The IOTA vision explained in 2 minutes

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Interview with David Sønstebø

Category: Explaining Series

Five Bullet-points of #IOTA Qubic and its insane implications and consequences interpreted.

Five Bullet-points of #IOTA Qubic and its insane implications and consequences interpreted.

As promised by the foundation, yesterday was the day the world received access to Qubic details and specifications.
Though, they didn’t promise that everyone would be able to understand the scope of Qubic right from the beginning. Considering how many people reacted negatively just a few minutes after the announcement, I’m convinced the majority of investors in the crypto-sphere need time to digest this revolutionary undertaking.
If you needed 2 weeks to fully understand what IOTA means for the world, you probably need another 3 weeks to fully grasp what Q can be on top of all of this.

Qubic is massive, the essence of disruptive and able to force industries to adjust to the needs of IOTA because it’s in their best interest.
Therefore, I don’t expect it to be ready before 2019 considering that Qubic probably inherits the functionalities of several other crypto-projects combined, while it’s running as a layer on IOTA.
The comparison to other crypto-projects, the due diligence and speculative consequences are solely up to the reader, so please don’t take my interpretation as investment advice.

Anyway, the most important innovations which will change the technological landscape forever were almost hidden among the rest of the explanations. And as revolutionary as they are they have absolutely nothing in common with the every day crypto terms. The mentioned specifics lay in the field of electrical engineering and semiconductor-technology, we come to that in point 1.
Luckily, I already found some great “overall explanations” about Qubic and of course, it makes no sense to write another one.
You can find a very good one here: What is Q? by James JD Sutton
At this point, with 10 minutes of your time, you should be able to understand it more or less.
Since I personally prefer complicated information in a context I already know and understand, I wrote this list of 5 bullet points and what this innovation means in detail.
Please keep in mind that the following list is my personal interpretation, no citeable information. Also, these are just the points I find most important about Qubic, but there are certainly more functions.

However, if I’m right, IOTA, the Foundation and Qubic will eventually change the industrial landscape forever.

  1. Efficiency, Moore’s law, CFB’s law

    The IOTA Qubic team created a programming language in order to implement Qubic everywhere in the world: Abra.
    “Abra is trinary-based because trinary systems can provide significant energy savings, a crucial consideration for IoT devices. One trinary digit, a trit, can represent 1.58 bits. The amount of wiring necessary for a trinary system can, therefore, be reduced to about 64% of an equivalent binary system, resulting in a corresponding energy reduction.” source: https://qubic.iota.org

    It finally makes sense that IOTA is building JINN ternary processors. Come-from-Beyond managed to find a way to use binary NAND gates with trinary logic. This is certainly not the every day crypto-news and you should pin this onto your wall. As an approved electrician who studied both, electronics and geography, I can tell you that even 10% energy reduction would be a revolution for the industry. But we are talking about a gigantic, unimaginable number of 36%. If you had doubts that IOTA could run in the IoT, this is the number one reason you should be happy instead.
    Of course, it remains to be seen if they can deliver but I’m convinced they can.
    To draw my personal conclusion:
    If Come-from-Beyond and the engineers of the IOTA Foundation manage to reduce the energy reduction of logical gates and wiring of 36%, they presumably bring the industry into the next evolutionary step in hindsight of Moore’s Law.
    One of the biggest problems in the semiconductor industry is to reduce the energy consumption. Transistors can be designed smaller and more efficient the less energy they consume. Then more transistors (which usually means more calculations) can be built in one CPU. This development used to follow Moore’s law, until recently.
    CFB changed this law. This means less wiring, less electricity, less heat, less power, but the same output because of Abra, the trinary logic and JINN. Moore’s Law would no longer be the relevant indicator for transistor-progress.

  2. The incentive to support IOTA, meaningful mining

    “There is no incentive to set up a full node in IOTA, spamming is even more senseless!”
    Although this is wrong anyway, with Qubic, these times are certainly over.

    What would be the best way to create a high hash rate in the Tangle?

    -To win over the miners? Nope. Some crypto miners, for example, are not exactly the party that likes to support IOTA. Even with better incentives, the ideology would make it almost impossible, in too many cases I assume.
    What if Abra, trinary logic and JINN create a landscape where all devices in the IoT are used for increasing the hashrate, in times when they are not used.
    I have 6 devices in my house that could be used for low level “mining” (ie validating transactions with pow – there is no mining in IOTA). If software would sell just 10% of the computational power of my six devices (which would be 36% more efficient then today) then I could constantly earn money with low efforts -and secure the tangle.
    Since we are in the era of electrical self-sufficiency, the power for that would be collected on my roof. No running costs would be generated. On the contrary!
    Of course, the more the merrier, meaning that I expect many people switching over to IOTA as the traditional mining misses one important incentive: meaning.

    Mining these days is nothing else than a trade of electricity for money. In the future, this incentive should be regulated as it implies the possibility to waste energy we shouldn’t waste, coal power for example.
    With IOTA and distributed computational power, however, people can set up Qubics and rewards.
    Example: I need to correlate two big data frames for a science project which would take four days with my laptop: I set up a reward of x IOTA and let miners solve the task if the quorum is reached.
    The network gains hashrate, I receive the results and the miners are paid x IOTA. Everything is done via smart contracts, Qubics and external computational power. A meaningful task.
    This is way ahead of all incentives we have in the crypto-sphere so far.
    Additionally: these incentives can also be bound to other services than mining. Full-nodes, public light-node provision, bandwidth, hard-disk storage, RAM, performing automated snapshots, etc.
    As a result, the network achieves true distribution and decentralization.

