picture.

Sensors, cameras, smart devices often use ad-hoc solutions to function in their specific field, such as monitoring systems like Scada, that send valuable data to a nearby control center in order to optimize industrial processes.

What if these monitoring systems are working time-sensitive, but the current solutions are slow and on top of that centralized and unsecured. The productivity could be better, employees may work in a more dangerous environment and as a result: the company could face problems.

Connected facilities incentivize industry-espionage and hacks.

Distributed denial of service attacks is a phenomenon of the last few years, where certain malicious parties are attacking infrastructural points in the web, to cripple communication of some systems and special services.

Sometimes as a decoy for a hack, sometimes for political or activist-reasons.

Not rarely, mentionable down times create financial losses or the blockage of regional infrastructure’s hits, next to the target, also other companies that are located in the surrounding area.

A problem of the Internet, not necessarily of the IoT.

Due to the distributed mesh-net characteristics, the IoT is envisioned as a network, that is self-sufficient, in which case it can connect devices of the identification group via many ways, not only one.

An attack on central points is per definition impossible because there is no center in the IoT.

That leads to a natural resistance against DDoS and other downtimes.

Legacy systems vs. new systems

An additional issue of cloud-computing in the IoT would be the costs. Legacy system use to ignore huge amounts of data because there is neither storage no need for them.

New systems in the IoT, with smart solutions, rely on this data, but sending them into the cloud would go beyond the scope of the IoT. Too much information is generated, and real-time analysis, as well as centralized cloud-computing solutions, are conflictive with each other as uploading these huge amounts takes time and money -especially if the cloud-storage is thousands of miles away.

Fog computing, however, creates a bridge-solution for the identification group and computation group: It is about forwarding the computational power to the edge of the network, where data is generated and the results are needed.

The benefits of using Fog computing instead of legacy cloud systems are tremendous.

Varghese, Wang, et. al [2017]. come to the conclusion that. “For an online game use-case, we found that the average response time for a user is improved by 20% when using the edge of the network in comparison to using a cloud-only model. It was also observed that the volume of traffic between the edge and the cloud server is reduced by over 90% for the use-case.

This is just one use case that can be mirrored on many other settings.

In consumer markets, Quality of Service and Quality of Experience are important factors.

Another example would be the transparent customer. When a transparent customer enters a big supermarket, his views and interests could be analyzed within seconds.

Cameras can detect his interest in certain devices or components, and advertisements on monitors along his path can be adjusted to his specific needs. With old legacy systems impossible due to the long processing times between these cameras, a cloud, and computational resources, with fog computing, however, the data can be processed way faster and deliver the necessary information back to the customer, along his way in the mall.

To draw a simplified picture of the fog-landscape:

The distributed mesh-net is growing in height z, if you will, whereas decentralized and centralized networks are growing on the x and y axis. Shorter ways from the data collectors to the computational resources are the result of fog-computing.

Concerns can be addressed with IOTA

Whether it’s the data-integrity, optimization or protection of the in-house Research & Development data, companies look for a lasting solution.

When data is stored centralized, hackers usually use social engineering, or phishing attacks to get access to the data.

As centrally stored data would be collected all in once with this method, Fog computing would make it possible to store sensitive information in small packets, distributed, with different passwords/keys/seeds to access them.

IOTA  can deliver a unique solution here. A data-stream, bound to countless seeds, in a distributed network, secured with sophisticated algorithms. Not even quantum computing would be a threat to the hashes.

As you may already know, IOTA is a distributed ledger technology, that enables fee free transactions.

For data-transfer with fog-computing, you wouldn’t even need tokens, the only condition would be to confirm two other transactions before sending one of your own.

A rule that enables true scalability for a billion device network on a global scale.

With Masked Authenticated Messaging, IOTA has an additional option to send and process sensitive data.

Now, a really big hurdle in the IoT is the availability of dozens of connections and different norms.

When devices could be connected in a similar way, the usability would increase. A plethora of standards that are built for the IoT can lead to a fragmentation of the network, as companies want to stick to their standards, to support their product-line or roadmap.

If IOTA would be the standard settlement and data layer, which is free to use, the Internet of Things could be a barrier-less environment with true scalability and data-integrity.

