Must-watch: 500 Billion Reasons why IOTA

Category: Random

The Universe of Iteration

The Universe of Iteration

Stanley Miller isn’t necessarily a well-known name if you’re not a chemist.
The scientist from the 1950s has proven how amino acid building blocks can emerge from nothing, so to speak.
All it takes is methane, ammonia, water, hydrogen, and electricity, in a certain mixture, at certain temperatures, time and iterations.

What was it like 4 billion years ago, when the first amino acids decided to join together to form living cells? The first unicellular organisms formed 100% of the known life in the Precambrian age and for what it’s worth, all the following life as well.
Stromatolites can still be found today, in shelf areas, always formed by so-called cyanobacteria, which are able to produce oxygen. As supposedly the first living organisms on earth, they are responsible for the presence of oxygen in the atmosphere. Life on earth was thus formed by chance, after various elements and chemical substances interacted with each other over billions of years. A product of repetition.
Over an almost infinitely long period of time, different events have been combined again and again in different ways. Until, by coincidence, life came into existence. An unstoppable chain-reaction that tried everything to use energy for its purposes. The apparent waste product of cyanobacteria, oxygen, enabled other, already adapted cells to enlarge and form nuclei. Eukaryotes were born. Here, too, a cascade of endless interactions with the environment was the reason.
Substances were processed, every molecule used, digested, absorbed. Sometimes the result was death, sometimes an advantage over other life formed and remained. Cells that only occurred in strange niches in need for more or less sun, with a specific temperature preference, or calcareous water.
The infinity of iterations began to unfold. The goal was to move on. Energy, transformation, survival.
As the first invertebrates emerged, the first explosion of species, the Cambrian Explosion appeared, which is still seen as the moment where life manifested itself in the oceans.
But the only constant that remained was that everything kept evolving. As the byproduct of this evolutionary cycle, a huge number of life-forms had already died which occurred much more often than survival. This mechanism is still active today.

Human Ideas

If you skip several eras of the earth’s history, the dinosaurs, several great extinctions, and quadrillion steps in between, then we arrive at Homo Sapiens Sapiens.
The number of iterations which the human organism has carried out evolutionarily until then is certainly higher than any nomenclature known to us could express. And this number will be exponentially higher in the future.
How exactly does mankind “iterate through evolution”?
Try to imagine something that’s never happened before. The other things are caused by trial and error.
Everything we know happened because people tried it before.
Aspects of culture in the form of music, film and creative art, technological achievements from mastering fire, other elements, invention of the wheel, steam engine, domestication of the horse, invention of combustion engines, fidget spinner, french fries with chocolate sauce, cage fighting, homeopathy, pipe cleaner, hoverboards, 4k cameras or distributed ledger technologies. It makes no difference whether these things are meaningful, sustainable, popular or affordable. They were discovered, used, and someone thought it was a good idea to focus their lives on it and monetarize, innovate every facet of this discovery.
This characteristic of infinite further development, of trying out, failing and shining, are characteristics that we find in other places.
In our simulations of artificial intelligence.
Sergei Ivancheglo (NXT, IOTA, Paracosm, Inventor first full proof of stake) has recently published a short article about Aigarth.
The visionary known as Come-from-beyond knows the potential impact of artificial intelligence and its possibilities on society which he explains as something that should be made available for everyone.
It can be assumed that the same unstoppable evolutionary force that has created and enhanced life itself also has an impact on the software progression.
Why should we leave a potential existential boost, a multiplier of the knowledge, possibilities, and solutions of our own lives only to special companies or rich individuals, when it can solve so many problems and simplify life for everyone, in every direction?

Ai & Aigarth

A vivid example was provided by a competition played on a Go board in 2016. Go is probably the oldest game of mankind, which is still played all around the globe.
The strange thing about Go is that moves and combinations can’t be brute-forced, because the number of possible game combinations in Go is about 10 to the power of 170 while the number of atoms in the universe is only about 10 to the power of 82.
Google’s AI project AlphaGo defeated the then reigning world champion Lee Sedol 4-1.
The training method of the AI, in this case, was to include all available human moves and tactics, video material, and so forth.
With the usual proceedings of machine learning, the algorithm was iterated millions of times to make it a true end boss.
This event called many interested people to the scene, but the event was outshined by a way bigger event a year later.
Namely, the extended project called “AlphaGo Zero” -a new approach. It did not train with human tactics, but instead started at zero (hence the name) and only learned to win along the known Go-rules. AlphaGo Zero destroyed AlphaGo in 100 games with 100-0. It created unknown moves, exotic tactics, and undeniable progress for the entire scene.

