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Investing in IOTA: What to Consider

Paving the way for using a decentralised network to power the Internet of Things (IoT), IOTA is creating a new platform in which the technology can be leveraged for uses other than performing transactions. While its infrastructure, called Tangle, works in a somewhat different way than blockchain, IOTA still presents an interesting use case of leveraging decentralised systems to form IoT networks. Specifically, the way Tangle is built, enables it to scale faster as more computers join the network (as opposed to Bitcoin, for example, in which more computers usually equal more latency).

Each individual IOTA coin is extremely low in value, worth only fractions of a cent. In fact, it is so low, that the more commonly used unit for transactions is MIOTA, or “Millions of IOTA.” Since transfering a single IOTA requires little resources, and IOTA is built with no miners in place, there are also no transaction fees - which makes the network alluring to many potential users.

Who should include IOTA in their portfolios?

  1. Bitcoin investors: Since IOTA is often compared to the world’s first cryptocurrency, Bitcoin, it could benefit when the comparison favors it. Events which highlight some of Bitcoin’s shortcomings, such as prolonged transaction processing times, could make IOTA an attractive investment.

  2. Cryptocurrency investors: IOTA is considered a large-cap cryptocurrency, with its overall value worth billions. Therefore, it could be included in a balanced portfolio focusing on the cryptocurrency space.

  3. Blockchain and IoT enthusiasts: IOTA was conceived to leverage the advantages of distributed ledger technology towards IoT systems. Hence, those who have faith in either technology, or both, could consider investing in IOTA.

  4. Day traders: Like many other cryptocurrencies, IOTA can fluctuate dramatically over the course of a single day. Traders could try to utilise the IOTA coin price movements in an attempt to generate short-term profits.

What drives IOTA’s price?

Being a relatively large cryptocurrency (by market cap), the IOTA price is subject to the ebb and flow of the cryptocurrency space, with various factors influencing its price. Here are a few worth mentioning:

  1. General cryptocurrency trends: The status of cryptocurrencies as stable financial securities is heavily debated. Whether it is from a legal/regulatory standpoint, or for determining its status as a viable trading and investing market - voices for and against are heard across all facets of the financial world. Therefore, whenever a trend is created for or against its institutionalisation, the market often moves in tandem, and cryptos such as IOTA are often part of the trend.

  2. Bitcoin: Still considered the yardstick by which all other cryptocurrencies are measured, it still has a tremendous impact on its fellow crytos. Whenever Bitcoin displays a solid upward or downward trend, the altcoin market follows suit.

  3. Strategic partnerships: Since IOTA was designed to serve the needs of IoT networks, securing a well-known partner could strengthen its status as a crypto and cause its prices to rise. For example, if IOTA announces a partnership with a major, well-known tech brand, it could have a positive impact on its price.

  4. The spread of IoT: While there’s a growing number of industries that implement Internet of Things networks in their products, it is still far from being the standard. As more household appliances, automobiles, vending machines and other “traditional” technology products become connected, it could possibly cause an increase in demand for the IOTA token.

IOTA: Built to connect

After Bitcoin took the world by storm and generated incredible buzz for its underlying blockchain technology, an increasing number of blockchain platforms set out to harness the power of the technology for uses that extend past the realm of money transfer. One such example is the Ethereum network, which was created to demonstrate the potential of the technology for creating smart contracts, decentralised apps and more. Ethereum was a huge success, growing rapidly in popularity and quickly establishing itself as the second-largest cryptocurrency (by market cap).

It is no surprise, then, that other uses for decentralised networks emerged, paving the way for IOTA to demonstrate the potential uses of decentralised architecture in IoT networks. Moreover, the creators of IOTA set out to create a superior platform and an IOTA wallet, using Tangle instead of a traditional blockchain architecture, claiming to create a network that is better than blockchain, by promoting values such as “true decentralisation” and massive scalability. Moreover, while quantum computing existed only in theory when IOTA was created, its creators did boast that their technology is superior to the likes of Bitcoin in withstanding a quantum computer-powered hack. While the extent of IOTA’s success still remains to be seen, in theory, it could prove to be another evolution in the decentralised network space, with a long-lasting impact.

History of IOTA

Born in 2015, IOTA founders David Sonstebo, Sergey Ivancheglo, Dominik Schiener, and Dr. Serguei Popov, set out to create a blockchain-based “backbone” for the Internet of Things. By building their system on their own form of blockchain, IOTA creators were able to solve several of the issues plaguing other blockchain networks, such as transaction fees, dependency on miners and scaling issues. The network’s potential was recognized by several academic institutions and IOTA was also able to partner with German automotive giant Volkswagen, working on a joint IoT project. In addition, IOTA is a founding member of the Trusted IOT Alliance, whose members also include well-known names, such as Bosche and Cisco.

Conclusion: IOTA could be a leading crypto in the future

As mentioned before, the IoT space is still growing and its full potential is far from being reached. Additionally, the cryptocurrency and blockchain industries are still in emergence and could potentially grow exponentially over the coming years. Having a strong foothold in both positions IOTA as a potential force to be reckoned with - and its impact on both industries could prove to be substantial.

*Cryptocurrencies can fluctuate widely in prices and are therefore not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

*This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation.

*Past performance is not an indication of future results. Your capital is at risk.