Due to the value of collected data, new markets would come up, that aim for selling this information in real-time.

People would possibly be able to sell their consumer data, each time they enter a shop, with true nano payments.

If data would be collected in the fog, BigChain DB a scalable distributed database for all kinds of data could deliver the necessary infrastructure for customers, institutes, and companies.

A seamless solution for the IoT.

Fog computing is, therefore, the next necessary milestone in the field of the Internet of Everything and a vital part of the vision of IOTA.

 

Video of Dominik Schieners Presentation at the Tech Open Air 2017

 

 

 


Sources:

https://www.cisco.com/c/dam/en_us/solutions/trends/iot/docs/computing-overview.pdf

http://www.springer.com/de/book/9783319576381

https://arxiv.org/pdf/1701.05451.pdf

 

Images:

<https://www.iot-now.com/2016/01/11/40800-connectivity-on-the-edge/>

 

Revealed Business Connections of IOTA

Revealed Business Connections of IOTA

Market capitalization of a cryptocurrency is the best indicator to show which project succeeded the most. 

…this sentence is not true.

After years of pump and dump, history has shown that only real-world adoption counts, that real connections to businesses make a difference.

To give you an idea on how far IOTA has come, I set up a list of known collaborations or business connection of IOTA.

Important: The following list also includes partnerships with members of the Decentralized Identity Foundation(DIF) and Trusted IoT Alliance,

-> so there is not necessarily a direct collaboration.

It’s just a matter of time and NDA’s that this list will grow.

What we already know is incredible, but there are some connections we don’t know yet, and considering what the IOTA foundation already has accomplished, I can only assume that this is just a fraction of what’s behind the curtains.

I, therefore, do not guarantee that this list is complete or that it’s reflecting the reality. 

This list only shows revealed business connections and is not officially approved by anyone

This list will be updated when I get new information:


Accenture (via DIF)

Alpha Venturi (via Foundation)

Augmate

Authenteq (via DIF)

Bayonet (via DIF)

Beth Israel Deaconess System (via Foundation)

BigchainDB (via DIF)

Bitse (via TrustedIoTAlliance)

Blockchain Helix  (via Bundesblock)

Blockstack (via DIF)

Bloq (via DIF)

BNY Mellon (via TrustedIoTAlliance)

Bosch (via TrustedIoTAlliance)

Brainbot (via Bundesblock)

Bundesblock (http://t3n.de/news/blockchain-wirtschaftsstandort-831376/)

Canonical (via TrustedIoTAlliance)

Ccis

Civic (via DIF)

Cisco (via TrustedIOTAlliance)

Consensys (via TrustedIoTAlliance)

Consent (via DIF)

Chronicled

DANUBE Tech GMBH (via DIF)

E7 Ventures (via Foundation)

EU Commission (via Foundation)

F6S

Filament (via TrustedIoTAlliance)

Foxconn (via TrustedIoTAlliance)

Freeelio  (via Bundesblock)

Gemalto (via TrustedIoTAlliance

Gem (via DIF)

Gnosis (via Bundesblock)

Harvard Medical School (via Foundation)

Huawei EU (via social Media, rumors)

IBM

ID2020 (via Foundation)

IDEO (via DIF)

Innogy (via Foundation)

Imperial College London

IPDB Foundation  (via Bundesblock)

IRTSystemX

Jolocom  (via Bundesblock)

Ledger

Luxoft

Microsoft

Mooti (via DIF)

Netki (via DIF)

New Mobility Consulting

NewMobilityLab (via Foundation)

Norwegian Centre for E-Health Research(via Foundation)

Procivis  (via Bundesblock)

Olso Medtech (via Foundation)

Oslo Cancer Cluster (via Foundation)

Outlier Ventures

Peter the Great Saint-Petersburg Polytechnic University

R3 (via DIF)

RSA (via DIF)

RSKsmart

Satoshipay

Seedlab GmbH (via Foundation)

SINTEF (via Foundation)

Skuchain (via TrustedIoTAlliance)

Slock.it (via TrustedIoTAlliance)

Sovrin (via DIF)

Taqanu (via DIF)

Tierion (via DIF)

UBUNTU (via Canonical)

UC Berkely

University of Lancaster

UC London

UN (over ID2020/Foundation)

Uport (via DIF)

Whitechapel Think (via Foundation)

World Energy Council (via Foundation)

World Economy Forum (via Foundation)

ZipPower (via Foundation)


 

This list will be constantly updated, so take a look once in a while,

Limo

 

Is a doublespending attack possible with IOTA?

