The success of Bitcoin in the past few years has proven the value of blockchain technologies, which is a form of distributed ledger technology. Blockchain was the premier technology for allowing peer to peer transactions without intermediaries or fees, but due to inherent flaws in its design, transaction times have increased, shadowing the benefits of the blockchain. These flaws, such as the lack of scalability, brings stakeholders to explore alternative Distributed Ledger Technologies beyond the conventional Blockchain.

Enter IOTA and the Tangle

IOTA is a distributed ledger designed around the concept of the Internet of Things. Their vision is “to enable all connected devices through verification of truth and transactional settlements which incentivize devices to make available its properties and data in real time. This gives birth to entirely new general purpose applications and value chains”. As opposed to blockchain, which groups transactions into blocks and sequential chains, IOTA is based on the Tangle which powers a secure, scalable, and feeless transaction settlement layer that stores transactions as a stream of individual transactions. Using IOTA, people and machines can transfer money and data in a trustless, permissionless, and decentralized environment without the need for an intermediary.

Uses for IOTA

IOTA’s strengths lie in data integrity and transactional settlement. IOTA enables new business models that were previously limited by a legacy financial system. Imagine real time streaming payment services for data and energy usage, and sharing computational resources over a distributed network. With the emergence of the Internet of Things, IOTA brings us closer to smart cities, and an array of previously unimaginable use cases.

Use case scenario: Electric vehicles

To envision the potential for IOTA as a key enabling technology, IOTA has published their ‘verticals’, a set of use cases showing its applicability in different industries and environments. In the past decade, the power and utility industries began to shift towards clean energy. In the next decade, it will be subject to a transition towards distribution and smart decentralization of the grid. Since 2017, IOTA has collaborated with leading Dutch energy companies to develop an IOTA smart charging solution and prototype.

Currently, charging an electric car involves connecting the car, swiping an RFID card provided by a service provider, and the bill is invoiced on a monthly basis. The concept behind this solution is to allow payments and data exchange to happen fully autonomously in an electric car charging scenario. Upon connection, the user is charged automatically for the energy usage, reducing the need for monthly invoices.


Whilst IOTA’s benefits and its advantages over blockchain make it quite attractive, it is still too early to say whether it could potentially replace blockchain as the primary distributed ledger technology. However, its potential as the infrastructure driving the Internet of Things and the various applications made possible with the technology certainly makes it a prime candidate.

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