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IOTA
Ledger of Things
Internet of Things
“50 billion connected
devices in 2020”
-Cisco
Intro-Video
Smart Centralization
Cloud EVERYTHING
4
Potential problems
of IoT
5
Single Source of Failure
6
Censorship
7
Smart Devices, Dumb Network
8
Data Transfer
Money Transfer 9
Blockchain
“Why the Blockchain
Is the Biggest Thing
Since the Internet” -
NASDAQ
Distributed Ledgers
● Every party has an
individual copy
● Prone to tampering
● High cost to compare
datasets
● No way of verifying the
origin...
● Datasets shared amongst all
parties
● Every party can verify the
datasets of other participants in
the network
● Tampere...
Single Source of Truth
Shared Truth
13
Illustration from Bitwage.com
+ = ?
14
Blockchain’s Limitations
● Scalability
● Storage
● Bandwidth
● Fees
● No Data Privacy
● Expensive Data Storage
15
I o T Requirements
● Low Resource Consumption
● Widespread interoperability
● Billions of nano-transactions
● Data Integri...
The solution
Rethink from scratch
A revolutionary new
distributed ledger designed for
Machine-to-Machine
interactions.
17
Blockchain without the Blocks
and the Chain. What???
Tangle
18
● Limited to Block Size and
Time
● Not scalable
● Transaction Censorship (fee
thresholds)
● Centralization
● Consensus Dec...
Tangle
20
Tangle
● Bundles all transactions in a Directed Acyclic
Graph (DAG)
● Completely self-regulating, consensus no longer
deco...
● No Fees
● Scalable
● Quantum Proof
● Modular
● Lightweight
● Offline 22
$0.01
- $0.01 + $0.01
23
Data Integrity
● Data is tamper-proof
● Enables automatic
processes
● Remove humans from the
equation
1001
0101
0011
1001
...
Scale
Usability
Blockchain
IOTA
Tangle
Scalability
25
Go Offline
Offline Tangle Cluster
Main Tangle
26
If this then that
Smart Contracts
Turing Completeness
Security
Very Cheap
Scalable
Low Entry Barrier
(based on SQL) 27
OUR VISION
28
Things
29
Sharing Economy 2.0
Anything with a chip in it can be leased Devices trade resources among each other
30
No longer bound to machines hardware!
31
Cloud, Fog and Mist
EDGECORE
● Real Time Processing
● Avoid network congestion
and signal collisions
● Incentive for inter...
CURRENT
STAGE 33
Protocol and Network Statistics
◉ Official launch July 11th
◉ 1 year of development
and testing
◉ Community of 1000+
◉ Mor...
(Unofficial slide)
◉ Tech problems with auto-discovery/slow syncing
and double-spending wallets
◉ Network currently down
◉...
IOTA Foundation
We are an open-source, non-profit Software
Foundation. Goal of the Foundation is it to
establish IOTA as a...
Foundation members
David Sønstebø Dominik Schiener Sergey Ivancheglo Serguei Popov
USE CASES
Bandwidth on demand
Supply Chain Visibility
Banks
Insurance Providers
Customs
Importers/Exporters
Shipping Liners
Logistic Companies
10110
001...
Smart-Grid
Other Use Cases
● Sensor Data selling & Data Marketplace
● On-demand API access
● Data Integrity (insurance, banking, etc.)
and now...
End of IOTA Foundation
presentation
...The Tangle
in more details
Skipping over the whitepaper
Basics
● DAG Basic Examples (trees, direct, indirect, confirmation)
● Approvment DAG (IOTA) vs Transaction DAG (BTC)
● Mai...
A bit of terminology
● Genesis & Tips
● (own) weight (∝ amount of PoW)
● cumulative weight ● Score
Tip Selection Algorithm
● Only guideline for network, no rule
● Simple strategy: Choose two random tips
● Does not encoura...
Tip Selection Algorithm
● Simple strategy 2: Choose two tips out of the 10% with the
highest scores
● Problem: Vulnerable ...
