IOTA, a cryptocurrency powered by Tangle technology, is now being used in an electric vehicle charging station in the Netherlands. The charging station is in Arnhems Buiten campus, a business park test site where customers can test machine-to-machine charging technology solutions.
Machine-to-machine charging is part of Internet of Things (IoT). IoT is a technology in which machines can communicate between themselves. Physical devices such as vehicles or home appliances are embedded with electronics, software, Radio-frequency identification (RFID), and network connectivity, allowing the devices to exchange information. Each device can be uniquely identified, while the embedded computing system is able to transmit data over the existing Internet infrastructure.
Machine-to-Machine (M2M) micropayment transactions will enable the devices to purchase more electricity, bandwidth, storage or data when required, and sell resources when in excess. IoT has several applications, for e.g. Smart Grids, Smart Homes, Intelligent Transportation and Smart Cities. A key requirement for using IoT successfully is that the machines should be able to communicate securely, without being hacked. Imagine the consequences of a cyber attacker hacking a smart grid!
Logically, blockchain, with its reputation of being very hard to hack, should be useful in securing IoT. However, blockchain needs enhancement for use in IoT, which is expected to have 30 billion objects by 2020, requiring a scalable technology to secure it. To make M2M micropayment transactions over IoT a pervasive reality, the technology also must be able to support a very large number of micropayments.
Blockchain currently is not sufficiently scalable: as of May 21st 2017 there were 200,000 unconfirmed transactions. Mining process is resource-intensive, and proof of work (POW) consensus algorithm requires majority of participating blocks to approve a transaction, thus impacting scalability adversely. Blockchain also requires transaction fees, to prevent the miners from spamming the already-congested network. Bitcoin’s mean transaction fees have risen above US $1. If a business model depends on numerous micropayment transactions, then no profit may be left after paying the transaction fees! Uncertainty over transaction completion and profit margin currently limits adoption of blockchain in the IoT space.
IOTA, the cryptocurrency built for IoT space, uses Tangle technology, which is based on directed acyclic graph (DAG). Tangle is a distributed database, has a peer-to-peer (P2P) network, but has no blocks. The “Genesis” transaction in the beginning had created all IOTA tokens, and there is no mining involved. The transaction making process includes the consensus, and hence there’s no transaction fee. IOTA foundation oversees developments related to IOTA.
ElaadNL, an initiative by Dutch grid operators to promote solar and wind power fueled smart-charging, has partnered with IOTA foundation to come up with the IOTA-powered charging station in the Netherlands. The charging station has the following features:
- kWh-based charging
- A proprietary IOTA charging app
- kWh measurement storage
IOTA foundation had identified fee-less electric vehicle charging aided by their technology that promotes micropayments, as one prominent use case. IOTA is ranked 9th among the cryptocurrencies based on market cap.