  3. The road to true distribution and decentralization

    In a network, where countless tasks are assigned, executed, transactions are conducted, validated on millions on computers and almost all industries, the network activity will grow to a four digits number of TPS and higher right after the release of Qubic.
    IOTA has the data marketplace, important features for data integrity, a great incentive to provide computational power and a market that demands solutions.
    An open source network that offers all solutions and costs nothing to shift value or data is the one perfect layer the industry is waiting for.
    Since the industry needs software solutions that IOTA is offering, it’s just a matter of time that it begins to rely on it. Presumably, this results in more transactions per second and ultimately a distributed system that is tamper-proof without the coordinator.
    Qubic is the missing piece of the puzzle to get rid of the coordinator. As mentioned in point 1, Qubic, Abra and the improvements will be so efficient that all problems that have been articulated by critics are suddenly gone.
    The IoT will be feasible, IOTA will be secure, distributed, 100% permissionless and tamper-proof.

  4. Interconnectedness of markets

    We know that different connectivities are a problem when industries need to send information between different devices such as apple and android. Therefore data and connection standards have been created in order to resolve these barriers.
    But in the IoT are also other barriers. Markets, currencies, assets.
    The financial world is not a homogenous field where trading assets and the connections in between are easily drawn.
    This can become a problem because some assets are important and affect almost every industry, but while the effects on the company and price are clear, the options to react accordingly are not, which means that companies could suffer before they could react.
    Qubic connects all world-markets with the Tangle. This way they create a landscape where trading, markets, services and prices become a global liquid construct that knows no boundaries in terms of functionalities.
    Example: Your company depends on lumber and oil prices. With Qubic, you can set up a smart contract, that is bound to external prices (via Oracles) in order to adjust the prices of your services which are changed automatically, depending on how expensive your expenses are (for lumber and oil).
    In the end, the company can ensure that always the best prices for services and goods are offered. They can calculate more efficiently and most importantly, everything works automatically.
    This mechanism can be brought into every industry, it can change expensive processes, reduce bureaucracy, improve efficiency and disrupt industries to a point where we can speak of an additional industrial revolution.

  5. Sharing economy powered by electrical and monetary self-sufficiency

    Let’s try to draw a picture of how we live in the future 25 years from now. I tried that with my series “Life in the future” part 1 (local economy) and part 2 (mobility)
    Now, especially in these cases, I emphasize on the ability to gain self-sufficiency in terms of finances and electricity, food, water.
    In a society where sustainable resources are used, independence and quality of life can be improved vastly.
    Qubic based systems can improve my idea of the life in the future even further because as part of the sharing economy, people can, next to producing electricity, produce clean water, offer mobility services, 3d printing services, and most importantly finance their life entirely.
    Everything they need for that could be powered by IOTA. For free.
    Sending microtransactions, secure data, sell electricity, sell comp. power, attach your service-prices to external sources, monitor crops, buildings and systems with sensors, sell the sensor data and raise the productivity.
    The future is efficient, autonomous and self-sufficient. Qubic seems to be the missing piece of the puzzle.
    I’m looking forward to seeing it in action.

 

 

 

 

Life in the future cap. 2: Mobility

Life in the future cap. 2: Mobility

My series started with the intention to improve the imagination we might have for technologies that will be a part of our lives in the future.
The first part started with an introduction followed by my ideas how the local economy could function in 18 years. A vast change in the economy as a whole and a vast change for the majority of people.
The following part will be centred around the mobility and how it will be a fundamental change in our lives in that sense, that we mustn’t take care of security, traffic jams, time management, maintenance of our car, theft, and manipulation of the odometer anymore.
But another part is that cars will become modular and thus:  create jobs and a new level of security and service.
This part and the possibilities of a highly advanced mobility sector are so exciting that my imagination knows no end.
As we are all aware of the consequences of fossil fuel-based engines, my thoughts are based on the assumption that 99.99% of all cars in 2036 are running on electricity only. At least in the advanced regions of the world.

A new efficiency

There will be many manufacturers that will create modular parts of vehicles. Depending on how you want to use your car, you can buy different modules from many different manufacturers. The modules are designed so that they always fit together as part of a bigger system. Every car has an engine and batteries part, a storage and utility part, and a passenger and function part. In the future, cars are wrapped in a skin of photovoltaic panels. Whenever it’s exposed to the sun, it’s generating electricity. The electricity that can be used to charge the battery or that can be sold and shared into the grid. The mobility sector could be able to disrupt common solar collector manufacturer, while they are standing in the sun, next to your house. Efficiency is one of the major improvements for the fourth industrial revolutions. I’m therefore convinced that car manufacturers will disrupt the solar collector industry at least partly if they decide to integrate the production of photovoltaic-technologies to their facilities.
The majority of cars will be autonomous. Even the law will adapt to that because statistically spoken, there is no advantage in controlling vehicles with a human. The interaction of algorithms and AI between sensors, the engine, brakes, and the necessary security mechanisms are far superior to humans.

The degree of efficiency of the photovoltaic capabilities of a car will determine if cars of the future need to be charged with charging stations at all. Some vehicles will still need a charging-station infrastructure as they have to be functional even at night, but many cars, especially small cargo vehicles can be run on solar energy generated “on the run” entirely. Solar panels today have between 15 and 21% efficiency, that means only a fraction of the available energy is actually transformed into electrical usable power. Think about what happens when the efficiency is increased up to 75% or even more. Cars would be able to generate enormous amounts of power, which they could then use for their engines, services or even to sell the generated energy after they have been parked somewhere. But a necessity for that will be also a better battery technology.

That means that if they still need recharging, it will be automatic, but to me, it looks like the technology could advance to a point where recharging becomes a rare event.
Since cars are likely to become truly autonomous, I expect them to take care of almost everything. That includes cleaning, maintenance, upgrades, annual tech check, sensor-check etc.
I doubt that in 2036, owners of autonomous cars will ever see a garage again as the cars will automatically drive to them once a problem comes up.
These ideas of a better efficiency are the true revolution of the internet of things and the fourth industrial revolution.
Less consumption, a modular, multi-purpose approach and an improved security due to autonomous decentralized systems.