These insights are highly valuable because they prove that AI’s can create new knowledge that is superior to the limited human knowledge. If they receive basic information, rules and time and a specific task in a specific field.

Since human knowledge is very diverse, as described in the first part of the article, it can be concluded that it’s beneficial to build an AI in a decentralized AI service, like Aigarth, that collects and generates more knowledge in many different categories without many interferences and that provides more insights than a centralized service of a few entities. If it’s built on a decentralized ledger like IOTA and on a module for renting computational power like Qubic on IOTA, the conditions for secure usage of AI’s are provided. A possible tool for a responsible society that benefits everyone and that is easily applicable for specific tasks by everyone.

In 15 years we will know how such an impact can change our society. And whether iterations will bring changes that may shift the balance of power or not.
15 years sound like a long time, at first, but if you look at innovation timeframes, it’s really just a blink of an eye. World of Warcraft has been released 15 years ago, also Facebook, Skype, Firefox and Bluetooth. Time flies fast, but not as fast as innovation! These innovations changed society, and for the most part: the companies won. Time to set the course for a progressive future for the rest of us and to keep the number of iterations for ourselves as small as possible.

An economic possibility we’ve only seen in science fiction until today.

An economic possibility we’ve only seen in science fiction until today.

A thought experiment. As a child of the nineties, it is impossible to miss the big series around Gene Roddenberry’s Star Trek universe.
Jean Luc Picard was an immensely authentic mentor for his officers, a moral soul Start Treks, who held a glimmer of hope for the future in store.
Star Trek was one of the many scenarios that came up with action and fantastic ideas but founded the landscape of these series on a philosophy for the future that is far away from a capitalist, communist or monetary social system.
Another example of future-oriented series is “The Orville” created by Seth MacFarlane, the US comedian, producer, and actor who has shaped an entire generation with Family Guy.
The Orville, at first, looks like a slapstick version of Star Trek Enterprise, but after a few episodes, I couldn’t get rid of the feeling of being in a progressive world, which apparently shares a key-aspect with Star Trek that seems unthinkable in our world. Until today.
An economic system that is not based on money, but on reputation and motivation.
This achievement fails first and foremost because of the lack of acceptance of such a system, but after decades of mismanagement and income gaps it should have become clear that today’s model has innovations and incentives in store, but that a fair model for the entirety of humanity, even in an ecological and sustainable sense, can no longer be achieved in this way.

Status Quo

The consequences of unrestrained capitalism are noticeable everywhere.
1% of the richest 1% own more than half the value of mankind. According to a study by the University of Zürich, a few hundred people are responsible for over 80% of the world’s capital. According to Jeremy Rifkin, GDP is decreasing in every country in the world. The monetary system has a part in this.
For years, the European Central Bank has been using a zero interest rate policy to stimulate the economy, but the IMF has, again, lowered its forecasts. In other words: the capitalist system is, so far, the only system that has prevailed for longer, but it is neither fair, nor sustainable, nor stable. In addition, it provides a terrible outlook for the future.
Since there is no technology to introduce another system, we are still in a de facto trading society on the level of the Neanderthals. A stick for a stone, an apple for a bread.
There is no review of production, safety, fairness, value commitment, and there is also no justice which enables the same opportunities for everyone. It is the luck of the birthplace, marital status, skin color and culture that defines the monetary circumstances of our lives. Comparable to 10000 years ago.
We humans like to be innovative, but we are still hunters, collectors, hoarders, and crooks. No fence is high enough to protect my apple, which is mine because it is was always mine. Right?

