The Machine Economy (and similarly, Industry 4.0 or Web3) may just sound like buzzwords to try and grab your attention. However, IOTA’s audacious vision and impact in this space will become unquestionably real, in the not too distant future.
IOTA has marketed itself as the backbone of IOT, though it may be more apt to describe it as the backbone of the machine economy. It will act as a trust layer, automation enabler and will provide the infrastructure for the semantic web on which the machine economy will run.
The Foundation and Ecosystem
The IOTA Foundation is a non-profit, set up in 2017 in Berlin, Germany. By having a non-profit foundation behind it, IOTA is attractive as a neutral territory where many competing participants can utilize the same network. The IOTA ecosystem is an essential component, where there is a thriving community and many industrial and government partners.
Distributed Ledger Technology
IOTA is a Distributed Ledger Technology (DLT), it provides a way for multiple participants in the network to transact value and data through the shared ledger. The data structure of IOTA’s ledger is called the Tangle, its public network is permissionless, meaning that anything can participate without requiring permission to join.
The public network is home to the IOTA cryptocurrency. IOTA can also be set up as a private network, which can be useful for companies if they simply would not benefit from posting all of their data on the public network. IOTA plans to make the public and private versions seamless and interoperable, so for example smart contracts could be run in either environment.
To Fee or not to Fee
Feeless transactions are a killer feature of IOTA. Note that feeless does not necessarily mean free, this is often a common misconception — for example, just as e-mails are feeless, they are not free as you still need a device to send and receive them. Some future applications may want to add their own processing costs on top of the feeless IOTA protocol, such as to process smart contracts — but the protocol makes this optional. Most other protocols out there have fees baked into them, to provide security etc. It will be incredibly difficult for a protocol that has fees, to remove them — whereas it will be very easy for a feeless protocol to add optional costs if a certain usecases require it.
Being feeless on the protocol level will additionally help to enable a zero marginal cost society, which would mean that network participants could exchange other forms of value such as compute time, hard drive space, mana etc. instead of making it all about fees.
The below video by Jeremy Rifkin provides further insight into this kind of economy.
Standardization and Interoperability
This has been a key focal point for IOTA, as can be seen by having Richard Soley from the Object Management Group (OMG) on the board of directors since 2018: https://blog.iota.org/welcome-richard-soley-to-the-iota-foundation-eb61e015187d/
Efforts in this space have been significant, with Mike Bennett providing fairly regular updates: https://blog.iota.org/iota-standardization-update-january-2021/, With IOTA not only working with OMG, but also with eClass.
It is also worth mentioning that the IOTA Smart Contract Protocol (ISCP) will be agnostic to the virtual machine and smart contract language, so will be able to run anything from Ethereum / Solidity, to Cardano / Plutus, Cartesei / Linux and so on.
By offering standardization, agnosticity and interoperability, this will only help to cement IOTA’s position and make it much more attractive for participants to join the network.
The Machine Economy
The following article explains technical details behind IOTA and digital twins, which are a key component in the machine economy.
By combining smart contracts, oracles, identity, IOTA streams, IOTA access, digital assets (NFT’s) and digital twins, amongst others, this will enable countless possibilities with incredible potential for the machine economy. IOTA has been building and re-building itself over the last years and with the Chrysalis release and Nectar incentivized test net due very shortly, it is now incredibly close to realizing the vision and will start to unleash the true potential of distributed ledgers.