Decentralized Software and Fog computing

Decentralized apps (dapps), that are running on top of a distributed ledger, can be integrated into the cars. In 2036 the computational power available in vehicles will be big enough to calculate a solution to every issue in real-time.
There won’t be a single point of failure anymore since the software is running on millions of computers which are inside of vehicles, that are connected via several different types of connectivities to the IoT.
GPS, WLAN, Lora-Wan, Bluetooth, Radio, 5G, 6G, cameras and LiDaR for real-time 3D tracking of obstacles and other vehicles will make the car the perfect sensor drone which will generate and calculate data simultaneously.

This information will fuel other decentralized apps, that will follow certain algorithms in order to interact with systems at intersections or important areas within the infrastructure. Traffic-jams won’t be a problem anymore. Machine learning algorithms can be fed with the behaviour of ants in order to tell the system how to prevent traffic-jam waves before they are happening. A machine learning network could be applied to several other systems as well, not only traffic congestion preventions.
Some systems could calculate the risk of aquaplaning in dangerous conditions when it’s raining. Driving behaviour can be adjusted if schools are in the near area or animals have rutting season. The security adjustments are a real innovation, a normal human couldn’t learn under normal circumstances. At some point, the reaction time is limited due to the latency of information that has to be processed in nerves, the brain, and our muscles.
Machines only have the limitation of the speed of light. Everything else should be possible if edge and fog computation is applied.

Since at least Europe changed the law in favour of their customers, the data that is generated belongs to the citizens, according to the GDPR (General Data Protection Regulation).
Especially in the mobility sector, this data will be extremely valuable because services and infrastructures can be adjusted to changing habits, to traffic, to consumption levels or higher demand for certain goods. When the mobility is autonomous and systems are operating in a fog-computing situation, then these systems need to be fed with data in real-time. Data which can be monetized.

Specialization

If we take a closer look at the modules of vehicles, then the possibilities seem to have no end.

A car can become an office, surgery, secure station (panic room), hotel room, delivery service, basic supply of medicine, they can even become little greenhouses that follow the sun automatically or in the future private planes that fly from city to city.
If people are in need of medical assistance the medi-modules can react in just a few minutes.  There can be either a human or a highly advanced automatic unit whose neural network algorithm has been fed with information in order to know which treatment fits best. The medi-module carries a license, the necessary tools and treatments and is always available.
There could be furthermore modules owned and maintained by do-it-yourself stores. Which can be filled with construction materials or tools and machines that can be shared for as long as people need them.
Cooking, cantina modules, a plumber, electricians, computer services or services one would find in a red-light district. The future holds all the possible technologies to enable a new world of service that relies on decentralized and modular systems.
An interesting thought is a modular car with a replaceable battery part. Whilst travelling long distances, the battery part of the modular car could be switched with recharged parts of countless owners along the way. Even a transition between autonomous cars and a trainlike speedway could become a possibility, where long “centipedes of single modules are bound together, that are travelling at high speed on railways for longer distances. Modular parts could attach or de-attach. The passenger does not need to leave his cabin even once, but he’s travelling through dozens of cities, stations and everything could be powered by sustainable energy in a sharing economy.
This way of travelling allows customers to receive exactly what they need to that time. Busy business people can do work and hold meetings, a developer can develop, women or children which are travelling alone are secure and every journey could offer a high level of privacy and comfort. Even decentralized cinemas could become reality.

The ownership of all of those modules could be a source of income.
Owners would let customers rent these modules on the way. They only had to take care of the maintenance, the infrastructure and the regulation. A perfect passive income source or option for businesses to create extra income while supporting a decentralized infrastructure.

Security

One of the biggest horrors on can face on highways or German “Autobahnen” are wrong-way drivers. These occasions are rarely on purpose, and oftentimes because elderly drivers confuse streets. If intelligent systems can be integrated into autonomous driving modules, it would be an easy addition to arm them with a wrong-way driver defence system in order to stop them slowly and to protect incoming drivers with automatically performed evasion manoeuvres that are based on the information other cars are sharing in real-time.
The same protection could be integrated for rear-end collision, especially if sudden weather changes are registered by sensors. Swarm intelligence and AI are perfectly suited to adjust to environmental changes, that would nowadays lead to more accidents.
Similar systems could be used to fight a fire, to protect citizens, and to fight terrorism or criminals.

A decentralised network can send data and value, but beforehand it has to be ensured that the information is tamper-proof and unique.
Only then, customers can sell and produce data which belongs to them.
The security of these autonomous systems is a game-changer.
We need an overall protection of goods, data and integrity of information. The typical odometer fraud will be impossible as the manufacturing of a vehicle will be bound to a unique hash-value that will be secure and saved in the ledger in the near future.

The mobile sector will be a good example of how the economy will adapt to decentralized and autonomous systems and how it will start with the loss of jobs.  Eventually, however, this enables value for the society and new possibilities which can be created with a sharing economy due to modular builds of autonomous vehicles and the creation of infrastructure we will need for that.

I assume that this will take more than 18 years because infrastructural changes take a long time, even if we count in that innovation will be accelerated in the next 10 years.
However, a basic necessity of all of my thoughts is a system that can offer the communication and secure transfer of information and value between all connected devices and vehicles.

Because the most important backend technology is one that combines a high-level layer of security through encryption with anonymous streams of information, tamper-proof authentications, which are filled with biometrics and individual passwords that make it possible to use all kinds of sensitive services.
A system that is able to handle billions of transactions between modules, facilities, customers.
A never-stopping cycle of information, values, authentification and confirmation that boosts our new economy and mobility. IOTA is the first distributed ledger that can work in this highly specialized environment.
No other crypto-project is partition tolerant and simultaneously scalable and free to use.
The possibilities are truly endless.

The next part will cover a sustainable energy-usage.