Let’s look over the fence for a moment.
In theory, do we have enough food in the world? Yes.
Do we have unnecessary problems in the world that could easily be solved? Surely.
Do we have enough people who would like to participate but can’t? Most certainly.
What hinders us is the monetary system and the boundaries that are created along with it.
We create trade borders so that the state can benefit more. We tax all goods so that our country benefits more than the next and we subsidize exports that block entire markets in supposedly cheaper countries so that we stifle monetary competition.
A system that does not provide apples for everyone, but instead declares the apples that we have to be so valuable that only we can reach them.
Because monetary values have gravitational properties which we should have under control so that the status remains as such.
Monetary values are a Damocles sword of a society that does not want to be unarmed and therefore prefers to break in under its burden.
We need a system for everyone.
A system that keeps incentives to do more to get more. A system without monetary barriers and without a Damocles sword that we don’t like to carry but consider imperative for our wellbeing – at least in the richer parts of the world.

A society based on reputation

A system based on reputation could probably help us out here. A system science fiction authors use to describe the economies of the future.
-Earn status and living standard, the more diligent you are
-Be a reliable, good citizen
-Lose reputation if you engage in criminal activities.
-The less fortunate can still be helpful and there should be enough value in the world to support elderly people, disabled persons and those in need.
-If this agenda is installed instead of “maximize your $/€ net-worth no matter what” then maybe, we could build a better future for everyone, including the environment.

Today’s integrated technologies are not suitable for this, but the last few years of distributed ledger technologies have shown that there are certainly ways to map such a system.
To shed more light on this thought experiment, we should ask ourselves what characteristics a technology would need for this:

-No transaction fees
-Distributed data integrity
-Data transactions that map reputation values quickly, securely and irrevocably issued by trusted entities that are independently governed by the network around it.
-A failure-proof-infrastructure
-Low maintenance costs, preferably fed with alternative energies
-Global availability due to satellites
-Economic clusters for different values a society can have

Notice anything?
I think IOTA could represent this useful base technology in the future.
But I am very sure that the discussion already fails because of the “why”. The people who could make it possible would much rather build higher fences, right?

The 3 most dishonest points which render every public crypto-discussion obsolete.

The 3 most dishonest points which render every public crypto-discussion obsolete.

1) You are here for crypto.

No, you’re not. You’re here for Dollar, Euro, Yuen, Rubel, fiat money.

You disagree? Well, then why do you try to cash out at an all-time high? Instead, shouldn’t you accumulate as many tokens as possible, especially in times like this?

2) You care about decentralization

Then why is everything you call decentralized running on the centralized Internet? You say you do care, but you don’t.

Full decentralization is an ideal postulated by those who want to spread their wisdom: “buy [put in a random project they invested in]!”

There is no 100% decentralized system. 100% is a number in science that is hardly reached, especially not in a connected world, that isn’t built on a mesh-net but on central servers which can be shut off any minute.


3) You know what you’re talking about.

No, you don’t because no one really does. Distributed ledger systems are new technology. Developers and business executives try new ways and theories, as pioneers in a field that changes constantly.

These ideas become general arguments until they are refuted which is a good thing because that is how innovation works, trial and error.

But that doesn’t mean there are any experts. Here are only people who accumulated ideas and experiences that worked so far.

What could be improved in discussions then?

For instance, we shouldn’t try to engage in a crypto-discussion with monetary interest only.

Does the project you like inherit the capabilities to change the world to the better? That’s just a rhetorical question because you wouldn’t want to answer it anyway.

Overall, this sector becomes meaningless if we argue only in order to earn money.

The crypto-sector would benefit hugely if discussions would be solution-oriented.

We need less trading role-models and more silent developers and progressive thinkers.

Trying to improve your life is a fine attitude, but what would the world be like if everyone just wanted to drive a Lambo?

Crypto is more than that…


Competitors and Amy Castor: a tale on reputation usage and a campaign to discredit IOTA

Competitors and Amy Castor: a tale on reputation usage and a campaign to discredit IOTA

Disclaimer. I’m invested in IOTA, Ethereum, and Bitcoin. I’m not connected to the IOTA foundation and the following post is my own work and opinion. This is not meant to deter the collaboration of legitimate scientists. The IOTA Foundation is always grateful if thinkers help IOTAs adoption and vision.

Bells and Whistles

This is my response to the “responsible disclosure” of would-be neutral scientists that are destroying the reputation of IOTA, but also of the MIT (media lab), the Boston University (one associated developer), and Forbes.

In these times, fake-news and tinfoil stories can be found everywhere. The following post could be just a big coincidence, but if we allow ourselves in connecting some dots, maybe we get a better picture of “cryptoland”.