Is a doublespending attack possible with IOTA?

The “inner circle” of IOTAs community and me had a few discussions about this sensitive topic.
A lot of FUD’sters are using everything they can get and frankly, it’s not like we are caring too much about the price, but about the collateral damage that can be done by word of mouth marketing into the wrong direction.

I came to the conclusion, that I personally don’t like to see misinformation, although the long-term success of IOTA won’t be harmed anyway.

Still: too many people read the wrong things, and come to the wrong conclusion, following the questions:

Is there a doublespending threat in IOTA?

Is it true that a single GPU can outperform the overall hash power to carry out a doublespending at will?

This wrong assumption states that the technology IOTA can be manipulated to the benefit of a single person or a maliciously acting hacker group.

People eventually come to the question: Is IOTA safe to use?

We get to that answer.

First of all, let me ask you a question:

 

Is there any currency, asset, system, good, piece material on earth that can’t be misused or manipulated in any way?

Let’s not look at a baseball bat or a frying pan but at a few currencies.

We live in a world, where the global economy relies on the decision of the Federal Reserve, not to alter the key interest rate to their benefit, otherwise, the consequences can be harmful to everyone on the planet.

Same applies to the European central bank, The People’s Bank of China, the Bank of Russia and a few more.

Central coordinated institutes, that literally print money as they like, and change the key characteristics of its value.

A horror for blockchain and distributed ledger believers.

I’m not even referring to the possibilities of fraud and scam for third-parties that are not under the direct protection of these central institutes because a bank robbery can happen everywhere, anytime and no one can prevent that from happening again in the future.

Statistically spoken, it’s pretty sure that even today, somewhere on earth, a bank will be targeted.

Fiat money, on top of that, can be copied and counterfeit money can be found in every single city.

That also applies to the biggest Blockchains like Bitcoin, Ethereum, Litecoin etc.

Doublespending in Bitcoin

The Consensus-model in Bitcoin relies on synchronicity, mining, and the block validation by the nodes in the network.

Theoretically a great and secure system.

But if attackers would get control over 51% of the hash-rate (majority attack), delivered by miners (image above), they can doublespend as they like, because:

 

“Since the attacker can generate blocks faster than the rest of the network, he can simply persevere with his private fork until it becomes longer than the branch built by the honest network, from whatever disadvantage.

No amount of confirmations can prevent this attack; however, waiting for confirmations does increase the aggregate resource cost of performing the attack, which could potentially make it unprofitable or delay it long enough for the circumstances to change or slower-acting synchronization methods to kick in.

Bitcoin’s security model relies on no single coalition of miners controlling 
more than half the mining power. A miner with more than 50% hash power is incentivized to reduce their mining power and reframe from attacking in order for their mining equipment and bitcoin income to retain its value.” (Bitcoin Wiki)

 

That means if a person would able to compromise these 5 mining-farms: AntPool, BTC.TOP, Bixin, BTCC Pool, F2Pool, it could generate blocks and validate them with an equivalent number of nodes.

Until then, the honest miners are urged to change the mining pool if the hash rate is too big. We entrust them with this decision, but the reality is that no one can be stopped from building the biggest mining-farm and take over if he has the resources.

I don’t say it’s easy, I just say it is possible. Yet, no one freaks out or hinders Bitcoin from rising in value.

Critical voices, however, are increasing, because this “centralization” is not in accordance with Satoshi Nakamoto’s idea of a decentralized system.

In my opinion, mining acts as a Damocles’s sword, because the incentive to earn money for the security won’t work forever, especially when the scaling issues increase even more. Let alone the transaction fees.

But at this point, I won’t talk about the other big problems like scalability due to rising difficulty and block-size, but let’s keep that in mind.

