Smart cities will provide more and more services, an increasing number of which they'll be apt charge for. As urban IoT infrastructure expands, local businesses will naturally also take advantage of it. With all of that on the way, there's an expectation that it will be useful for people to have access to a suitable electronic currency for small fees and minor purchases — for making micropayments. IOTA, a ledger-based technology designed specifically for the IoT, is being proposed for that purpose.

Several ledger systems already exist. The most well-known is blockchain, the technology at the base of Bitcoin. Blockchain has some of the basic characteristics appropriate for supporting micropayments in an IoT environment, but it has disadvantages too, which make it unsuitable for making micropayments in IoT ecosystems.

Electronic payment systems must get better at security, personalization, and convenience. IOTA was designed to provide those qualities. When compared to other electronic payment methods, it has three main advantages: it is modular, decentralized, and not subject to taxation.

IOTA is based on a new distributed ledger, called Tangle, which overcomes the inefficiencies of the current blockchain design, introducing a new method of consensus in a decentralized peer-to-peer solution. This approach allows using the technology, for example, to transfer money without any commission to pay for anything from parking fees to a car wash to a sandwich.

IOTA comes from the IOTA Foundation, which is working with STMicroelectronics to create a new level of powerful, continuous, and economic access to IoT functionality. The spectrum of this cooperation is the integration of IOTA Tangle into ST's 32-bit MCU ecosystem. The solution will allow products and services with IOTA functionality to be easily integrated, letting developers to easily and quickly create and prototype new IoT solutions (X-CUBE-IOTA1).

What’s blockchain?

To understand the innovation of IOTA and Tangle, it is worth reviewing how a blockchain works. Blockchain is a sub-family of technologies in which the register is structured as a chain of blocks containing the transactions and whose validation is entrusted to a consent mechanism. The main features of blockchain technologies are immutability of the register, transparency, traceability of transactions, and security based on cryptographic techniques.

A blockchain is made up of blocks, one after the other, that contain information on multiple transactions. The management for all transactions is entrusted to the Nodes that are called to see, control, and approve all transactions. In this way, a network with the blocks of all the transactions is formed.

Each block is also an archive for all transactions and for the entire history of each transaction, which can only be modified with the approval of the network nodes. Transactions can be considered unchangeable (figures 1).

Figure 1: Structure of the blockchain. The essential elements are Node, transaction, block, Ledger, and Hash. Ledger is the public register in which all the transactions carried out in an orderly and sequential manner are “annotated” with maximum transparency and in an immutable manner. Hash is the encryption algorithm that uniquely and securely identifies each block.

IOTA technology

IOTA's innovation is relying on a tangle, a different approach that made it possible to scale the network in a purely IoT and blockchain ecosystem.

The idea was conceived by young computer scientists in a group of hacker forums. One of the minds behind the coin designed for the IoT is Dominik Schiener. The project was funded in 2015 by David Sonstebo, Sergey Ivanglo, Serguei Popov and Schiener. In a short time, it achieved a respectable capitalization of over $8 billion. Cryptocurrencies are generally burdensome and complex, but this project aims at a lightweight approach that makes it suitable for any scenario that requires the use of microtransactions.

Blockchain ensures the verification of transactions on decentralized systems and a system of transfer and exchange of data between machines and people that is secure and autonomous. IOTA does not use a blockchain, but a data structure called “tangle,” a type of direct acyclic graph (DAG). A tangle doesn't work much differently, but it makes the system scalable, faster, and even more secure.

DAG architecture assumes that the user and the validator are the same. A DAG is made up of many vertices and nodes, where each node is directed from one vertex to another. In figure 2, an example of a DAG graph. In Tangle, paradoxically, performance increases with the number of transactions created. It is important that every transaction has a positive integer for its “weight” (figure 2).

Figure 2: DAG layout. The boxes/nodes (A,B etc) represent transactions, the number in the corner of each box represents its “weight;” the center number is the cumulative weight

The main idea of the graph is to issue a transaction; users must work to approve other transactions. All users who issue a transaction contribute to network security. For a node to issue a valid transaction, it must resolve a cryptography algorithm like that of the Bitcoin blockchain. It is important to note that the IOTA network is asynchronous.

IOTA uses hash-based signatures instead of elliptic curve (ECC) encryption. Not only are hash-based signatures much faster than ECC, but they also greatly simplify the general protocol (signature and verification). IOTA uses Winternitz cryptographic signatures. The ternary hash function of the IOTA is called Curl. Hash-based signatures are based on so-called “one-time signatures” (OTS). As the term suggests, a single key pair must be used once only. Otherwise, an attacker can reveal more parts of the private key and falsify signatures.

IOTA's ternary logic uses three symbols (0, 1, and 2), and the related hardware circuits that implement it must be able to manage three distinct electrical states. A more comfortable and interesting variant of ternary logic is, however, that which uses the symbols 0, 1, and -1, which can be represented by a single trit (a trit corresponds to a bit in binary logic).

IOTA & IoT

With the growth of connected devices and interoperability between them, the number of possible applications of IOTA and Tangle will increase. This characteristic makes the new technology particularly interesting, especially in the complex infrastructures of industry 4.0.

The cooperation between IOTA Foundation and STMicroelectronics will lead to having a software package to integrate IOTA on ST development boards easily.

“With specialized hardware playing such an integral role in the Internet of things market adoption, it is exciting to work with such partners as ST to enhance IoT’s role as an innovation facilitator,” said Holger Köther, director of partner management, IOTA Foundation.

The X-CUBE-IOTA1 expansion software package runs on STM32 and includes middleware to enable IOTA functions. The expansion facilitates the portability of different STM32mic controllers. The software is supplied with examples of implementations to use the IOTA middleware on a NUCLEO-F429ZI or NUCLEO-F746ZG development board (figures 3).

Figure 3: A functional diagram for X-CUBE-IOTA1

“By enabling IOTA functionalities via the X-CUBE-IOTA1 expansion software for STM32Cube software technology, developers can now easily include IOTA features and capabilities in their IoT devices and create valuable applications using the STM32 Open Development Environment.” said Alessandro Cremonesi, STMicroelectronics VP System Research and Application.

In addition to STMicroelectronics, Bosch has partnered with IOTA to integrate its new data collection device for the IoT into the IOTA Data Marketplace. Bosch will use a series of open-source software protocols to connect its Bosch XDK development kit with IOTA.

The potential of IOTA technology has also been embraced by big tech companies like Microsoft and Cisco. Some companies, municipal administrations, and universities have already begun to explore the possibility of using the Tangle network for services such as electoral system, request for certificates, and more. The small municipality of Haarlem (Netherlands) is the first government organization to have started an IOTA-based solution for managing legal documents.

Recently, the IOTA Foundation has signed a collaboration agreement with the International Transportation Innovation Centre (ITIC) to create test systems (testbed) aimed at the world of “intelligent mobility,” also known as smart mobility. ITIC's goal is to create a testbed network capable of incubating and validating sustainable mobility services based on artificial intelligence (AI), using physical (real) test methods or based on virtual and augmented reality.

IOTA's Tangle architecture could be used as an infrastructure for exchanging messages and data acquired by the sensors. Sensors of this type could also be placed in private homes in the future, in which case the owners of the buildings would become suppliers of service to the structures that deal with environmental monitoring.

IOTA is essentially created to make sure that transitions can take place without being subject to any kind of commission. Only in this way can the Internet of Things allow new developments even in transactional terms.