Thumbnail image: http://www.coroflot.com/vincentchan46/CitiTransmitter

Life in the future cap. 1: Local economy

Life in the future cap. 1: Local economy

Detached facts about IOTA are certainly helpful in order to develop a fundamental understanding of the coming paradigm shift, but the real effect of innovation is hard to grasp when we do not see these changes in action.
The following series of five stories aims to promote the understanding that is perhaps indispensable in order to see the bigger picture alongside hype and entertaining price bulimia we see every day in the cryptosphere.
In 2036 I imagine a different world than we know today.
If the focus is set correctly, the vision of the future gives hope for better conditions, which will not only improve the quality of life but will also change the world at the level of socio-economics.
It certainly makes sense at this point to define focal points that we read again and again in the area of IOTA. Focal points of problems that must and can be improved through this innovation.

-A local economy, -the new mobility, -a sustainable energy-usage, -barrier-free transactions of values and also -the hard democracy.

Capital 1. Local economy

Isn’t it ironic that huge furniture stores talk about a cozy appartement, about familiar space and our personal home, but fly in their goods from Kazakhstan, Brazil, and China in order to build a cupboard that looks the same in every shop and country?

Isn’t it counter-intuitive that we talk about sustainability when we buy apples from our own country but warehouses store them in cooled-down environments so that they can be offered against the season of their harvest and thus consume more Co² than when they are shipped in by huge container ships from Argentina?

Isn’t it an ecological tragedy and unnecessary potential for conflict when we transport fossil fuels such as gas and oil over thousands of kilometers, thereby undermining the recipients’ independence and supporting providers in their autocracy?

The future should be smarter than that. And by this one should not only mean the interconnectedness in the Internet of everything, but also the way we deal with it.
The neighborhood of the future will become more autonomous.
Solar collectors and collected rainwater on the roof, direct current energy storage in the basement, efficient insulation and a sharing zone which is shared between neighbors complete a settlement that could be far away from the industry that puts a strain on our environment today.
Within the sharing zone, there is a multi-story greenhouse which, thanks to sensor technology and fog-computing, enables efficient work that grants basic food supply with the aid of subsistence farming. These things are not necessarily free. The incentive to work, earn and buy groceries, also the costs for the products can all be a part of local, distributed micro-economies.
At the heart of the sharing zone is a 3D printer with the size of a garage that can be used to produce furniture, components, and tools of all kind.
Electronic components can also be printed so that the neighborhood can add blueprints at any time to produce the needed things for maintenance or construction.
The 3D printers of the future can be filled with residual waste, plastics and wood waste, so that an endless recycling system allows the re-use of old objects that as a result neither pollute nature nor promote industrial obsolescence.
These technologies combined allow a higher standard of living, which is based on the interconnectedness of the world and shared knowledge. These systems are fail-safe by design due to their decentralized and distributed nature. In the end of the day that would mean a vast improvement of ecological conditions.
The required transfer protocol for tamperproof data or values enables a sharing economy that establishes more than just the basic supply of infrastructure, such as food or goods. And no intermediaries hinder progress by forcing transaction fees or taxes onto the people.

This development does not prevent or prohibit an additional industrial production of innovations and goods but promotes a radically more sustainable approach that induces fundamental improvements of the quality of life on a global level and can also prevent negative impacts on the macro-climate. As borderless innovations, these could solve issues all over the world.
The local economy makes use of simplicity and autonomy so that the reduction of unnecessary infrastructure and material supplies reduces external dependency, which then prevents negative influence that could be caused by surrounding forces or nations.

Of course, there are limits to this autonomy.
Medical supplies, education, spezialized technology won’t be available everywhere, but this is not about going back to feudal structures, rather about optimizing the redundant systems we have today.
Urban citizens and culturally interested people may be drawn into agglomerations so that these neighborhood clusters would have less space on the ground to ensure this kind of economy based on subsistence. Smart and green cities that grow upwards could, therefore, provide the needed space.

Green building concept. Source: T.R.Hamzah et.al

These ideas are not new, but they fail because of simple things like air quality in city centers.

What needs to be done

Regulations and stricter controls can rarely improve these issues, as they are the dirty byproduct of combustion engines which are still used everywhere, for obvious reasons.
One answer to this will be the new mobility, which is integrated into the overall concept of smart cities. No combustion, more autonomous vehicles, less pollution, and an efficient use of transportation.
Subsistence farming means we rely on the surrounding parameters of the environment. Sensors in private ownership can solve two problems there.
First: It solves how we can deploy all these systems and secondly: private ownership ensures that data belongs to the people which can then monetize their efforts.
The use of DLT’s in all of this is one of the major benefits in terms of privacy and the handling and commerce of data.

Next month, May 2018, the European Union sets strict rules about the dealing with data, the GDPR (General Data Protection Regulation).
This is a major step into the right direction as companies such as Facebook or Google still use their customers data for their own purposes only.
The GDPR forces companies to an improvement, while it gives the ownership of data back to its creator. Because as we all know, data is the new oil.
We also need to ensure that the biodiversity is positively influenced rather than completely erased where we live, if we want to use real sustainability.
Heavy diesel vehicles and private vehicles are the biggest problems for an improving biodiversity in the green city centers, today.
A well-thought-out public transportation system and additionally a flexible delivery system (with autonomous vehicles and drones) can remedy this situation in the future, at least partially. Heavy transportation will likely still use fossile fuels.

Of course, this should not take away the option of owning one’s own vehicle, but even these should not use combustion engines that pollute the lungs of all inhabitants of a city with nitrogen oxides. And if, then we need to develop technology that vastly reduces the negative impact.
These ideas are not meant to force socialism or communism onto the people, on the contrary. It’s a new system: a zero margin economy as Jeremy Rifkin described.
To sum up, we need the new technology and infrastructure deployed and a general rethinking when it comes to ownership. We need the political metiér to adjust to the new challenges, especially because they usually only think in timeframes of one legislation. And finally, a technological acceptance in society that can connect all of the mentioned solutions.

