Ok, so either you found this yourself or somebody sent you here who thought that you don’t know about one of the biggest disruptions of our time which will affect our lives — but you should! Because you will be confronted with it anyway and it makes sense to know today what will change the world tomorrow.

This article aims to explain what this disruption is about, in a way that Average Joe understands it.

1. Where we are

We are living in 2018, the Information Age, 21st century,…you name it. What characterizes our lives is the fact that technology more and more intrudes our once ever so cozy and human-relationship-focused lives: Maybe you remember the times when

telephones did not have displays

TV only had three channels

the Fax/telecopying boosted communication speeds

computers with a 3.5GB HDD cost more than 3000 dollars

mobile phones were used to phone

We have come a long way since then. With the internet leading the way, our lives are determined more and more by the technology around us: Facebook, What’sApp, Netflix, Uber or Skype/Facetime are tools which billions of people have awarded a (mostly too) important position in their lives.

A very interesting observation is the following:

Something interesting is happening

Apparently, the internet keeps on evolving and with it its services for us as human being. You may like it or not, but this evolution is not over yet.

2. The next “big thing” aka game changer

You might have heard of Bitcoin, which was invented to provide an alternative to the alleged corrupt banking system: With its focus on transaction speed (versus a normal bank transaction) and transparency (all transactions can be seen by everyone), a new public ledger was born set to take the throne from older inventions such as SWIFT transfers (corporates) or Paypal (Average Joes). Moreover, it strived to be a decentralized solution to our privacy problems: no central servers were needed, the system cannot simply be taken down — not even by governments!

However, this financial revolution got stuck.

When Bitcoin’s price soared, so did the costs (because a certain amount of fees is needed to pay the people securing the network (i.e. the miners)). And suddenly people and corporates noticed that Bitcoin’s sore spots are the high costs plus the scalability: the more people used it, the higher the unconfirmed transactions, the slower the network was.

In order to understand why this is important, have a look at some visionary outlook of what life could look like in some years:

‘NO WAY,’ you might think,’We would rather have lightsabers before that’. Unfortunately, this is not true because the topic of SmartCities is gaining more and more importance, here is why:

Each of these areas will be interconnected and the keyword here is “sensors”: Your car (if it’s a rather new one) already has more than 300 sensors installed without you noticing them simply because they are limited to your car’s functioning.

However, the new sensors are already capable of connecting to the internet! So basically every electronic device will have access to the internet.

So why is that disruptive? Simply because all this data will be processed for thousands of reasons:

weather data can be collected and used for precise measurings, forecasts, etc. (here is the latest example of the city of Vienna)

smart homes can save a lot of the owner’s money by making economic decisions on the basis of the sensor data

health data is stored in a tamper-proof fashion enabling people to deal with insurances, doctors, hospitals in the fraction of today’s time (as far as bureaucracy is concerned)

waste is collected once the sensor tells the company about a full trash can at public spaces (Australia is leading the way here)

billions of use cases emerge from this

Again, you may say that his is still far away. However, even today world-leading sensor company BOSCH is producing its sensors in a way that they are capable of connecting to the internet (and if things can connect to the internet, you call this the “internet of things (IoT); you might have heard of that already…).

3. The problem

As you can imagine, this IoT is huge: think of some of your devices which you need every day:

mobile phone

TV

car

fridge (smart fridges are on the way)

Take these 4 devices multiplied by 1 billion users (yes, our earth’s population is about 7 billion but let’s be conservative): 4 billion devices. Now each of these devices sends data (your car alone has 300 sensors), you get the idea:

It results in an unbelievable amount of data and transactions.

Yet one of the goals was to not have central companies involved, right? We don’t want our data to be in the wrong hands.

And we want to have it fast, right? We don’t want to wait in today’s (and tomorrow’s) time.

And of course it must be free, right? We want to spend money for more important stuff.

So with a blockchain technology like bitcoin this is not possible:

too many transactions would slow down the network

you’d have to pay for every transaction (say, my car wants to pay for charging while standing at a red traffic light; the energy costs 5 dollars, but I have to pay 50 cents for the transaction)

checking if the transaction is valid (and not a hacker’s fake transaction) takes too long

4. The solution

Apart from Bitcoin, there are more than 1,500 other cryptocurrencies each of which wants to be the next big thing. However, many are scam projects and only very few of the others have real use cases and partnerships.

