What If You Could Have Bitcoin Without The Problems Of A Blockchain? IOTA May Be The Solution. Posted on : Oct 16 - 2017

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

I entered the cryptocurrency field in 2013 and watched the price of Bitcoin skyrocket from a low of $100 to over $1000. There was a rush to invest in Bitcoin companies, then in 2014 the price crashed back to $250. Investors that had become interested in the technology started to think, “OK, Bitcoin is dead, but the blockchain concept is an advance. How do we take that coin out and keep the blockchain?”.

Three years of investment later, the world still doesn't have any major live applications of a private blockchain. But what if this was the wrong question? What if the real question was “how do we take the blockchain out of Bitcoin”? What if we could have cryptocurrency, secure/transparent data transfer and decentralized autonomous organizations without a blockchain? This is what the team behind IOTA, a cryptocurrency with a market cap of over $1.2bn USD at the time of writing this, set out to determine.

Why would the blockchain be seen as a problem? It all comes down to scalability and there are three hot button issues: the tiny maximum number of transactions per second, coupled with the cost of storing an entire blockchain and the power hungry cryptographic computing required that may be required to maintain it.

Bitcoin, the original blockchain, is a system that allows for people to exchange cryptocoins in a peer to peer fashion. There is no Federal Reserve issuing Bitcoin, there is no FDIC insuring online wallet systems, by their very nature peer to peer systems do not have a central authority.

The fundamental difference between Bitcoin and any other digital artifact is the fact that the blockchain means only one person can have possession at a time. If I use my cell phone to take a picture of a cute puppy I meet at the park, I can send you a copy of that picture, and then the world is a little brighter for both of us. If I send you some Bitcoin, it disappears from my wallet and appears in yours. There are no counterfeiters in the Bitcoin universe, which is another way of saying that there is no “double spend problem”. There is a fee structure for transactions, it's both linear and transparent, but that doesn't make sense for IoT devices for many reasons. View More