A note before we begin: because it would take up the entire article to explain how blockchain works, I assume you have a basic understanding of the core concepts. If you don’t, I recommend watching this quick 3 minute video before you continue with this or any of my other blockchain articles. Have more time/interest? I recommend this slightly more in depth course.

The focus of these articles has been on the blockchain, reinventing various industries, and disrupting the true idea of what is possible in each. I have to be honest, when I first started writing about blockchain several years ago, I had no idea it would reach the level it has regarding price and influence. I believed then that it had an inherently handicapped state due its lack of regulation and ability to scale without slowing down, and I still stand by this and believe it's one of the major hurdles the technology faces.

That said, it's also still just the beginning, as the blockchain industry itself continues to reinvent itself and show us all that we are the infancy of witnessing its potential. The handicaps of scalability and regulation will not be deal breakers for many use cases and are not reasons not to embrace and engage in the many token offerings, as clearly, its adoption is growing at lightning speed. There are proving to be many insanely valuable applications for the technology, and fortunes will be made (and lost) by those deeply involved in the next few years.

But - what about this core question about scalability and price fluctuation? What is the "next generation of blockchain" that will allow for the Internet of Things to engage?

If the number of connected devices we will see in our modern world is estimated to be close to 50 Billion in the next decade, and we expect a decentralized ledger based technology to manage them. But, it must be able to scale quickly and also have an inherent element of price stability to be realistic. How will blockchain ever honestly be the backbone of the Internet of things if it inherently cannot scale quickly? As it stands in its current state, it won’t. For the machine to machine, Internet of Things elements of society, the blockchain must evolve into a non-linear, transaction fee free solution that can scale and maintain price stability. Berlin-based IOTA Foundation has achieved exactly this, with the introduction of a multidimensional ledger system, they call "Tangle."

Used with permission of the IOTA Foundation.

It has transformed the possibilities imaginable with decentralized ledger based technologies. Instead of a linear one-after-the-other chain of events to a multidimensional web of events not representing a string at all, but more of a web (or a Tangle). Read about it in depth in their Whitepaper.

From a blockchain system that relies on "miners" to validate transactions on the chain, to a system that does not require mining at all but instead relies on every micro transaction to perform two small validations as a requirement of participation. The implications of this are enormous, as when the task of mining goes away, so do the transactional fees, and then the lack of scalability. Now, for the 50+ billion connected devices that need to communicate and transact with each other, there is no cue to wait in to perform a transaction, and there is no volatile price fluctuation that would prevent the operations from being realistic in the first place. After all, the idea of the Internet of Things performing transactions on our behalf only makes sense if we know they will happen quickly and at an affordable and predictable price.

Let’s take a step back and look at how you might see this "Tangle" in an everyday life Internet of Things, Machine to Machine, example story:

Getting to Work On Time.

It's become clear that most of us will see driverless cars in our lifetime, as they are already being tested in several states. So, let's imagine for a moment that both you and I have driverless cars. Now, if we don't have to drive our cars, why do they need to be parked at our houses? Couldn't they just park elsewhere and show up at our home when we are ready to leave for work? It seems that that would be acceptable, and also free up what was once garage space into new recreational or workspace. So, we both have driverless cars, and they don't park at our house anymore, but park a mile away and are scheduled to arrive to bring us both to work.

It's Monday morning; I need to be to work at 9, and you to be at work at 8:30 (sorry). Obviously, your car needs to pick you up sooner than mine does, and therefore, needs to get out of the parking garage and on the freeway sooner than mine does. Unfortunately, there is construction on a piece of the highway coming from the garage to your house, and all cars must take an alternate route. Thanks to the smart driverless technology, both of our cars leave the garage on-time to arrive on schedule, but due to an unexpected breakdown on the alternate route, they are delayed. There is only one lane, and all cars are halted as they filter through. As we determined, your car needs to arrive before mine does, and here, is the magic moment where the decentralized ledger and Tangle come in.

Using some predefined monetary limits set by you, your car begins to "negotiate" with cars in front of it that have more time than it does to reach you on time. My car, for example, has plenty of time and doesn't mind if your car goes first. Using the IOTA Tangle, your vehicle requests my car to pay a small fee to pass me, and go first. That request is put into the Tangle and awaits validation while your vehicle performs its two validations on another request pending validation in exchange for its validation request to pass my car. Thanks to the thousands of cars on the road doing the same thing, your car's request are validated quickly, my car accepts the offer, and pulls over for a second to let your car pass, and you are on your way. Now, I’m doubly sorry as not only do I get to arrive at the office later than you, but you also paid me a little bit to get there on time. I owe you!