To sum up: there is no 100% guarantee that money can’t be lost, and there is no 100% secure system.

Before I make a statement about IOTA, let’s look at the basics.

IOTA

IOTA as a DLT also relies on synchronicity, proof of work for confirming transactions, a peer to peer, fully decentralized (later also distributed) network.

It’s targeting the Internet of Things, that has a few relevant differences in terms of network topology compared to the Internet. The former has mesh-net capabilities, that inherits some natural connection barriers and lots of different connection types.

These connections (image below) can be Bluetooth, Radio, GPS connection, 5G, TCP, FTP, HTTP, or even carrier-pidgeons with WLAN-repeater if that benefits the mesh-network.

Built on a directed acyclic graph, the Tangle,  IOTA has a few more differences to Blockchains and their field of application.

There is no mining, no difficulty, no blocks, no permanent hash-rate, no decoupled consensus.

Consensus lies solely at the users, that have to approve 2 other transactions before they can send one.

To set up a node, the system demand that you look for neighbor nodes via mutual tethering.

People that see the advantage of setting up a full node, instead of using a light node, are therefore bound to mutual tethering. They manually have to look for neighbors IP’s in order to become a part of the network.

Usually, people use the #nodesharing channel in the slack for mutual tethering.

Doublespending in IOTA

A doublespend is a successful attempt in winning the race (time) in confirming a transaction that uses the same balance that was promised to the original receiver but will be also sent to a second receiver to scam the former one.

While doing so, you pretend to complete a transaction, and it shows as confirmed in your wallet, but with time and the race about getting more weight, the transaction becomes invalid, in favor of the second transaction you did simultaneously.

That means, you could trade and receive the equivalent in value for your iotas of that doublespend transaction, but after a short time, you possess both: your own funds back plus the traded asset of your business partner.

This would also mean: IOTA doesn’t work, people never had 100% guarantee that they are in possession of their funds or of the traded assets they gave for iotas.

And as a result: IOTA would certainly fall in value, people and companies would lose trust and in the end, IOTA certainly would suffer from a lasting destroyed reputation.

This attack could be used in the common markets, to short IOTA and to perform a big doublespending, to make a big profit from the reaction of the markets.

A successful FUD attack. Is that so easy like a few self-claimed experts postulated?

No. Here is why:

What conditions have to be set up to attempt a successful doublespending?

  • Getting an “omnipresence in the tangle with “bad” nodes, formed as a sub tangle (or parasite chain).
    Your transactions need to be confirmed/referenced by these other nodes. The gained weight competes with the (older) weight in the main net.
  • At some point, this parasitic chain needs to be synchronized back with the main tangle to approve their confirmation.
  • Therefore, your transactions need more weight than transactions of already confirmed transactions in the main tangle.
    This attack needs to be conducted very fast. 

How can you achieve these conditions?

  • Mutual tethering: For this purposes, it can only work when you own a full node and you need to find a substantial number of neighbors manually per mutual tethering.
    Becoming an omnipresence with mutual tethering is almost impossible.
  • In coordinator times: get control over the coordinator.
    Is that possible? No. Except you are David Copperfield. It’s as realistic as finding an entry to Fort Knox. We know there is a way, but we don’t know where.
    If we leave out a few logical barriers and you would get control, the coordinator could be shut off in a second. Another node would act as the coordinator then, as long as we don’t have the Monte Carlo Random Walk algorithm integrated.
  • You have to find the transaction that you want to doublespend in time (before it is confirmed by the main net if you are looking for a specific one)
    Even with the tangle-explorer, you would need to execute your attempt in a matter of seconds before it gets confirmed.
    Since IOTA is getting faster, the more users are using it, the confirmation-timings of a few minutes as of today, are decreasing even more
  • You have to deal with the network topology (Mesh-network)
    A successful attack of any kind needs to overcome the natural barriers of different connections and connection types.
    That leads to an unknown variable, you cannot calculate your variable t as long as you don’t know every connection, latency, delay, and bandwidth.
    Since time is of the essence in a race attack, you have a factor x in your attack vector.
  • To increase the weight of your transaction, you need to perform proof of work.
    Even if you have hundreds of GPU’s, it takes time and costs money. PoW while trying to win a (time-sensitive) weight race it not the best condition from the beginning.