Luckily, the last 18 years have shown how fast and strong innovations can work. As we are in a time of infrastructural change already, new energy sources are emerging, corporations are restructuring towards e-mobility, and people are actively adapting to their environment. A progress that looks subtle, but changed everything in 18 years. Renewable energy, vegetarism, less consumption and stricter ecological rules for the industry are some mentionable changes that arrived in society.

But is that time-span till 2036 enough to adjust to the new requirements of a smart world, globalisation and the climate change?
18 years ago there was no social media, no smartphones, no 3D printers, no data-clouds, and also no electric vehicles that are able to interact with the surrounding technology.
In 2000, the statistical majority of houses in the western world were supplied with the Internet for the first time. With dial-up modems.
In the year 2000, it was still possible to get lost, there were no map services like Google maps, Google Earth or Openmaps.
No Twitter, no Youtube, no Facebook, no Wi-Fi. Email was the new thing. 18 years are unimaginably long in terms of innovation.
The next 18 years have the advantage that the world is already connected, and the innovations are here. Now, we need to use them in a secure, fast and decentralized way.

In hindsight of all those changes that are about to come, we need to prepare for radical changes in our personal life which are necessary.

But this isn’t just a change we can observe, we are in the center of it.

In the next part, I will discuss the new mobility which embedds into this vision of a smarter way of living.

 

Bitcoin Will Inevitably Lose Its Value, IOTA Will Take Over

Bitcoin Will Inevitably Lose Its Value, IOTA Will Take Over

The following statements, backed by scientific papers, technological and geopolitical, illustrate how Bitcoin will inevitably lose its value.
IOTA was conceived and designed with a vision further into the future than most of us can comprehend. Its features will turn into major benefits as time progresses and it is a question of when, not if, IOTA will take over as the standard in cryptocurrency and industry 4.0.
What limitations will be the death of Bitcoin and the uprising of IOTA? Though you will not find a defined answer to that here, my commentary and facts I present should authenticate this opinion.

Is this article FUD?
That’s hard to determine because fear, uncertainty, and doubt have become anything to an investor that threatens his investment. First and foremost an investors ignorance is the main culprit of FUD.
This, of course, also applies to IOTA supporters. Cryptoland and its effects, in general, have the ability to transform investors into raging mobs that ignore facts, reason, and humanity, just to protect their funds and hopes of a big return on investment.
Bandwagoning is a phenomenon that goes beyond rationality.
Ad hominem, blatant lies, death threats, I’ve seen them all. But one thing is for sure: the truth always wins.
Is this article filled with logical fallacies, bad anecdotes or lies? No, because I don’t like misinformation. Since I’m a subjective being (and also invested in IOTA), it should be evident that my fact-based opinion can’t be completely objective.
Whether or not there is an incredible number of competing projects, magazines and investors that are spreading lies and false claims about IOTA, this article is not about creating deception, it is just my honest point of view.

As long as there are no major technical flaws (which can happen to every cutting-edge technology), there are a plethora of reasons why IOTA will eventually overtake Bitcoin.

Satoshi

The incredible whitepaper in 2008 opened a world of wonders.
With a new perspective on transferring money, we experienced the first sign of real emancipation from the big institutions that fostered inequality and a world where the power was not in the hand of the people.
Despite rules/laws that prohibited such concepts, when humans all over the world received a tool to share their wealth, they were finally granted sovereignty over their possessions.
I think all cryptocurrency investors can agree on these points or at least use them to newcomers why they invested.

Since then, the ideological component of cryptocurrencies has been drowned in a sea of greed, return on investment and proclamations of “when Lambo“.
Bitcoin, the currency that was created from the whitepaper of Satoshi Nakamoto, is different than “a peer-to-peer electronic cash system” in many regards.
Some other changes were implemented because game-theoretical aspects needed to be included, such as the small block size. Some others are changed to account for the growing number of users that congested the network.
The biggest change of the technological nature, however, was that people became aware of the monetary advantages Bitcoin introduced.
Hard-forks, specialized mining hardware, bandwagoning, social media manipulation, smear campaigns, and hacks are the daily madness we all are aware of.
The incentive to earn money is so big that the initial ideological dream, the democratic advantage, and most importantly the technological advancement is almost completely ignored to a point where Bitcoin doesn’t fit into the real world anymore.

Mining Issues

Mining is a vital part of Bitcoin’s consensus and creation of the currency. IOTA has no mining. For several reasons.
IOTA cannot function because there is no monetary incentive to run a full nodeby Anon.
This assumption turned out to be false given that the number of full nodes, including Nelson nodes is higher than 5000 already.

Bitcoin is proud to be the most secure project. There is no other project with a higher number of developers and a longer time-frame where bugs and problems have been eliminated. That is a truth that every investor should acknowledge.
There are hundreds of projects, dozens of wallets, countless corrected bugs, and a journey that has undoubtedly proven that Bitcoin is not hackable. Not anymore.
The consensus is decoupled from the user.
The holy trinity of Bitcoin’s consensus lies in the miners, validators, and users.
Mining in Bitcoin gives the network its blood-pressure and nutrients, but the heart grows too big.
The hash power is growing exponentially because the rising user-number and the incentive to earn money with mining follows the mainstream adoption.
More and more people and companies, even hardware giants like Nvidia and AMD start to specialize in mining cryptocurrencies.
That is an ecological tragedy and a centralized point of failure masked as an advantage and technological progress.

Bitcoin global hashrate

Mining, right now, is mostly performed in countries with low prices on electricity. China, Iceland, India. The power that is used comes primarily from fossil energy sources such as coal and oil. Mining farms look for maximum profit.
It is a reasonable assumption that even in the future, they will use the cheapest energy source.

