The Internet of Things (IoT) is the interconnection of devices without human involvement. It is a surging area of growth in IT, and is likely to grow further once self-driving vehicles become a mainstream reality.

But current Internet architecture is poorly-equipped for the surge of data transfer that will accompany the growth of IoT. The centralized structure of data handling – from user to the cloud and back – is not robust or fast enough for real-time processing needs of IoT devices.

A decentralized internet is crucial to the evolution of IoT, and several DLT projects are seeking to reap the benefits. 

Real-Time Data Processing Critical For IoT

The Internet is currently based on centralized servers(“the cloud”) which receive data, process it, and return it to the end user. Mobile devices are merely “display vehicles” for data processed in the cloud, as Peter Levine from Andreessen Horowitz explained:

Levine predicted that the IoT would require a decentralized internet, as the need for real-time data processing rose and centralized systems became overwhelmed with data processing needs.

His prediction hasn’t been far wrong. Analysts at Gartner, Inc. wrote that 8.4 billion “things” were connected to the internet in 2017, a rise of 31 percent from 2016. That figure is expected to reach 20.4 billion by 2020. Consumer retail devices account for 63 percent of IoT applications.

The number is expected to balloon again to 500 billion by 2030, according to research by Cisco. Peter Levine described a future of distributed computing, referring to the most obvious example of self-driving cars processing data in real-time. 

A self-driving car generates roughly ten gigabytes of data per mile, Levine explained. If vehicles on autopilot continue to grow in number, it will be impossible to send data back to centralized servers every time a car spots a stop sign or a pedestrian. They won’t be able to waste a microsecond of time.

The IoT, Levine envisioned, would expand the market of data processing units from a few billion to trillions. Machine learning would still operate at the cloud level, but more and more data processing would occur in-device when and where it is needed. That’s where distributed ledger technology comes in.

Distributed Ledger Technology and the IoT are About to Collide

As the number of connected devices rises, they will have to rely less on central servers and more on their own computational power. 

With its ability to duplicate a data storage network and create ample redundancy through its distributed characteristics, blockchain technology is an obvious solution to the rise of data volume and speed requirements.

The IOTA Foundation argues their Tangle is infinitely more capable of handling the IoT-driven surge in data traffic because the DAG structure “allows transactions to be issued simultaneously, asynchronously, and continuously, as opposed to the discrete time intervals and linear expansion of a Blockchain.”

While a blockchain is a sequential chain of blocks with chronological predecessor and successor blocks, IOTA’s Tangle is a complex web of transactions that are Directed (all pointing in the same direction), Acyclic (not capable of forming loops, in other words, returning back to the same transaction), and a Graph in which “reference pointers and transactions form a graph of edges and vertices.”

IOTA has already formed partnerships in some key IoT verticals, such as with Jaguar Land Rover. It recently partnered with EVRYTHNG to create secure supply chains that offer end consumers trust in the provenance of products from food to fashion.

Other cryptocurrencies are also seeking to provide IoT-friendly ledgers. Crypto Briefing has already introduced IoTeX, a privacy-enabled smart contract blockchain, as well as Oracle’s efforts to combine connected devices with its Hyperledger-based blockchain solutions.

With fast, feeless, frictionless microtransactions auditing data across the network upon which devices connected to the Internet of Things will rely, projects like IOTA stand at the crossroads of two emerging forces that are likely to meet within a decade.

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