I’ll say it upfront: Competing projects try to harm IOTA as much as possible.

Let me start with this tweet of “fnord” because this pretty much sums up my motivation to write this summary.

On this blog, I usually try to stick to straight facts and relevant, legit news about IOTA. No Bells and whistles, Just information. 

We also expect straight facts and objective information when we visit pages like Forbes or when we read peer-reviews from MIT and BU scientists, but apparently, this is not the case.

Therefore, I decided to leave the path of tech news around IOTA for a moment, in order to draw a picture of how competition in this sphere works.

Recently we witnessed a misinformation campaign of highest magnitude in order to harm IOTA’s reputation. And I’m going to explain why.

It is vital to understand that some innovators in this innovative field of cryptocurrencies act in their own best interest. As rational deciding homo oeconomicus in this game of blockchains.

You may have seen the big headlines about IOTA: “MIT And BU Researchers Uncover Critical Security Flaw In $2B Cryptocurrency IOTA” following the “vulnerability report

The report was done by:

Ethan Heilman (Boston University, DAGlabs, Paragon Foundation – joint collaboration with Spectre, another DAG project, Commonwealth Crypto, Dev of a Bitcoin anonymity transaction Hub),
Neha Narula (MIT Media Lab),
Thaddeus Dryja (MIT Media Lab, Lightning Network Dev),
Madars Virza (MIT Media Lab, co-founded Zerocoin Protocol that Zcash is using, advising Zcash.)

The Forbes Article was written by:
Amy Castor (Independent writer at Bitcoin Magazine and Forbes)

Sergey Ivancheglo, main developer of the Tangle and creator of proof of stake, known as Come-from-Beyond, responded on several channels and closed the case.

The IOTA foundation also published an answer.

Unwinding all the details becomes unnecessary, but I’ll highlight the important ones:

  • IOTA has never been hacked.
  • CURL was tested under ludicrous conditions. The victim’s system would be running malicious code. In those conditions, stealing the key is trivial and much easier and effective. (custom wallet)
  • The discussed signing algorithm CURL was in an old version of IOTA, that was patched weeks ago. IOTA is using SHA-3/Keccak right now, there was no vulnerability to start with, but even less of a chance after that change.
  • the apparent flaw was, as revealed instead, an intended copy protection mechanism
  • No funds were or are at risk.
  • The Forbes headline, as well as the vulnerability report, suggested that the alleged flaw is still in play.
  • Yesterday there was an attack on the network, effectively defended by the presence of the Coordinator function. The IOTA team will be posting all the details in a blog entry.
  • IOTA’s valuation and price were directly and significantly affected by those actions, adding to the general value loss that has been affecting the whole crypto world this last week.


The headline takes effect

After IOTA supporters reminded the cryptographers that this is unethical and hardly a “responsible disclosure”, they reacted as if they were neutral and rather victims of an unjustified shitstorm:

I just give you the blank tweets.

In the meantime, Ethan Heilmann retweets an incredible total of 49 defamatory and blatant tweets. These were clearly, important and necessary actions by any reputable, objective scientist, both in content and form.

A few examples:




Madars Virza follows the crowd and tweets funny stuff about the legitimacy of the whole idea of IOTA:

David Sønstebø offers an open debate because the claims are wrong, but he gets no response:


Matthew Green, Co-worker of Madars Virza, ZCash, starts to attack IOTA and Sergey Ivancheglo. People from Zcash stepping in? Coincidence:

Another ZCash Co-Founder and developer tweets against IOTA, coincidence:

Bitcoin Core Developer Peter Todd reacts:

One of many Twitter-reactions by Amy Castor, that already blocked me, and many other accounts that expressed criticism:


Amy Castor is already convinced that IOTA is a scam. She is working for Bitcoin Magazine and she’s a member of the Bitcoin Core Slack. Again, just another coincidence. Her agenda “don’t roll your own crypto” seems like a general campaign against former or recent initial coin offerings ( ICO’s)

Numerous tweets show her biased stance against IOTA. Some of which are pointing to sources on Bitcointalk and weird websites, that obviously try to discredit IOTA. Some others are just asking to know what are David Sønstebø’s benefits, what his incentive is for creating IOTA. – this is something that he explained more than once in a very clear way.