Iceland, however, experiences a different problem. The geothermal energy that is used to mine cryptocurrency is a limited collected source. Additionally, the electric grid is pushed to its limits right now.
Politicians from the Icelandic pirate party stated that: “The value to Iceland … is virtually zero.” -as even almost no taxes can be derived from that. The opposition is growing.

Also, the consumption of energy from vulcanoes still heats up the atmosphere. It may be renewable, but it’s avoidable heat for the atmosphere. An ethical and technological regression.

These examples show that political decisions can shut down major parts of the hash power at any point, given that the incentive to mine threatens the environment and the electrical grid.

Bitcoin key statistics of mining

These aspects apply to all other minable projects as well. An incentive to use cheap electricity for revenue is a dangerous path, not a technological advantage.
Since IOTA has no mining, but a small proof of work, the electrical consumption can solely be created in renewable energy-clusters in every city and area in the world. “Zero margin electrical power” can support IOTA that is functioning in a multi-connection distributed mesh net.
The incentive to use a global standard for data/value transfer and data integrity is a way better solution, both more efficient and politically accepted.
Since there are no centralized mining farms nor fossil energy usage, IOTA will be used everywhere, while Bitcoin will face serious problems.
Additional information on the energy consumption and the ecological footprint is written here.

As the last addition to this section, I want to highlight that Cogniota, according to developers of IOTA, will make it possible to sell hash power for computational services. This incentive combines two major advantages: IOTA can incentivize parts of the mining industry to sell their hash power in order to solve actual problems, rather than an exchange of money.

Scaling Solutions

Scalability is not just a buzzword that has minor impacts. It determines if a currency can be widely used in the future or not. IOTA is theoretically infinitely scalable (as far as bandwidth it allows)  due to its unique consensus mechanism.
The lightning network (LN) will equip Bitcoin with payment channels that will enable billions of transfers, without fees. This is the missing piece of the puzzle, according to the Bitcoin evangelists.
Payment channels are a new approach that Bitcoin and Ethereum are exploring as the mainstream adoption leads to enormous transaction fees and transaction queues.
For now, the solution is in development, but we clearly understand that it is a necessity.
Those who used Bitcoin in December know that a solution is desperately needed as the transaction fees went insanely high.

Three problems, though, blur the hope and expectation the community has for LN.

  1. The block size is limited. The opening of millions of channels will lead to congested blocks again. It isn’t true scalability, just a sophisticated procrastination.
  2. Fees for closing the payment channels are an additional factor that hinders true adoption.
  3. Centralized hubs (like exchanges or big services) will be a possible threat to consensus according to Jonald Fyookball

That means that even if LN will work as intended, the development will still not be finished.
On the contrary, an additional step will be an assessment, whether or not a hard fork has to be performed that offers bigger blocks. In the case of full spread mainstream adoption, even the LN won’t grant full scalability like IOTA offers.
It is not possible to open an infinite number of payment channels, as the block size is too small right now.
Also, closing a channel and synchronizing it with the mainchain costs transaction fees.
In a world of microtransactions, transaction fees, even if they are small, are a threat to businesses and the majority of use-cases.
An exemplary calculation of transaction fees with present systems can be found here.

My conclusion is: Bitcoin will not work in an interconnected world, IOTA will.
Additional concerns about mathematical proof that Bitcoin cannot run decentralized with the LN have been raised, but it’s still inconclusive whether that is true or not.
The bottom line is: Bitcoin is trying to develop something that IOTA already owns.
Zero transaction fees and true scalability.
On top of that, IOTA has already flash channels which are bi-directional, feeless and extremely convenient. That means that IOTA combines far greater on and off-chain load capacity but Bitcoin still needs to find out if LN is feasible at all.

Adaptivity For The IoT

Mesh-net capabilities in the Internet of Things will have several characteristics that contradict Bitcoin’s functionality.
The economy of the future will eventually happen in local industrialized clusters, as smart cities will create economic islands of data and value streams with millions of devices each.

The effects of economic clusters can be further comprehended here in “A Historical Approach to Clustering in Emerging Economies” from the Harvard Business School (2017).
These clusters will have a demand for a DLT that is capable to function in this special environment.

a) Geographical distances will create latencies that are comparable to asynchronous networks. The network topology will represent the streets in a mountain chain with several connections (with remote parts) that are not always connected to the rest of the network at all times.
Bitcoin, therefore, needs a functionality that enables offline chains. Right now, this is not possible because the Lightning Network is neither ready nor fully suitable for mainstream adoption, as outlined earlier.
IOTA, however, can work in this environment, because offline chains are part of its architecture. The synchronization of offline chains has no disadvantages and can be performed with flash channels or normal transactions.

b) Transaction fees for microtransactions

c) If IOTA works as intended, try to come up with a use-case that is unfitting for IOTA, but perfectly suitable for Bitcoin.
Since I had no success in finding the answer, I can only deduce that IOTA will be chosen over Bitcoin because the advantages are obvious.

The impact of the IoT on the global economy can be inferred when taking a look at McKinsey’s latest assessment:

10-15 trillion dollar market according to GE and McKinsey until 2034

I conclude that the technology with the best abilities will likely be able to take the biggest part of the market capitalization.
It remains to be proven if Bitcoin will survive solely with a functionality as “digital gold” -without intrinsic value. That would mean that Bitcoin would cost millions in mining and fees but had no unique feature.

Shor’s Algorithm

Quantum computing is a threat to cryptography as we know it. Though it is not yet suitable to decipher algorithms used in Bitcoin and other cryptocurrencies big advances have been made, especially with the big D-wave 2000Q quantum computer that already has 2000 Qubits. Since the D-wave is solely focused on reverse annealing, it cannot be used for integer factorization or other applications.