~The End.

This sounds futuristic, but examples like this will be happening millions of times every hour, all “within” the Tangle.

While I am boiling this down to simplistic terms and examples, this is important because virtually this what will be happening trillions of times a day all around us in the future. Light Bulbs will be negotiating when they need to be on based on other bulbs being on for longer than them; city share bicycles will reserve and then release parking spots based on speed and destination; phone data plans will buy only precisely the amount of data they need to perform a transaction, and it goes on and on. The ledger will be immense and will need to work online and offline (Bluetooth devices in your home will negotiate and transact without the need for my devices to know about it in my home).

Among many example transaction types, such as secure messaging, peer to peer payments, energy unit sale transactions, and more - the Tangle does this quickly, and for free. It's stability, scalability, and transaction cost make a strong case as to why its potential future as the backbone of the Internet of Things is realistic. This is a great post that goes into more depth on this topic, and I recommend reading it.

Data is the new oil, the fuel of the future that is pivotal for the era of connected, smart, and autonomous infrastructure. IOTAs data marketplace offers a real solution.

The data marketplace is initially organized by the IOTA Foundation as an open innovation initiative, with the intention to showcase how the IOTA protocol can enable such data marketplaces and how micropayment based business models will function in the future. Participants from all sectors and industries are represented, companies such as Deutsche Telekom, EWE, Microsoft, Bosch, TINE, PwC, Accenture, Fujitsu, Schneider Electric, Orange, DNV GL, and many more have deployed sensors that directly sell the data on the marketplace. The data ranges from environmental data from various locations all around the globe to anonymized healthcare data from wearables, to agriculture data from Africa. As soon as data is put into IOTA’s decentralized permissionless ledger, it is distributed to countless nodes, ensuring that it is impossible to tamper with the data.

“We are very excited to announce the launch of our data marketplace,” said David Sønstebø, Co-Founder of IOTA. “This will act as a catalyst for a whole new paradigm of research, artificial intelligence, and democratization of data.”

“The possibilities of applications based on Blockchain and especially Tangle (“next generation Blockchain”) are immense. Providing public access to valuable data is one of the most pressing challenges within IOT. The Data Marketplace of the IOTA Foundation is one of the most innovative initiatives in this area. As one of the world’s largest IT companies, Fujitsu is strongly supportive by developing Blockchain and Tangle-based offerings and actively integrating them as scalable solutions into the ecosystems of our customers.”– Dr. Rolf Werner, Head of Central Europe at Fujitsu

As blockchain continues to reinvent business as we know it, blockchain itself is being reinvented to accommodate the rapid growth of technology and devices we will see in our lifetime. I am very excited to be able to share this with you for the first time if you haven't heard of IOTA yet, and if you have, I'm sure you are happy to see more about it. The IOTA foundation clearly will act as a catalyst for a whole new paradigm of research, artificial intelligence, and democratization of data.

Another example of how blockchain is reinventing business and changing the world.

This article is part of a new series of articles I am writing profiling businesses reinventing existing industries using the Blockchain.

It’s not just a solution for The Internet of Things, it has the potential to become the new backbone of the internet. Watch, and you will see more and more companies emerging with solutions to existing markets with solutions based on the Blockchain. It’s early days, and the best is yet to come. Follow me here as I will continue to write about great examples of the “Blockchain reinventing business.” If you have or know of a company I can review and potentially profile, please submit your idea to me at reinvent.biz.

Disclaimer: I make the best effort to select companies I feel are the best fit for the markets I profile, and in some cases I work directly with PR firms to promote their clients, who are the leaders emerging in the space. While I am not directly affiliated or invested in the companies I profile here, I do own Bitcoin, Ethereum and other cryptocurrencies. I hold investment positions in the coins, but do not engage in short-term or day-trading. When mentioning an ICO or TGE, it is not intended to be investment advice. You should seek a duly licensed professional for investment advice. (I recommend Abacus Wealth Partners, for their philosophy of sustainable investing.)

Thanks for reading, and tune in again next time by following me @jesseseaver.