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14 February 2020

IOTA and Eclipse partner on not-blockchain Tangle, with IoT ambitions

The IOTA Foundation and the Eclipse Foundation have announced a partnership that combines the Eclipse open source software efforts with the IOTA distributed ledger technology (DLT). The new Tangle EE Working Group takes the name of IOTA’s technology, which is positioned as an open source, fee-free mechanism to facilitate transactions for data and services, with a leaning towards the IoT – as you might have deduced by the name.

The founding members of the new working group are Accessec, Akita, BiiLans, Calypso Network Association, Dell, Energinet, Engie Lab Crigen, Geometric Energy Corporation, IoTIFY, Object Management Group (OMG), Otto von Guericke University Magdeburg, RWTH Aachen University, STMicroelectronics, Software AG, TMForum.

Dell is very enthusiastic about blockchain in general, and so its inclusion is not surprising, while Software AG is trying to position itself as the premier provider of IoT-focused cloud and analytics services. STMicro announced the integration of Tangle into its STM32Cube software, which would open up the DLT to anyone using a STM32 microcontroller (MCU). The Object Management Group is a pretty significant standards organization, in its own right too, which houses the Industrial Internet Consortium (IIC).

So the membership is promising, if not mind-blowing, and seems to span all the initial levels of the stack. The Tangle EE Working Group says that several projects are going to be formed, with business and academia collaborating to develop tooling and use cases – the first two being a decentralized data marketplace and decentralized identity services.

You will not be surprised to hear that we are most interested in the data marketplace angle, which is going to be leveraging the Tangle for the payments side of things. Launched as a proof of concept in 2017, the marketplace has some 70 participants including some big players in the technology realm, but so far, it remains a pilot rather than an actual marketplace. Participants include Accenture, Bosch, Deutsche Telekom, KPMG, Orange, Philips, and Tech Mahindra. There is also a new Industry Marketplace, although there doesn’t seem to be much going on there either.

However, we also have to see how the tensions between IOTA the business, the IOTA Foundation, and the Eclipse Foundation are reconciled. There are inevitably going to be concerns about the impartiality of the non-profit IOTA Foundation, when IOTA itself is still in the game, despite the proclamations of good intent. As the IOTA Tangle protocol is open source itself, to some extent, IOTA the business doesn’t really matter anymore, as long as the IOTA Foundation can steer the open source ship. It’s not a major concern, but it is something to be mindful of.

IOTA uses a different DLT than things like bitcoin and Ethereum, and gets very upset when people refer to it as a blockchain. Based on a Directed Acyclic Graph (DAC) technology, IOTA wants to prove the viability of its system – which it is pitching as a better alternative to blockchain thanks to the promise of no transaction fees. To this end, all the transactions are entangled with each other, hence the name, instead of being organized in a chain-of-blocks structure. You can, should you wish, create a private Tangle, using the Compass software.

IOTA claims to be far more efficient than blockchains like bitcoin and Ethereum, as well as quicker, cheaper, and properly decentralized – as the rewards for compute power in the blockchains seem to inevitably consolidate miners into a few major players. This is where the Tangle comes in.

As IOTA explains, ‘in order to participate in this network, a participant simply needs to perform a small amount of computational work that verifies two previous transactions. Rather than creating a hierarchy of roles and responsibilities in the network, every actor has the same incentives and rewards. In order to make a transaction in the Tangle, two previous transactions must be validated with the reward for doing so being the validation of your own transaction by some subsequent transaction.’

‘With this ‘pay-it-forward’ system of validations, there is no need to offer financial rewards. Transacting with IOTA is and will always be completely fee-free. Moreover, without the need for monetary rewards, IOTA is not limited to transactional value settlements. It is possible to securely store information within Tangle transactions, or even spread larger amounts of information across multiple bundled or linked transactions. This structure also enables high scalability of transactions. The more activity in ‘the Tangle’, the faster transactions can be confirmed.’

So far, the IOTA Foundation has not really shifted the needle much. It has a lot of pilots, but so far no real commercial impact. The Eclipse Foundation might finally get the ball rolling, but the technology does seem viable – and very soon, there is going to be a swathe of alienated blockchain investors that are looking for a way to recoup the time spent on less promising projects. So far, IOTA seems to have found a solid grounding in the energy space, but it could also prove to be the transformational platform that brings IoT data marketplaces to the fore.

In February 2019, Enexis and ElaadNL tested IOTA in an autonomous load balancing proof of concept, which would schedule EV charging and discharging to act as a grid balancing tool. Volkswagen showed off a demo for using Tangle to deliver OTA updates to connected cars, in June 2018, while in April of that year, InnoEnergy was showing off how Tangle could power energy trading. Kontrol Energy, a slightly strange outfit, is also a big fan of IOTA.

As for the latest partnership, Eclipse Foundation executive director Mike Milinkovich said that “the Eclipse Foundation will provide a vendor-neutral governance framework for open collaboration, with IOTA’s scalable, feeless, and permissionless DLT as a base. By doing so, we will accelerate the development of new applications built with this transformative technology.”

“As an open-source project, we realize the importance of increasing access to IOTA’s technology,” said David Sønstebø, IOTA co-founder. “This is a significant step forward for the IOTA Foundation and our ecosystem to develop a diverse, global community of contributors and adopters collaborating on production-ready commercial applications.”

“As IOTA’s technologies continue to be adopted in commercial use cases, this transparent and open governance framework will be essential in regulating code development, ensuring market fit, and fulfilling our promises of openness, interoperability, and sustainability. This will elevate IOTA to production-readiness,” said Dominik Schiener, co-founder of IOTA Foundation.