To get a deeper understanding of a double-spending attack:


Please read Winstons comment about that:

 

In blockchains, as we all know, the most well-known attack vector is the “51% attack”. Research has been done in the years since that theoretical attack was postulated, and it was actually found that it would only take 34% of network hashing power to carry out the attack. So right off the bat, there is a fundamental public misunderstanding of this attack vector (people think that it requires having the majority of the network hash rate when it actually only requires 34% of it). But the exact percentage is semantics anyway – let’s move to how this attack applies to IOTA.

As you continue in this article, you’ll notice that “34% attack” is not actually “34%* attack”.

The most crucial first step to understanding all of this is that IOTA mesh net topology. This differs greatly from all other blockchain protocols. Mutual tethering and the future of IoT connectivity are the factors that make IOTA a mesh net, which has some very implications for network security, the most important of which is how this topology strengthens network resiliency against the 34%* attack.

IOTA mesh net: Each full node only sees one tiny part of the Tangle – through their handful of neighbors. No one has a list of all IPs of all nodes.

Now, let’s address the 34%* attack in IOTA. Because blockchains are not in mesh nets, the 34% attack in blockchains just means that if you get enough hash power, you can successfully conduct the attack. Percentage of network hash rate is the only variable in the block chain 34% attack. However, in IOTA, there are THREE variables required for this attack.

1. X percentage of network hash rate
A sufficiently large portion of the network hashing rate (“X%” [any number]. We’ll establish the multivariate “gradient” concept later in this writeup): Just like in Bitcoin, the attacker would have to achieve a certain very large amount of network hashing power in order to overtake the network. But this is NOT the only variable in IOTA as you can see. There also isn’t an “all or nothing” network takeover in IOTA. This idea probably requires an entire article in and of itself, but suffice to say that 34%* attacks only take down layers of the Tangle, requiring an exponentially stronger 3 variable attack to propagate deeper and deeper into the Tangle.

2. Omnipresence
Seeing the entire network topology at once. “Having an overview of the network
To deploy attack resources properly and efficiently, an attack would need to get a broad overview of every full node connection in the Tangle. This is obviously impossible since every connection is kept private, and no entity is able to map the network.

3. Y percentage of omnipotence
Being paired with a certain % of all full nodes in the network.
Neighboring with a sufficiently large portion of the network (Y% omnipotence): The attacker must be able to push their massive amount of hashing power (X% of the network’s hash power) through the tangle _suddenly_ (a non-sudden attack is not an attack, so suddenness *is a sub-category of this 3rd requirement).

For example: An attacker needs X% of network hashing rate and is paired with Y% of all neighbors in the Tangle. It would greatly help to be able to have an overview of every connection in the network in order to optimize the attacker’s attack propagation, but this is impossible so it can be ignored henceforth.

Let’s say that X = 25% and Y = 15%: The attacker would bring down a small number of “edge nodes” (the nodes that the attacker is connected to). This is where the “gradient” concept comes into play. The combination of X and Y will determine what percentage of edge nodes are taken down in the attack, and thus the effectiveness of the attack. X can be 99%, but without sufficient Y, the attack can only bring down a very small percentage of edge nodes (around Y%!). The edge nodes and nodes surrounding some of those edge nodes would be overwhelmed with the attack and restart or just blacklist the attacker so that their nodes can become functional again. The low latency nature of a mesh net means that there is a gradient of attack that depends on X and Y.

Now let’s say that the attacker wants to propagate their attack deeper into the Tangle. X = 40% and Y = 20%: The attacker would bring down many more edge nodes and be able to propagate the attack deeper than the attacker in the first example above. The bigger/better the X & Y combination, the deeper the attacker can propagate the attack into the Tangle. This would theoretically require exponential increases in both hash power AND neighbor finding & maintenance to make marginal increases in Tangle attack depth, making the Tangle orders of magnitude more resilient to such attacks than the non-mesh net topology block chains.


What about accidental doublespendings, performed by users of the GUI?

