Building on the first two questions derived from a previous model, our model focuses on IOTA specific questions and features.

If you are considering this model, you might be in this situation:

“My solution requires sharing data across a multi-stakeholder ecosystem, where the parties do not trust each other or do not want to trust a central storage for data sharing.” If this is the case, it sounds like you DO need a DLT.

Why IOTA?

There are so many DLT’s nowadays and it is hard to determine the correct one to use. So, let’s try to understand why IOTA should be your choice.

Let’s do this by considering the following example.

A city council wants to promote electric vehicles (EVs)-based transport. To incentivize citizens to use EVs, the city council wants to provide a platform for exchanging information on the availability of power from connected EVs and charging stations. With such information, AI agents can perform optimal allocation of charging stations to cars. This will maximize global efficiency, reduce delay and balance grid load. Charging stations can be installed and offered by different service providers. To reduce the compliance burden, the platform should allow payments for power, to be processed on power usage (pay-as-you-use). To allow market flexibility, payments should also happen ‘peer-to-peer’, so directly from the car to the specific charging station operator without the need of a middle man.

It is clear that, because there are different charging stations providers and drivers, it will be a big competitive disadvantage to share all this data into a central storage and no party would agree to do so. So a DLT is required, but why IOTA?

The first question to answer is: are the parties required to share a mix of Internet of Things (IoT) and non-IoT data? In the example above not only IoT data, such as a car’s current battery status, are shared but a mix, including power tariffs, charging stations schedule and other event notifications. The non-IoT data is usually more structured and only occasionally shared when an update is needed. Instead, IoT data such as battery status is usually more frequent small time-series data points.

IOTA transactions support any kind of payload

IOTA’s flexible transaction payload can support any type of data. Financial transactions are obviously also supported by other ledgers too, but where IOTA excels is in being a trusted data layer for connected devices. Due to its lightweight transaction protocol, any device can issue IOTA transactions.

However, sharing data and guaranteeing data integrity among untrusted parties through a DLT often comes at a cost. Most of the time this depends on the quantity of information shared. In the example above, the information shared for each transaction might not be much. However, the number of involved parties and transactions might grow very fast, thus resulting in a large quantity of information being secured through a ledger.

Sending IOTA transactions does not require fees

Hence, the aspect of economic advantage must be considered: do the parties benefit from a low-cost or free to use infrastructure to share immutable data, irrespective from the amount of shared data? This is often a desirable property when designing a new solution, as it removes the barriers for adoption and does not impose any extra fee on the future solution users in order to cover the infrastructure costs. Most of the existing blockchains and DLTs, where users have to pay fees to issue transactions, not only limit future business models but add an economic disadvantage. For example, for sharing data using Ethereum users need to own crypto tokens first, then they can use the infrastructure to send data transactions. Together with the decision to utilize a DLT with transaction fees, additional legal, financial and regulatory considerations have to be made on how to manage the cryptocurrency-related aspects, which are inevitably tied to it.

Unlike many blockchains and DLTs, IOTA utilizes feeless transactions. This makes possible to issue 0-value transactions, used solely for sharing immutable data. Thanks to its feeless model, your IOTA solution provides a far better economic scalability. This is not possible with other ledgers, where each transaction has to incur in a fixed or variable fee, varying with the variation price of the associated token.

If you got this far and the answer to all the questions above is yes, it is likely that IOTA is your choice to build your solution.

IOTA is my choice: what’s next?

Now that you understand why IOTA is your go-to choice, it is good to identify a few design principles that allow you to understand the different building blocks of the IOTA technology stack that you might want to use.