IOTA, the backbone of the machine economy

IOTA is defined as a permisionless distributed ledger for a new economy. Distributed ledger and not blockchain, because IOTA runs on a DAG of their own known as the Tangle, optimized to power the future of the Internet of Things with microtransactions and data integrity for machines.

All in all, the backbone of the machine economy, as they describe it.

The total supply of IOTA’s digital currency is fixed, reflected however as infinite (or more than enough) to host the current and future velocity of machine nanotransactions.

The Tangle

The Tangle brings validation as an intrinsic property and hence combined with the usage of the network, unlike regular blockchains. To achieve scalability, everytime a new transaction joins the tangle, it chooses two other transactions to approve. The network is decentralized, unlike blockchains that centralize around mining-farms. That said, there is a need for central coordinating node.

Several techniques are integrated to make of the Tangle a stronger DLT model, including randomness through Poisson point process, or biasedness towards transactions with more cumulative weight to favor increasingly larger branches of the chain. Similar concept to traditional blockchains, but presumably more flexible, as it allows smaller branches to merge with the bigger.

Decentralizing data

IOTA’s vision brings on a decentralized data marketplace where data producers meet data consumers. Data can be securely stored, sold, and accessed by anyone in the network. Through IOTA, a truly decentralized marketplace opens up vertical data silos that were previously kept limited under the control of a few entities.


Through the marketplace, we are one step closer to the machine economy where devices can trade everything from storage to computation, passing through things like analytics, electricity, etc. At the moment, closed silos of data lead to up to 99% of it totally wasted. If opened, who knows what kind of knowledge we’d be able to unlock.

A growing ecosystem of individuals, organizations and projects is already part of IOTA to empower its protocol and vision.

Applications to cities

Mobility & Autonomy. Real-time zero fee payments, with secure data transfer and immutable data storage for connected and autonomous vehicles. Cars will pay autonomously for things like parking, charging, or tolls. In order to pay for these, they will earn money in return of services like car sharing or item deliveries. Electric vehicles will be able to earn as well by becoming a part of the P2P energy trading network. World’s first IOTA electric charging station already in progress.

Global trade and supply chain. Collective transparency, authorized and authenticated participation, and immutability records to build trust between all the entities involved in trade. Specific applications already in the works including track & trace, trade facilitation & documentation flow, and transparency reporting.

Smart Energy. Smart charging and decetralized energy system support, through IOTA each city can become its own digital smart energy community, growing through self-sufficient transactive grids.

Javier Alaves

Javier Alaves

Javier combines his current work at BC4C with general DLT research with a strong focus on fundamental analysis. He has written a thesis on distributed resource management for future cities. and holds +6 years of experience in the fields of EdTech, digitization and robotics.

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