What is IOTA? It’s distributed ledger technology

What is IOTA?

Giorgio Mandolfo from IOTA Foundation spoke to Crypto Finder to explain.

Interview from Blockchain Week London on 23 January 2018.

Check out our second interview on IOTA

Read the transcript:

Hi, I'm Giorgio Mandolfo. I'm part of the IOTA foundation as a sysops engineer.

IOTA is a distributed ledger. It's a distributed ledger built on top of a protocol called Tangle.

The Tangle is a different way of conceptualising decentralised ledgers, different in particular compared to any other blockchain ledger. In fact, in IOTA, we often say it's blockchain with no blocks and no chain.

IOTA itself started with four co-founders – Dominik Schiener, David Sønstebø, Serguei Popov and Sergey Ivancheglo at about 2015, way before I even knew about the project.

The protocol and the very first white paper started taking into place and then fast forward 2016, the main net (which means basically the IOTA as a ledger) went live mid-2016.

And then late 2016, an ICO started and that helped the very first four founders to sort of bootstrap this protocol, allowing them to further develop the protocol and get more people on board.

And more recently, at about November 2017, the IOTA Foundation was formalised as a German not-for-profit organisation.

The goal of the foundation is to further develop and research into the space, and providing also support to the ecosystem.

What is IOTA trying to achieve?

Interview from Blockchain Week London on 23 January 2018.

Read the transcript:

What is the IOTA Foundation trying to achieve?

At very early stages, the co-founders realised that the current blockchain as a technology had two major issues and they were trying to sort of fix them.

They decided to basically start from scratch. So learn what you have up until now, which is the blockchain, which is an amazing technology, and then take it from there. Okay, now that we know how it works and how it actually acts in real life, how can we then take it from here and make it so we don't make the same mistakes?

So the idea, the very brilliant idea, at the very bottom of it which is very simple but ultimately according to me and according to many others, is very, very clever, is that the IOTA-distributed ledger (the Tangle protocol) will basically merge these two actors on the network – the miners and the people that actually use the network.

Miners are the validators in a blockchain technology, so miners make sure that the network is secure.

So the idea is to merge these two parties into one entity. So basically, whoever transacts on the network is also part of the validation process.

Why is this, according to me, spectacular? As simple as it sounds, basically, it first of all erases the need of miners, therefore fees.

And just by this (this is also what really just went straight into my brain and I was like, "this is it!"), when you remove fees, you all of a sudden open possibilities that I even don't know.

Like all of a sudden, you have the ability to have zero-value transactions with data on it and yet having the network sustain itself, even if there are many transactions. So all of a sudden, you have this ability to micro-transact.

And, of course, the guys (when I say the guys, I mean the focal or founder and the early adopters) way of thinking about the IoT space in this, still stands.

Ultimately, this is basically to enable true IoT.

IoT as we know it today, up until now pretty much, is not real IoT. It's just some private cloud of a specific company selling your products that then you install wherever you want – your secure alarm, your sensors.

And then all this data that this IoT device collects is sent to the cloud, to this private cloud, and then ultimately it's locked in there and that is not true IoT.

True IoT means that devices of different manufacturers can actually connect, share, transact eventually.

People may think that blockchain is the answer. But if you have fees, how can you truly have a transaction whose value is either zero or just so sub-cent? And then you have to pay transaction fees on top.

That's not sustainable. So that is one problem that IOTA solves. Is the fact that by not having transaction fees, all of a sudden you truly can have micropayments, and basically if I send you one cent, you get one cent.

Not to mention transactions with no value in it. That also enables another type of business cases that I'm not even aware of.

What are some of the examples where fee-less transactions could be beneficial?

There are two main, and I believe these will be the very first two, industries that will see the benefit of fee-less transactions.

And it's nothing secret of course – a truly decentralised data marketplace where everyone can actually join and sell their data.

And again this is just the starting point. And then imagine big manufacturers as soon as they start integrating the IOTA protocol, the IOTA technology into their hardware, then all of a sudden you have a multitude of companies joining this data marketplace.

So, all of a sudden, you have companies that still are competitors but they may be even interested into selling part (if not all) of their data even to their competitors, and yet making a profit without any middle man. I believe that's the very first.

And the second one is automotive industry and smart cities – when you think of autonomous driving, then all of a sudden you have the ability for a car to automatically be aware of their surroundings.

So say, for example (just in a very simple use case), where the charging station is, how far it is and how much it actually costs to charge.

All this information will be real time, free to get because ultimately there is a sensor that sends this data) and it's free to get because it wants to attract these cars. And all of a sudden, you have cars that make smart decisions based on this data.

Check out our beginners guide to IOTA