Reverse annealing allows users to specify the problem they wish to solve along with a predicted solution in order to narrow the search space for the computation. The predicted solution may be a result of a previous quantum or classical computation or an educated guess. But it is not suitable for an efficient integer factorization that is needed in order to find collisions on standard cryptographic schemes.

Other ventures though, such as the IBM Q project with already 49 Qubits, which can be used for integer factorization, show a rapid and exponential rate in this field of quantum computing.

Timeline of available qubits

It turns out, that Moore’s law also applies to the field of quantum computer. According to this whitepaper by Aggarwal et.al. suitable quantum computer could be available even faster than expected.
If a quantum computer with a sufficient number of qubits could operate without succumbing to noise and other quantum decoherence phenomena, Shor’s algorithm could be used to break public-key cryptography schemes such as the widely used RSA scheme.Edward Gerjuoy (2004)
Same applies to the secp256k1 elliptic curve in Bitcoin.
That means that the necessary number of Qubits that can perform an efficient calculation of the Shor’s algorithm with a negligible amount of quantum error calculations can be available in approx. 6-7 years.

Since cryptocurrencies are not used in our daily lives to buy groceries, the majority of investments are due to the expectational value of cryptocurrencies as a whole.
That could mean that if there is a reason to doubt Bitcoins success, such as fundamental breakthrough’s in quantum computing, the expectation value can vanish and thus, decrease Bitcoins value immensely.
This point on my list is certainly not the most conclusive one because it is said that solutions could be implemented rather quickly, but the comparison to IOTA raises an additional question:
Why would we use a technology that will soon be rendered insecure, that needs adjustments to work again, when we already have a possible solution with the Winternitz algorithms that are used with IOTA?

The tradeoff right now is that addresses shouldn’t be re-used, but with the upcoming Trinity UCL wallet, people will receive a big portion of usability and security for the post-quantum era.

Hope ≠ Reality

“Shilling” describes the nature of cheering for your investment. All kinds of reasons are brought up in order to emphasize on how good this particular investment is. Everyone does or did it. Bitcoin, Ethereum, IOTA, Nano, you, me.
These arguments and word fights are common, boring, and unnecessary, yet everyone does it and everyone thinks they have a positive effect on the global cryptocurrency price.
Bitcoin especially has a major advantage that on the other side, doesn’t reflect the reality: The network effect.
There are by far the most people invested in Bitcoin. It’s impossible to determine but Bitcoin has been around since 2010, generally speaking. Since then, tens of millions of people have invested on countless platforms.
If you ask a person in an urban area what Bitcoin is they usually answer: “Internet money”.
This fact is largely true because Bitcoin has been used online for e-commerce services for years already.

Since most people are invested in Bitcoin, we normally see the most shilling for BTC in social media. This fact has nothing to do with its functionality or innovative quality. It is solely because many people know it, and many more are invested in Bitcoin than in all other cryptocurrencies.
Another factor is that Bitcoin is still the reference currency for the entirety of cryptocurrencies.
If Bitcoin’s price falls, 99% of all projects fall too.

In the future other coins will become more accessible and liquid through fiat pairs, therefore negating much of their dependence on Bitcoin. The future demand for Bitcoin will drop.
IOTA demand, on the other hand, will explode with a growing number of real-world use cases, industry adoption, and it’s capacity to offer a new standard.
This means that the true innovative value of currencies cannot be compared with Bitcoin because of the high number of all biased “judges” and the social media indicators that show how many people like a crypto project. Bitcoin owns social media. But IOTA owns the best tech.
The one-sided coverage of negative events and criticism of IOTA is a big sign that the landscape is highly biased. But the truth is: companies and institutions do not care about shilling, memes, and likes.

The Adoption Race

The most conclusive point, and the one that needs no additional explanation.
What IOTA lacks in ease of use it certainly wins and solves in adoption and innovation.
The number of companies that are convinced that IOTA is the solution, is by far higher than in any other cryptocurrency, including Bitcoin. IOTA has already won this adoption race, which is the most important race. In a short time-frame of 2 years.
Bitcoin is in an anti-adoption period right now, a problem that arises from transaction fees and transaction queue.

Under these conditions, IOTA will take over the market capitalization of Bitcoin sooner or later. It’s inevitable.
Use-cases such as micropayments, data marketplaces, data integrity, Q (a secret project the foundation is working on for 4 years) and the incentive to use hash power as computational power are the knockout for Bitcoin as soon as these applications are working.
Since expectational value is created long before these use-cases are actually deployed, I expect a major bull run right after the announcement of Q.

When I combine both projects and problems, I don’t see much room for Bitcoin, as its problems are way bigger than IOTAs’.
Bitcoin is still no closer to achieving its vision after 9 years of development. Yet we see IOTA rapidly progressing to a production ready state for multiple applications in the near future.

Usability issues on IOTA’s side versus architecture-flaws on Bitcoins side. Bitcoins time is running out.
A bigger network effect and shilling cannot change that.

 

 

Thanks to Ryan and Izelkay for editing.


Concerning IOTA problems and controversies:


1) Centralization of the coordinator:

David Sønstebø addresses the road-map and status quo here (at 29.00min):

He also explains that IOTA is exploring the ternary system, but they can go back to binary at any time.

The first comment under the interview gives timestamps for all discussed topics.

 

2) Concerning Reclaims:

3) Additional concerns, including wallet security, address re-usage, etc.

FUD Copy Pastas from Iota

 

IOTA: Infinite use-cases in a zero margin society and collaborative economy

IOTA: Infinite use-cases in a zero margin society and collaborative economy

The Internet of Things is the future, but its real character, its disruptive and transformational nature is not easy to grasp.

Needless to say, IOTA’s use-cases are rarely understood in its entirety.

Time to clear up some misconceptions. This post is inspired by Jeremy Rifkin.

The IoT is not primarily about wearables, smart fridges, smart-hamsters and the toilet that orders new paper. These popular examples are often cited by the media in order to describe the matter at hand to the new reader.