The latest release 2.3.1 has a doublespending warning implemented, to warn users of the GUI not to spend the same value again:

Conclusion

 

People claim that IOTA is unsafe because there is a theoretical threat of a doublespend.

There is also a theoretical threat with Fiat money, with Bitcoin, Ethereum and every other asset in the world.

There is even a theoretical threat of getting killed by an asteroid in 25 minutes.

No system is 100% safe. “100% safe” is almost nothing in the scientific world, most of the time it’s about significance.
And IOTA is significantly safer than FIAT currency, and also significantly safer than blockchains, once the network is big enough to provide the Monte Carlo Random work tip selection.

Until then, the coordinator protects the network from 34% attacks.

To perform a successful majority attack, one had to overcome the impossibility of becoming an omnipresence in the tangle, per mutual tethering.

He also had to outperform the hash rate of the network, he had to win the weight race against the confirmations of the main network and he had to find a suitable transaction for a doublespending before it confirms.

The mesh-net characteristics would hinder him from getting access to every part of the network and furthermore, would increase his latency.

All these efforts for a system, that supports micro-transactions.

So if people want to send big amounts of money, they should use many small transactions instead of a big one.

Unlike Blockchains, with IOTA, this is possible.

 

I conclude that there is a tiny, statistically insignificant chance of falling prey to a doublespend.

In reality, there is none considering that it’s almost impossible to arrange the needed conditions.

 

I suspect that Blockchains have a bigger problem than IOTA once the miners have full control over a chain.

Up to this point, nobody was successful in attacking the tangle, in fact, the CTPS (confirmed transaction per second) were increased as an attacker tried to slow the network down in mid-June.

Thanks Winston, for your insights!

If you find an attack vector, please talk to the IOTA foundation and try to prove your point, otherwise be careful with FUD-connected claims: They are mostly wrong and aim for moving the price.

 

 

Have a nice week,

Limo


 

 

 

 

 

Pictures:
miners: https://bitcoinworldwide.com/mining/pools/
mesh-network: http://thembsgroup.co.uk
doublespend warnings: https://blog.iota.org/gui-wallet-release-v2-3-1-f84d1160845d
featured image: https://www.tcmworld.org/testimonial-fork-in-the-road/

 

The incentive to run a full node for IOTA and to perform PoW without monetary compensation

The incentive to run a full node for IOTA and to perform PoW without monetary compensation

Lately, a lot of voices came up that expressed skepticism.

“IOTA will not work because there is no incentive to run a full node nor an incentive to provide hash power for a secured distributed ledger.
That leads to a low overall hash power and lots of opportunities to attack the Tangle.”
-some people say.

Is that true?

While this is a valid question to ask, my answer is no.

Let me talk about this incentive first.

Homo oeconomicus

Humans are often described as economical creatures, that act only in their best interest, not necessarily malicious, but in accordance to their needs.

If you give them a few options for a decision (either an economic decision or a decision while playing a game like Monopoly), they will likely choose the one that doesn’t benefit everyone but themselves at first.

This game theory of the Homo oeconomicus does not describe a person as an opportunist but as rational proceeding Agent.

When we think about mining Bitcoin, people do mine Bitcoin as long as they get rewarded.
Sometimes they choose the selfish model of being a miner, like block-withholding or like pool hopping, and sometimes they are loyal and as good miners, they stay at one mining pool and accept the terms of rewards.

These pool rewards could be:

a) Pay-per-share     or     b) proportional paid

And sometimes, people decide to try a double-spend, because the incentive still is money.

Either way: the decision making is important since we usually don’t want to miss revenue and we want to flatten our costs, especially while mining.

From a miner’s PoV, the incentive is not just giving the blockchain more hash power and security, because then he could do it for free.

Mining, of course, is incentivized by earning money alone.

Something like working for free is not even an option, hence the skepticism. 

Now, IOTA seems to be different in many ways.

There is no mining, there are no fees.

And as a result, we don’t have the incentive to earn money with mining at all.

The first initial thought of people, naturally, is that we cannot provide enough hash power.

The difference

What people miss here, is that we have a significant difference at hand.

IOTA is a perfect technology to enable new markets and business models.