Tip Selection Algorithm
● Mitigation strategy: Cap Max weight of transaction
● This drastically decreases probability of a...
A parasite
● Main tangle tip score ≈ Sum of main tangle weights
● Parasite tangle tip score ≈ Sum of main tangle and paras...
The Final Tip Selection Algorithm
● How do we figure out which tip is on the main tangle?
● We place some „particles“ deep...
Double Spending
● Conflicting Tx can exist in the Tangle
● Network has to decide which Tx (SubTangle) will not get
orphane...
Interesting Details
● All addresses can only get used once
● Spamming the network actually helps it
● Coordinator helps ne...
IOTA Presentation - BlockchainHub Graz Meetup #5
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IOTA Presentation - BlockchainHub Graz Meetup #5

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Georg Kapeller presented during our regular Meetup in the BockchainHub Graz the new, and currently developed technology of IOTA.

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IOTA Presentation - BlockchainHub Graz Meetup #5

  1. 1. IOTA Ledger of Things
  2. 2. Internet of Things “50 billion connected devices in 2020” -Cisco Intro-Video
  3. 3. Smart Centralization
  4. 4. Cloud EVERYTHING 4
  5. 5. Potential problems of IoT 5
  6. 6. Single Source of Failure 6
  7. 7. Censorship 7
  8. 8. Smart Devices, Dumb Network 8
  9. 9. Data Transfer Money Transfer 9
  10. 10. Blockchain “Why the Blockchain Is the Biggest Thing Since the Internet” - NASDAQ Distributed Ledgers
  11. 11. ● Every party has an individual copy ● Prone to tampering ● High cost to compare datasets ● No way of verifying the original dataset Traditional Ledgers 11 11
  12. 12. ● Datasets shared amongst all parties ● Every party can verify the datasets of other participants in the network ● Tampered datasets are excluded ● An immutable single source of truth is established Distributed Ledger 12
  13. 13. Single Source of Truth Shared Truth 13
  14. 14. Illustration from Bitwage.com + = ? 14
  15. 15. Blockchain’s Limitations ● Scalability ● Storage ● Bandwidth ● Fees ● No Data Privacy ● Expensive Data Storage 15
  16. 16. I o T Requirements ● Low Resource Consumption ● Widespread interoperability ● Billions of nano-transactions ● Data Integrity 16
  17. 17. The solution Rethink from scratch A revolutionary new distributed ledger designed for Machine-to-Machine interactions. 17
  18. 18. Blockchain without the Blocks and the Chain. What??? Tangle 18
  19. 19. ● Limited to Block Size and Time ● Not scalable ● Transaction Censorship (fee thresholds) ● Centralization ● Consensus Decoupled ● 80% of miners from China ● ... “Include my transaction, here is my fee” Blockchain’s Limitations 19
  20. 20. Tangle 20
  21. 21. Tangle ● Bundles all transactions in a Directed Acyclic Graph (DAG) ● Completely self-regulating, consensus no longer decoupled ● Very Scalable. Low overhead Proof-of-Work to prevent spam 21
  22. 22. ● No Fees ● Scalable ● Quantum Proof ● Modular ● Lightweight ● Offline 22
  23. 23. $0.01 - $0.01 + $0.01 23
  24. 24. Data Integrity ● Data is tamper-proof ● Enables automatic processes ● Remove humans from the equation 1001 0101 0011 1001 0101 0011 1001 0101 0011 1001 0101 0011 1001 0101 0011 1001 0101 0011 1001 0101 0011 1001 0101 0011 100101010011 1010001111010 1100100101111 0011010000011 11001111100110 0000001011101 0100111101010 24
  25. 25. Scale Usability Blockchain IOTA Tangle Scalability 25
  26. 26. Go Offline Offline Tangle Cluster Main Tangle 26
  27. 27. If this then that Smart Contracts Turing Completeness Security Very Cheap Scalable Low Entry Barrier (based on SQL) 27
  28. 28. OUR VISION 28
  29. 29. Things 29
  30. 30. Sharing Economy 2.0 Anything with a chip in it can be leased Devices trade resources among each other 30
  31. 31. No longer bound to machines hardware! 31
  32. 32. Cloud, Fog and Mist EDGECORE ● Real Time Processing ● Avoid network congestion and signal collisions ● Incentive for interoperability ● Data Integrity Requirements 32
  33. 33. CURRENT STAGE 33
  34. 34. Protocol and Network Statistics ◉ Official launch July 11th ◉ 1 year of development and testing ◉ Community of 1000+ ◉ More than 2m transactions ◉ $60m+ of value transferred ◉ More transactions per second than any blockchain 34
  35. 35. (Unofficial slide) ◉ Tech problems with auto-discovery/slow syncing and double-spending wallets ◉ Network currently down ◉ Community Management ◉ Funding of Foundation and Big Deal ◉ Anniversary update, Release 1.1, +1 Dev, +1Bussines, Phase 2 (utility), Exchanges
  36. 36. IOTA Foundation We are an open-source, non-profit Software Foundation. Goal of the Foundation is it to establish IOTA as a standard in the IoT stack.
