IOTA: The Distributed Ledger Technology Designed for the Internet of Things

The Internet of Things (IoT) is an umbrella term for billions of Internet-connected devices that share data with each other. Thanks to…

4 years agoInternet of Things

The Internet of Things (IoT) is an umbrella term for billions of Internet-connected devices that share data with each other. Thanks to this data-sharing network, IoT will become a driving force in creating more efficient communication across many aspects of our lives, including transportation, energy, manufacturing, city infrastructure, identification, and healthcare.

That world is fast becoming a reality. According to Gartner, the sensors and connectivity that will drive this future will be found in an estimated 26 billion objects by next year. Moreover, the McKinsey Global Institute reports that IoT will have an economic impact of between $4 trillion to $11 trillion in the global economy by 2025.

Distributed Ledger Technology Will Drive the Future of IoT

A significant enabler of this emerging world is distributed ledger technology, often referred to as DLT, which is a database of records that enables decentralized consensus. DLTs will enable new economies to emerge among machines by providing the protocol for them to transact value and data. This new machine-to-machine economy will incentivize billions of devices to share data and take advantage of this new value stream.

Challenges of DLT for IoT

One of the many challenges of using some DLTs for this future world of IoT is that you must be able to easily scale to service millions of daily transactions, in order to enable machines to communicate autonomously.

So far, attempts to scale blockchains have resulted in delayed transactions and high transaction fees. This is because there is a bottleneck, as transactions need to be verified by the operators of nodes (miners), who are then rewarded with a digital coin for their trouble.

As the volume of transactions increases, this bottleneck can result in a network that takes a long time to verify transactions. This in turn results in a competition whereby people pay to have their transactions jump the queue, leading to rising transaction fees. This makes blockchain currently impractical for use in most situations in our grab-and-go world, and truly impossible in an IoT future.

These technological limitations are a barrier. But there is a solution at hand.

IOTA: A New Approach

Enter the Tangle. A technology developed by the IOTA Foundation. As one of the first non-blockchain ledgers, IOTA was designed to eliminate mining and transaction fees.

In the Tangle, transactions are linked to each other in a novel method, requiring only a small amount of energy expenditure, compared to the high energy requirements of traditional blockchains.

Furthermore using the Tangle, there are no miners holding up processing of transactions. The transactions are verified in parallel by a community that self-polices itself and is open. This helps make transactions faster and increases the number of transactions that can be dealt with at any particular time. This is a crucial component in a world where billions of devices need to constantly communicate.

Instead of individual miners verifying transactions, the entire network of devices verifies them, removing the need for fees and reducing energy consumption. This feeless verification process also makes IOTA ideal for sending data (rather than just transacting value) with integrity, and performing multiple microtransactions. This combination of data and value transfer, forms the basis of a machine-to-machine economy.

Interesting examples of IOTA integration include:

2. ElaadNL is also responsible for the first smart charging station using IOTA technology, where a car can pay for charging autonomously.

3. IOTA-based Platooning by Fraunhofer BlockchainLab

4. A new way to pay for coffee by Daniel Münstermann.

5. Tanglesheep, a food dispenser that allows you to feed sheep in real-time by paying with IOTA tokens, similar to what you would do at a petting zoo.

Since sensors will soon be found in homes, automobiles, stores, shipping, and almost every environment you pass through, speed, trust and reliability are paramount. Proofs of concept and use cases using IOTA open source technology are being developed across every sector of IoT, including:

  • Social Impact and Public Regulatory Affairs

For more information on IOTA, please visit Documentation and code examples can be found at, as well as recordings of our live coding streams on our YouTube developer playlist found here.

Come up with your own IOTA-enabled idea for the IOTA Smart City Contest on Hackster for the opportunity to win over 10K in prizes by solving smart city challenges from our corporate sponsors.

If you would like to learn more about DLT and how it is shaping the Internet of Things, please join the webinar on March 8th at 9 AM PST: Exploring the IOTA protocol: Distributed ledgers and their practical applications.

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