IOTA is claimed to be the future Internet of Things on the blockchain, designed for fee-less micro-transactions for IoT. On IOTA, a transaction made validates two previous transactions hence speeding up network as more people participate. It is claiming to use Quantum Computer resistance cryptography for tomorrow’s hack-proof systems. It does not employ blockchain but uses Tangle that employs a blockchain . Thus, it is a balance ternary numerical system based on three digits instead of two.
IOTA also promises massive scaling opportunities more than Ethereum and Bitcoin.
IOTA co-founders, David Sønstebo Dominik Schiener believe that IOTA will deliver its promise; namely same incentive as Ethereum and Bitcoin while providing minuscule validation. The effort in full nodes compared to Ethereum and making peer discovery easier without compromising security.
Related Coverage: IOTA is down by 50% in a 7-Day period
IOTA entered into partnership that would see Microsoft, Fujitsu, Samsung, Deutsche Telekom, and many other technology giants use its Tangle tech in the first-ever data cryptocurrency marketplace built for the Internet of Things. The marketplace will be go by IOTA distributed ledger. The stakeholders will be able to share and monetize data in the marketplace.
The demo for the marketplace is here.
However, Ethereum founder Vitalik Buterin and core developer Nick Johnson previously doubted the possibility of IOTA in delivering its promise. Criticism by Johnson came earlier and he wrote an article in September about why he doubted IOTA could deliver.
For instance, Johnson says that although IOTA sounds great in theory. A number of things about Tangle are not practical including the fact that it would run into storage and computational overheads. Since with the existing hardware working in binary, math will be performing on individual “trits”. The first converts from binary-wrapped-ternary encoding into the machine’s native number representation and back again after that.
“IOTA is by necessity developing to run on existing hardware. As are the communication networks it uses. As a result, its entire internal ternary notation has to be encapsulating in binary. Since resulting in significant storage and computational overhead.”
Buterin tweeted on December 1 claiming that there were incompetent people working for the big companies and major world governments that IOTA was partnering with, saying he had talked with them.
Schiener recently said that there are few use cases he can think in blockchain that Tangle can’t do better than Ethereum. He said ton November in a TNW Answers sessions that IOTA is setting up actual real world applications such as data marketplace, EV charging stations, web payments for shops, tipping, e.t.c. to make user want to spend their tokens and probably solve hoarding.
Ethereum is also to be moving towards the path of solving the same problem as IOTA. Also recently announced partnership with 30 banks and technology giants, including JP Morgan Chase, Microsoft, and Intel. However, Schiener says Ethereum won’t be able to solve the same problem as IOTA since it was develop without those needs in mind.
“I do not believe Ethereum can solve the same problems, simply because in order to do so they would have to revamp their entire architecture to the point where it would no longer be Ethereum, and I don’t think the miners or eventually stakers would ever vote “yes” on a proposal to kill their profits after their heavy investments”. “Ethereum is an interesting project, but they have a tendency to make very lavish claims and never deliver on deadlines”.