IOTA stands out as extraordinary in this respect simply because it has

real partnerships (the last of which was Volkswagen’s CDO announcing their collaboration last month)

(the last of which was Volkswagen’s CDO announcing their collaboration last month) a network which does not require fees (so you send 1ct to someone else and the whole 1ct arrives, for instance)

(so you send 1ct to someone else and the whole 1ct arrives, for instance) a scalable system: the more people use it, the faster it gets

system: the more people use it, the faster it gets really fast transactions: for 2018, 1000 transactions per second are the goal (Bitcoin has about 7). However, it theoretically is indefinitely scalable.

transactions: for 2018, 1000 transactions per second are the goal (Bitcoin has about 7). However, it theoretically is indefinitely scalable. it is legally established as a non-profit foundation in Berlin, Germany.

Of course, IOTA is not yet production-ready. The network as it is still has this kind of “server” which organizes all of the transactions — but once there are enough transactions permanently, it will be removed.

The code is being improved to make it what it’s supposed to be. But companies like BOSCH, Fujitsu and Volkswagen would not waste their time with it if it wasn’t promising.

What you also need to know is that IOTA as a software code is only the by-product of the hardware development. There is a special developer section which only develops an IOTA hardware chip whose goal it is to enable every electric device to compute the calculations which are necessary for sending out the transactions (remember that your fridge doesn’t have a computer to do this, right?).

To come back to the above example of smart cities and the many transactions that go along with this use case, you can already see how IOTA will handle this in the city of Taipei, Taiwan.

5. How it works

In order to understand how it works, let’s compare it to a parcel which is delivered via Fedex.

In order to send something over the IOTA network, you need the software which is called the wallet (as in Bitcoin).

You establish your “home address” by typing in a password:

In order to be safe and unhackable, your key (called the “seed”) must consist of 81 characters (letters A-Z, but only “9” as number is allowed). THIS SEED MUST BE STORED IN A SAFE PLACE , anyone who has it gets access to your house — we don’t want that, right?

, anyone who has it gets access to your house — we don’t want that, right? With your key you now have access to your home. This home has a unique housenumber and looks like this:

KGOZYHJRYVDBSXTUSECYJVEBLDVYFKCAKAWTPTCKXMBNOWNVRDRHRVSJNIVOQUFRODFPXWYSGROKRWKRZWJZTJOHSX

People can send you packages to this address (there is no short form of it, it must be this code of letters).

If you want to send 1 IOTA (remember that you don’t send dollars over the tangle but just the IOTA currency) to you friend Johnny, as with Fedex, you need his home address.

You start the software, type in your key/seed, tell it to send 1 IOTA to Johnny’s address and click “send”.

That’s it.

As with Fedex, you can now check your parcel’s status because you get the sending ID (called the transaction hash) which you can see in the “History” section. You can follow the parcel with this ID and see when it was sent (timestamp) and when it is safely delivered/transmitted (confirmed).

6. Outlook

As I said, IOTA is still in its beginnings. The technology needs refinement and the Foundations is being set up properly and professionally. Many things are about to be released within the next weeks (the community is already waiting desperately for the updates):

new homepage (www.iota.org), which will tell about

(www.iota.org), which will tell about new partnerships

new additions to the IOTA Foundation team (probably 100–150 people will be working for IOTA by the end of the year, hired and paid by the Foundation)

(probably 100–150 people will be working for IOTA by the end of the year, hired and paid by the Foundation) new exchanges trading IOTA (the biggest are yet to come)

trading IOTA (the biggest are yet to come) new wallets which will make sending IOTAs a lot user-friendlier

the biggest project Q:

IOTA’s co-founder on Q

IOTA hardware

lots of stuff which we don’t have a clue about yet

Just to summarize this:

Internet of Things is the “Next Big Thing”

Bitcoin and the likes cannot handle the amount of data and transactions

IOTA was specifically designed for IoT

big companies are aboard already

the biggest updates are about to be released

You can put the pieces together by digging deeper — a good start might be my other articles.

I hope you liked this little introduction. In case you want to donate some IOTAs, here is my address:

KGOZYHJRYVDBSXTUSECYJVEBLDVYFKCAKAWTPTCKXMBNOWNVRDRHRVSJNIVOQUFRODFPXWYSGROKRWKRZ