On top of that, Bitcoin Evangelist Andreas M. Antonopoulos tweets misinformation to justify the smear campaign:

Meltem Demirors – Director at DCG (Investor of ZCash) coincidence:

Responsible disclosure

Now, apart from this little list of tweets against IOTA, I’m going to look at the definition of “responsible disclosure“.
it says:

Responsible disclosure is a computer security term describing a vulnerability disclosure model. It is like full disclosure, with the addition that all stakeholders agree to allow a period of time for the vulnerability to be patched before publishing the details. Developers of hardware and software often require time and resources to repair their mistakes. Hackers and computer security scientists have the opinion that it is their social responsibility to make the public aware of vulnerabilities with a high impact. Hiding these problems could cause a feeling of false security. To avoid this, the involved parties join forces and agree on a period of time for repairing the vulnerability and preventing any future damage.

As we already know, the report of the Zcash, DAGlabs and Lighting Network devs was written as if there was a problem in effect, although the issue was already corrected.

Also, the Forbes article, that is written in present tense followed by the meetup title.

I conclude that in this case there is no “social responsibility to make the public aware of vulnerabilities with a high impact” because there is neither a vulnerability nor high impact.

Apparently, however, they seem to have the need to showcase IOTA’s alleged vulnerability, because the cryptographer decided to set up a live stream meetup to break CURL, the signing algorithm of IOTA.

They write:

“Now that all parties are out of stealth mode, I can formally announce that Ethan Heilman will be demonstrating how he, along with three researchers from MIT Digital Currency Initiative (DCI), broke IOTA’s nonstandard “Curl” hash function.

By doing so, they revealed in a $2B cryptocurrency a serious security flaw that could have allowed a hacker to steal user funds. (IOTA has since lost about 25 percent of its value, according to Coin Market Cap.)”

And they seem to also assume that when all cryptos are taking a plunge, IOTA shouldn’t have been affected. Even more interesting.

Now, to draw a conclusion

In theory, IOTA is a technology that is able to outperform almost every other cryptocurrency.

Especially the Lightning Network, that is trying to address Bitcoins scaling problems, and Zcash, that is possibly threatened by Masked Authenticated Messaging are in a direct competition with IOTA, let alone DAGlabs.

If independent scientists of a renowned faculty like the MIT or Boston University claim to be able to break IOTA, people listen, the market reacts immediately.

In order to make the public aware of vulnerabilities with a high impact, and to save people from losing money, they did disclose information in an unethical and wrong way, which added significantly to the loss of valuation. If that is not irony, I don’t know what is.

But these guys are not just rational, independent scientists. These people are investors and developers of competing projects, so no wonder that the tweets were written accordingly. Coincidental of course.

Direct conflicts of interest:

To support my thesis that this is a coordinated effort I point out the blatant and obvious conflicts of interest.

  • Ethan Heilmann and developer of, a direct competitor to IOTA (also Bitcoin Core developers involved). Due to almost 50 anti-IOTA tweets, I assume that he wants to change the sentiment or just coincidence
  • His project DAGlabs is in a fundraising right now. A direct competitor developing their own DAG solution and currently trying to acquire Series A funding partners. Coincidence.
  • Madars Virza is Zcash Co-founder, a direct competitor to IOTA (is heavily supported by Matthew Green and Ian Miers, both ZCash). Coincidence
  • Amy Castor is working for Bitcoin Magazin and is postulating questionable insults against the IOTA Founder while she is a member of the Bitcoin Core Slack and following an anti-ICO agenda. Bitcoin Magazine. Coincidence
  • To Cite Satoshiwatch: “Amy Castor – who propagated MIT’s malicious report/attack in the Forbes, is a writer for CoinDesk, Barry Silbert’s Digital Currency Group (DCG)
    -“DCG ownership and crypto-investments include Zcash, Ripple, Rootstock, and etc.” Coincidence
  • Tadge Dryja is working for the Bitcoin Lightning Network, a direct competitor of IOTA. Coincidence

All in all 4 people of ZCash involved. Madars Virza, Matthew Green, Ian Miers, Meltem Demirors Coincidence.

Centralization of the Coordinator:

Concerning the coordinator(Coo), it seems like no one is missing an opportunity to point out that the Coo centralizes IOTA. The Coo is a special node in the hands of the IOTA Foundation that sets milestones in order to prevent Sybil attacks.

