HANNOVER MESSE 2019, 01 - 05 April
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Dominik Schiener

Cryptocurrency or protocol?

Until 2015 Dominik Schiener had absolutely nothing to do with industry. Born in Berlin but with roots in South Tyrol, Italy, Schiener left school and founded a string of start-up enterprises. He went bankrupt and lost all his money. In 2015 he teamed up with David Sønstebø, Sergey Ivancheglo and Serguei Popov to found IOTA. Since then he has been in high demand in industrial circles.

His product is a cryptocurrency – or a “protocol” as he prefers to call it. “At the time we weren’t thinking about industry. Instead we wanted to simplify and safeguard communication and the exchange of values in the Internet of Things”, Schiener explains. The IOTA cryptocurrency was born. “We don’t believe in all this digital coin hype.”

But for many industry representatives digital coins are a dream come true. Blockchain technology eliminates bureaucratic hurdles. In future, contracts will be executed by means of computer protocols (“smart contracts”). It would be true to say that industry envisages direct money transfers between machines. Are limited Bitcoins the proper solution for payment transactions between robots, or between guided trucks and the lead vehicle in a platoon? Is blockchain really the right technology? “No, a blockchain is not scalable. At IOTA we are exploring a different avenue”, says the IOTA founder self-confidently. IOTA is based on a so-called “tangle”. Unlike a one-dimensional blockchain, which can grow in only one direction, the mathematical concept of a tangle can grow simultaneously at various places. Put simply, blockchain transactions are linear, whereas IOTA uses an entire network. In addition, a tangle does not depend on miners.

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IOTA aims to be so “lightweight” that even small embedded systems (e.g. on-board car computers, smartphones and drones) can easily process payment transactions. There are no fees. Each mem-ber of the network pays by means of the individual computing capacity. The advantage: the higher the transaction rate (i.e. the greater the number of users), the greater the degree of scalability. The system is infinitely scalable. According to IOTA, the system becomes faster and faster in direct proportion to the number of users and transactions. As soon as a critical size has been achieved, the time lapse between the initiation of a transaction and its validation is virtually zero. Has IOTA solved the latency problem?

“We are not yet production-ready as we have to develop the protocol and adapt it to industrial requirements”, Schiener admits. In the coming months Schiener and his IOTA Foundation want to learn more about industrial processes and discover where IOTA can be integrated sensibly into existing systems. “In the projects we experience a mixture of decentralized and centralized control”, Schiener explains. He and his co-founders are promoting an open ecosystem and are committed to attracting large numbers of industrial partners. This is the reasoning behind the IOTA Foundation. “Our goal is to create an independent IoT protocol and to break down barriers.” And how does he earn his money? “I own IOTA stock and pay my rent out of the positive price trend”, he says with a laugh.

“We don’t believe in all this digital coin hype.”

Dominik Schiener

Can IOTA transfer data as well as payments? According to Schiener, the answer is “Yes”. Theoretically, IOTA can instruct the robot to turn to the right, pick up a particular package and receive/pay for a firmware update at 2 a.m. tomorrow morning. In addition, industrial enterprises can use IOTA as a basis for connecting and controlling all their products. This is of direct relevance to Industrie 4.0. Fujitsu – an industrial partner of Schiener and his 60-member IOTA team – stated the following: “This represents a genuine alternative to cloud-based solutions. Together with IOTA we can create digital twins, given the fact that the machine sends back unfalsifiable data – data we can use to control machines and to test/execute processes.”

What else is happening on the industrial front? Robert Bosch Venture Capital has already invested in IOTA. In 2019 Volkswagen will initiate its first IOTA project. Sopra Steria and Fujitsu have also signed up. Industrial security start-ups see IOTA as a means of safeguarding their processes. At HANNOVER MESSE 2018 DXC presented relevant applications. And what about small and medium-sized enterprises? “Initial discussions have commenced in the East Westphalia region”, Schiener confirms, without going into further detail. “At the end of 2019 we will set up a consortium in which industrial enterprises can participate”, Schiener explains. What is the precondition for a breakthrough? “We need secure connections – for autonomous vehicles, machines and energy systems. Everything depends on 5G.”