But the truth is that the focus of the IoT will be a different one. The fourth (or third, if you count out the internet) industrial revolution will make life easier, more efficient, safer and fairer. Global progress.

The future is about reduction and improvement.

Reduction of fees, a smaller ecological footprint, improvement of equality, also fewer barriers for society, better healthcare, less corruption, the list goes on and on.

This also applies to almost every other DLT, so one of the questions is: what makes IOTA and its applications unique?

In the end, it’s all about the zero margin society and sharing economy.

 

 

An economical landscape where services and infrastructures are the basic layers that arise due to the industrial transformation.

The paradigm shift from a throw-away mentality to a sharing economy has already begun. Car sharing, Air BnB, the transformation from fossil energy to renewable energy that can be shared between neighbors.

The scope of applications has yet to be determined especially because most of the new use-cases are without existing reference.

Everything is new, everything is an uncharted area.

In order to specify possible use-cases, I’m going to list a few in their respective areas.

The transformations of technology and society are inevitable and already happening.

The biggest question is: Will this industrial and social conversion be successful in a way, that employment levels and the standard of living can be kept or even increased?

A second issue is: Can we provide all these solutions before we reach an economic breakdown and environmental disaster without a return ticket?

 

Machine Economy

When Machines are customers and provider or sellers, there are countless possibilities in the future.

Wherever a machine creates goods or services, it can sell them for microtransactions. That includes manufacturing products, services, data, streaming services and digital rights, such as video, audio, electricity, or even connection access, also services such as transportation or maintenance.

Everything that has an expensive middleman today, can be automated and distributed in the future. Centralisation is one of the losers of tomorrow.

Vending machines, Air BnB, e-Meters, gas meters, electrical vehicle charging.

Autonomous vehicles will inhabit every urban area. These vehicles can be equipped with a wallet and in order to make them truly autonomous, they belong to themselves.

That is one of many zero margin models, experts like Jeremy Rifkin draw for the future.

The possibilities are truly endless.

Use-cases: Industry, Domestic applications, gastronomy, electrical vehicles, payment models, pay on demand, infrastructure

Sensor Data

Data is the new oil, the new gold.

Whereas today many data-packages are sent to a cloud, thousands of kilometers away, the future will be that edge, fog, and mist computing create new ways for the industry to improve their systems and to sell these data-streams that are produced and processed in real-time.

The sharing economy enables business opportunities, where data of any kind are the product.

IOTA’s data-marketplace, therefore, can be the key corner for revenue, research, and sharing of personal data, that belongs to the people.

The GDPR is the first step in Europe, to ensure that digital rights for customers are always given and big companies hold onto these laws. IOTA can be the solution for every single use-case.

Use-cases: Sell/buy data, be the owner of your data, monetize transport data, environmental data for research, customer-behavior, biological indicators in health-care, pollution in subjects of protection. 

Legal Applications

Why using signatures, when you have tamper-proof, unique transactions and hash values that are as binding as legal contracts?

The advantage is that the decentralized storage of these signatures enables that only the appropriate owners and relevant contractors have access.

With this ability, you can ensure data protection, reduce barriers, and protect rights of owners.

As seen with NetObjects newest use-case, IOTA makes it possible to create a fair solution for owners of media of all kind.

Digital rights are a big field with billions of turnover each month. Smart-contracts are a new technological revolution, that enables all kind of transparent, yet fair solutions for hundreds of use-cases.

Use-cases: Heritage, insurance, digital rights, access rights according to age or position in a company. 

Data Integrity

There is virtually no use-case here where data integrity is irrelevant.

Every single data stream needs to be protected from third parties.

When the transparent customer loses his pseudonymity, the data he produces can be misused in many ways.

When big data companies are losing their control over their data, they lose their basic business model.

Data integrity is, therefore, the basic layer that needs to be given at any time, everywhere.

IOTA’s Masked Authenticated Massaging (MAM) will be the solution in the future, to protect the world of information in every application.

Use-cases: Everytime sensitive data is transacted, equipable in almost every single use-case.

Governance

The cure for the evils of democracy is more democracy. (H. L. Mencken)

Elections, the structure of organizations, the right of participation.

Democracy and governmental structures should be a basic right and every human should have access to it.

Sadly, corruption and the interference of the mightiest often reduces the democracy to an epitomal construct of irrelevance.

People do not feel like they own the power they belong.

In the future, DLT’s can and should be used to clear elections from external access.

One transaction could be one voice. This emancipation of the people before the big players in the world is an important step to stop corruption and inequality.

Transparent and credible governance ensure the trust of the people in their political representatives.

That also applies to all other elections in organizations and companies.

Use-Cases: elections, anti-fake news, emancipation, the power to the people, ensure that the source of information is legit.   

Sharing Economy

Given that collaborative efforts reduce costs of energy, transportation, and basic infrastructure, the economy can transform to a zero margin cost society: the sharing economy.

The combination of all other use-cases enables a world where local economic clusters are distributed all over the world.

Energy will be produced without fossil energy and will be collected, processed and sold in neighbor-efforts so that the energy markets are a distributed and

Less central authorities and companies will cite the daily life, as people can act

The picture I personally imagine for a city in 15 years is that we need no cash, that most of the systems, including shops and services run around-the-clock, and that mostly autonomous machines maintain supply and maintenance of almost everything.

We have access to a free infrastructure of electricity, connection, communication and basic supply of groceries, healthcare, and education.

IOTA could become the distributed layer for data and value transactions. With its approach to data integrity, scalability and zero transaction fees, it’s designed to work as the backbone of the IoT, in almost every imaginable use-case.

Fees or missing scalability would render the majority of use-cases impossible as the IoT will be a global network of billions or trillions of devices. No other open source project can deliver the necessary characteristics.

The following outstanding speech of Jeremy Rifkin draws the IoT and its implications.