If people want to attack the network, they try to become an omnipresence in order to conduct doublespends.

This protection is necessary as long as the network is in its infancy. The transparency compendium pointed this out and it’s common knowledge, that it’s solely for the purpose of protection. The developers cannot alter transaction or access seeds.

Just the day before yesterday, an attacker tried to take over the Tangle.

To make it clear what’s happening, he added a tag to the transaction: “BZWFL99FUCK9CORE99LETS9FORK

The coordinator prevented a takeover from happening, everything is safe and sound.

But its purpose to protect the users of IOTA is of low significance, as it seems. People rather point out that due to the Coordinator, the whole system, idea, network is worthless. What a hypocrisy considering their biased stance.

At this point, I’m asking myself, why are these people insisting that the coordinator is a bad component? Obviously, the term centralization is undefined, because looking at this definition I could just claim that IOTA is still decentralized, especially because there are no blocks, no miners, the validation of transaction is not decoupled but in the hand of the users, unlike Consensus at Bitcoin. The comparison between blockchains and the Tangle looks therefore wrong, because of the “centralized part”, the coordinator has no participation in the consensus model.


When I look at Bitcoin, the true centralization happens due to the power of miners, where five of the biggest mining farms set 51% of the global Bitcoin hashpower.

Furthermore the centralization of developers, one can easily recognize when you look how many Bitcoin Core developers are connected with side projects or react in unison when a shitstorm is formed.

An incestuous innovation ivory tower, if you ask me.

If this was only about following science ethics, why would they fabricate a lurid headline, that clearly suggests that IOTA is still vulnerable?
Why would objective scientists talk about a crashing price and retweet dozens of tweets with an anti-IOTA sentiment?
Why would they decide to make a live-stream to showcase how to break CURL, although it’s not used anymore?

As a side note: The IOTA devs have not been invited to defend themselves or to talk about their point of view.

Since none of the mentioned persons kept a neutral stance, I can only conclude that this is a coordinated effort to destroy IOTAs reputation as ultima ratio because IOTA threatens their own projects.

Neha Narula, as the director of the MIT Media Labs, missed the chance to provide an independent peer-review of IOTAs -not in use- signing algorithm CURL.
Instead, she allowed that her team used its personal bias for their own purposes.

Amy Castor abandoned the ethics of journalism: “The duty of the journalist is to further those ends (justice and the foundation of democracy) by seeking truth and providing a fair and comprehensive account of events and issues.” when she started ranting her personal agenda like a bulldozer and furthermore acted highly unprofessional against IOTA Founder David Sønstebø.

Her lacking ethics may be motivated by the fact that she has written about Zcash, at this point I can only assume that she owns Zcash, or it’s just another coincidence:

This “responsible disclosure” is not the work of objective, competent scientists of the Massachusetts Institute of Technology or the Boston University as proclaimed. This is the epitome of a conflict of interest, where people use the names of big institutes.

In the game-theory, there are only rational agents. It seems these scientists are rational in that sense.

To cite Prof. Dr. Harald Lesch: “The economization of science is a problem: performance instead of position.”
-Especially in the field of crypto currencies.

Interesting to see that Zcash, DAGlabs and Bitcoin enthusiasts develop the same habits when they talk about IOTA, the same kind of habits that banks used to, when they talked about Bitcoin back in the days.

So if this is the business conduct of the MIT Media Lab, the Boston University or Forbes, I wonder where we can still find unbiased science and information.

What a great coincidence.

Casus ubique valet! Semper tibi pendeat hamus! Quo minime credis gurgite, piscis erit!

A rough summary of transaction fees for the IoT with current systems.

A rough summary of transaction fees for the IoT with current systems.

We often talk about IOTA as the new distributed ledger that promises a financial and infrastructural solution in a world where fees for transactions act as a barrier to progress, especially in the IoT.

But how big are the present existing fees for a system like the IoT? Do we really have a problem?

I tried to find out! Very amateurish, I might add, but enough for this purpose.




A bigger issue in estimating a none-existing number such as the “global-transaction-fee-index” is to find systems that are overall able to deliver the necessary services globally.

