IOTA bills itself as the “backbone of the Internet of Things.” It also “enables companies to explore new business-2-business models by making every technological resource a potential service to be traded on an open market in real time, with no fees.”
IOTA’s competitive advantages
1) No scaling woes. The more people who use blockchain, the less efficient it gets as the blockchain grows ever larger. IOTA ditches blockchains and flips that model on its head. Before you can make an IOTA-based transaction, you must validate two other transactions. That means the more people there are using IOTA, the more efficient the network becomes.
“It makes no sense to sort a puzzle just from one corner, piece after piece if you can have multiple eyes looking simultaneously and randomly for the right pieces to form the puzzle, from multiple corners,” writes Eli5. “The more eyes, the faster it gets” .
2) Quantum-computing resistance. Quantum computers can perform some calculations as many as 100 million times faster than a standard PC . That poses a serious threat to encryption and bitcoin miners. Dr. Sergui Popov speculates that a quantum box would be more than 17 billion times as efficient as a bitcoin miner . Since IOTA’s tangle doesn’t involve intensive computing power, quantum computers lose much of their speed advantage.
3) IoT. Because IOTA is so efficient, it’s perfectly suited for low-power devices. It could potentially run on relatively simple web-connected devices – things like alarm systems, cameras and sensors – or larger items like refrigerators and autonomous cars. Best of all, there are no transaction fees with IOTA.
The Oracle’s IOTA price prediction/target
In Goldman Sachs’ 2018 Investment Outlook, the firm argues the bitcoin and cryptocurrency “mania” already dwarfs the famous Dutch “tulipmania” in the 1600s and the March 2000 dot-com bubble.
At the very end of the piece, they include this gem:
At the peak of the dot-com bubble in March 2000, the combined market capitalization of Nasdaq and S&P 500 information technology stocks was 101% of U.S. GDP and 31% of world GDP. The aggregate market capitalization of cryptocurrencies is 3.2% of U.S. GDP and 0.8% of world GDP.
If there’s one thing I’ve learned in more than a decade of investing in various assets, it’s this: markets go higher and fall lower than we generally imagine they will. While I don’t see cryptocurrencies ever hitting 101% of the U.S.’s GDP, I still envision at least one more extraordinary rise in prices for cryptocurrency.
Why? Because the public still thinks of crypto as a currency and a currency alone. The average investor hasn’t heard of ethereum yet (not to mention interesting projects like Golem, Gridcoin, Waves and more than 1,000 others). 2017 was the year of bitcoin. 2018 will be the year of blockchain.
My personal target is a $2 trillion market cap for all cryptocurrencies. If we hit that number, we’d be at just 10% of the $20 trillion U.S. GDP. Under that scenario (assuming current coin ratios stay the same), the price of IOTA (MIOTA) would be around $8.65. If we hit 50% of the U.S. GDP, we’d be at $43.68 per MIOTA. At 101% of U.S. GDP, we’d be looking at a future IOTA price of $87.36.
I don’t disagree with Goldman. We’re in the midst of an extraordinary bubble. I just disagree that we’ve already seen the top.
Side note: The U.S. debt-to-GDP ratio for Q4 2017 stood at 104 percent. Perhaps the true bubble we’re witnessing is government debt.
Disclaimer: This post is does not account for currency inflation. Price predictions were calculated as if the total coin supply were capped at the time of publication.