The intrinsic value of the tech does not need to satisfy people in exchange of hash power.

Blockchains can only perform transactions, when a block is found and when the fees are paid.

IOTA does function without it, why would we conclude that we need that same incentive for IOTA like we need for Blockchains, where the very basic functionalities are quite different then IOTAs.

The incentive is, therefore: If I want to use IOTA, because the tech is incredibly helpful for my company, then I conduct a transaction and reference two other transactions per proof of work automatically.

This alone is enough to provide the needed hash power because companies want to use IOTA.

Another difference is that IOTA is not for human applications alone, like Bitcoin with its currency replacement-model.

Of course, there is a variety of other applications, but the main field of Bitcoin remains: People store money and send it to other people.

IOTA instead, can function as such a currency replacement, but its main use-case is enabling the machine to machine economy.

It is so much more than a currency replacement, that the comparison alone seems like a dysphemism.

This is about data-integrity, interoperability, real decentralization, e-health, e-governance, giving the consensus back to the people.

And ultimately, building a new economy.

It’s no surprise that big companies have already shown interest and on top of that, formed foundations with IOTA.

Reference: Trusted ID AllianceDLT Research and Innovation Network (e-health),  Decentralized Identity Foundation

We also have use-cases that will be enabled rather early, so they are not just an article on someone’s desk.

Innogy and Dr. Carsten Stöcker are experimenting with such a system right now and considering their latest article, it won’t take that long.

The longer IOTA is in development, the more companies will work with it, because there is just no competitor that can provide the same functionalities and possibilities.

Personal motives to run a full node

Another key point of my argumentation is that there are still some people that believe in the technology IOTA and decide to run a full node nonetheless, even if there is no monetary incentive.

The arguments for running a full node for private persons are therefore still mentionable.

  • You are aware of the fact that running the full-node is beneficial for the tangle topology and you want to help. (Yes, that exists)
  • You have lots of transactions to make and don’t want to rely on a light node-server, as there is no guarantee that they are online when you need them.
  • You have a web app running and need the stable connection
  • You want to have maximum speed, so you choose the full-node
  • You want to have a copy of the Tangle database, that is generated when using a full-node. (good for several reasons)
  • In the future, maybe you provide a service and earn money for a full node.The only financial argument would be:
  • You invested and want to support the Tangle as much as possible

Conclusion

I conclude, that IOTA will work as intended. Like it already does today.

The founders had enough time to think about a reliable system, that solves the problems of tomorrow.

Not just on the Internet, but in the Internet of Things.

Using IOTA is not about making money with your graphic card, it’s about solving real world issues and enabling a new stage of development: the fourth industrial revolution.

As I repeatedly wrote, the 4th industrial revolution will be a disruptive time. It’s still unclear where we are heading, but the fusion of automation and online technologies will change almost everything.

Eventually, some companies won’t keep up, because similar to the “dot.com bubble”, the 4th industrial revolution does not only generate winners.

Only the innovative firms will survive.

People and customers will have a plethora of more opportunities due to the distributed ledger technology, due to no fees and due to new markets and technologies that grow on top of that.

And since customers keep companies alive, everyone will benefit. This incentive is way more important than mining.

If they want to use IOTA, they set up an army of full nodes and server farms in a matter of weeks.

Inside of the mesh-net of the Internet of things, this PoW and the stream of nano-payments will ensure that there is no way that we have a shortage of hash power or that the missing incentive “money” would become a problem.

If the game theory around the Homo oeconomicus would apply to the decisions of the industry, IOTA (in comparison to Blockchains) would still be the better choice in hindsight of the challenges of the future.

A snake doesn’t need feet to move. The tangle doesn’t need an incentive for mining or mining at all.
Companies and people will use this important technology anyway.

Feel free to give me your thoughts in the comment section.

Have a nice week,

Limo.

If you are interested in the latest news, look at my video section for “Sunday Banter” or in German: “Sonntagsplausch” and subscribe to my Youtube channel and my Twitter Page to get the latest updates.

 

 

 

 

Images were taken from:
https://themerkle.com
http://ilmenterrante.altervista.org/
https://www.rtinsights.com
https://www.ophtek.com

 

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