  37. 37. Foundation members David Sønstebø Dominik Schiener Sergey Ivancheglo Serguei Popov
  38. 38. USE CASES
  39. 39. Bandwidth on demand
  40. 40. Supply Chain Visibility Banks Insurance Providers Customs Importers/Exporters Shipping Liners Logistic Companies 10110 00110 01011 < / >
  41. 41. Smart-Grid
  42. 42. Other Use Cases ● Sensor Data selling & Data Marketplace ● On-demand API access ● Data Integrity (insurance, banking, etc.)
  43. 43. and now... End of IOTA Foundation presentation
  44. 44. ...The Tangle in more details
  45. 45. Skipping over the whitepaper
  46. 46. Basics ● DAG Basic Examples (trees, direct, indirect, confirmation) ● Approvment DAG (IOTA) vs Transaction DAG (BTC) ● Main Idea: Issuing a Tx needs PoW (Approving other Tx) ● Approving means Signature verification & Check for double spendings ● But which Tx to approve???
  47. 47. A bit of terminology ● Genesis & Tips ● (own) weight (∝ amount of PoW) ● cumulative weight ● Score
  48. 48. Tip Selection Algorithm ● Only guideline for network, no rule ● Simple strategy: Choose two random tips ● Does not encourage approving tips by lazy nodes ● Because probability that their tips will get approved is equal to the one of the tips that did real PoW ● Solution: Bias towards end (i.e. tips with high score)
  49. 49. Tip Selection Algorithm ● Simple strategy 2: Choose two tips out of the 10% with the highest scores ● Problem: Vulnerable against double-spending “large weight”- attack will eventually always succeed
  50. 50. Tip Selection Algorithm ● Mitigation strategy: Cap Max weight of transaction ● This drastically decreases probability of attacker ● But he can still beat us by pre-building a parasite-chain
  51. 51. A parasite ● Main tangle tip score ≈ Sum of main tangle weights ● Parasite tangle tip score ≈ Sum of main tangle and parasite chain weights ● Parasite chain can be build without broadcasting ● Idea: main tangle should have more active hashing power ● which is ∝ cum weight
  52. 52. The Final Tip Selection Algorithm ● How do we figure out which tip is on the main tangle? ● We place some „particles“ deep in the tangle ● And let them walk towards the tips ● With affinity to high cumulative weights (MCMC) ● This will very unlikely select lazy tips ● and very unlikely parasite chain tips
  53. 53. Double Spending ● Conflicting Tx can exist in the Tangle ● Network has to decide which Tx (SubTangle) will not get orphaned ● Methodology: Run tip selection Algorithm many times and see how often the conflicting Tx are (indirectly) approved by the tips ● Result: Transactions in the subTangle with less hashing power will eventually get orphaned
  54. 54. Interesting Details ● All addresses can only get used once ● Spamming the network actually helps it ● Coordinator helps network until enough nodes are online ● Tx actually have a particular structure (bundles)

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