I take the liberty and define the “global-transaction-fee-index” as an indicator that shows the impact of the “mean fees” that would be added to a value transaction in the IoT.

The lower this index is, the worse it is for the IoT (shown with an example under “conclusion”).

This number is almost certainly utter bullshit but it gives us an idea how expensive and cumbersome transaction fees could be.

For my evaluation, I made a list of relevant requirements for present services:

  • the service needs to be fast (financial state of the art)
  • the service needs to be available almost everywhere (high adoption)
  • the service needs to be a commonly used technology right now (no proof of concept)
  • the service needs to be a system that is documented well enough to be assessed 

This list supposedly isn’t complete but should be enough for this assessment.

For my calculations, I furthermore held to the very conservative estimate for the IoT-devices by Gartner of approximately 30 billion devices in 2020 (Source: Gartner)

We can assume that not every single device will be used for shifting values because a big piece of the pie will just be connected to submit data in any way.
But my relatively high estimation, especially because of new emerging e-markets, is still around ~5%.

This little assessment, therefore, starts with a number of 1.5 billion devices that need to shift value just once a week in 2020

I have no idea if this is close to reality but we have to start somewhere, so this acts as a reference.

If you find any serious, scientific approach to transaction fees in the IoT, I would be happy to get it somehow!

The services I found that held up to the requirements are no surprise:


Swift /wire transfer  (globally active instead of national-remittance)

Paypal  (most popular payment service – highest online adoption)

Visa (also a globally used service with access to markets everywhere on the planet)

The resulting fees are:


            The IoT is a global system so Swift instead of national remittance is what we need for now. 

  • Paypal: “the fee for each transaction is 2.9% plus $0.30 USD of the amount you receive”

            Paypal has a few competitors especially in the Asian region like Alipay but is generally spoken the biggest fish. 

            Debit Cards as a whole are in a sensitive competition, so I assume that fees of MasterCard etc. are comparable to Visa.

The naive fallacy:


Let’s pretend to know the percentages of the transaction system of the estimated 1.5 billion transactions, once per week in 2020.

  • Since SWIFT is aiming for bigger transfers, I assume a small share of just 5 %
  • Paypal, especially in the growing field of e-commerce would have a share of 60% (we assume a mean value of 10$ per tx)
  • And Visa would have a share of the remaining 35% of all transactions.  (we again assume a mean value of 10$ per tx)
  • At this point, I don’t include micro-payments because existing systems simply make them impossible

That leads to:

Swift = 75 million tx/week

Paypal = 900 million tx/week

Visa = 525 million tx/week


Swift = 75 million * ~$30 = 2.25 billion Dollar per week

Paypal = 900 million * $0.59 ($0.29 + $0.30) = 531 million Dollar per week

Visa = 525 million * $0.251 ($0.151 + $0.10) = 131 million Dollar per week.

All global transaction fees combined per week: roughly 2.91 Billion Dollar per week (!) 

Even Bitcoin would *only* generate fees about 1.125 billion Dollar per week if the scalability would stay at 75cents per transaction, which isn’t the case, sadly.
The scaling of Bitcoin would lead to much higher transaction fees due to the big number of 1.5 billion transactions per week. But I don’t know how much that would be and furthermore, Bitcoins adoption is not as advanced as the mentioned services. So this is irrelevant.



The global transaction-fee-index would be (the higher, the better): 

1.5 billion transactions / 2.91 billion Dollar = 0.515 with existing systems

If the transaction fees would be 10 million Dollar per week due to proof of work, electrical expenses or investments in tokens for IOTA it would be:

1.5 billion transactions / 10 million Dollar = 150 (290-fold of 0.515) with IOTA

Whatever this number means, a multiplicator of ~290 in the global economy is a game changer either way. Even if it wasn’t 0.515 but 5 it would be a disaster for the IoT (!). 

This estimate of 2.91 Billion Dollar per week (151.23 Billion Dollar annually) is just a number without a scientific background, but let’s be honest:

Is my calculation so unrealistic?

We can alter the numbers down to 10% of what I calculated but we cannot hide the fact that the vision of the IoT gets into trouble if these systems don’t evolve.

And that, ladies and gentlemen, is one big reason IOTA is a necessary technology!

If you have questions or if I made a mistake, leave me a comment -I would be happy to discuss this assessment!

Have a nice week,