Interview with Dominik Schiener "Together with the industry we take IOTA to the next level"

The new technology IOTA is still in its infancy, but it is already considered a real alternative to Bitcoin and Blockchain. Dominik Schiener, co-founder of IOTA, talked to us at the Hannover Messe 2018 about similarities and differences, the big issue of security, but also about the future plans of IOTA.

Dominik Schiener has a great vision. Three years ago, together with David Sønstebø, Sergey Ivancheglo and Dr. Serguei Popov IOTA , a digital payment system, and founded the eponymous Foundation. Schiener and his colleagues have already achieved a considerable success story - IOTA is now one of the ten largest crypto currencies. Dominik Schiener describes why this is so in an exclusive interview at the Hannover Messe 2018.

IOTA is based on the so-called tangle technology, a directed acyclic graph, the blockchain in turn on a one-dimensional chain of blocks. What does Tangle offer in the application for benefits over blockchain?

The Tangle is actually based on similar principles as a blockchain: It is a database on which you can add data and that can never be changed again. The interesting thing about IOTA, however, is our way of achieving that. The traditional blockchain involves miners who consume a lot of energy. The scalability is limited due to the structure and the transaction costs are very high - at Bitcoin they were already at $ 30. This makes micropayments impossible, for example.

What we do differently now is that there are no more miners, but all participants validate transactions of other participants and thus contribute to the security of the system. Of course, this also eliminates the transaction costs. So if I send a cent, the other party gets a dime. This consumes less power, so it's greener. The Tangle makes IOTA scalable. All in all, we are very well positioned to solve problems for the Internet of Things and to enable new business models.

It is now said that as a tangle grows and more and more participants make transactions, the overall system becomes safer and faster. In the industrial application, it often has to go fast, which is only partially possible with the blockchain due to the mining process. This seems to offer IOTA for the industry better, right?

Exactly, and the industry is of course our main focus.

For which applications does IOTA offer itself?

The technology mainly allows two things: on the one hand, as already mentioned, micropayments are possible, with which one machine can pay for another machine. This means that a large company no longer has to buy a machine, but only lends it and pays per use (for example, per second) via micropayment. This is a completely new business model. In the automotive sector, IOTA enables me to automatically pay for the service, be it parking, loading or toll. And that without me having to take care of it myself.

On the other hand, of course, the issue of data security plays a role - how to secure data and verify it. Our focus is on Industry 4.0. So we ask ourselves where data from a machine can be saved in the factory flow and how it can be found out what the machine has done in the past. This application is useful for Digital Twins, for example. We want to create transparency in supply chains: where was the product, which documents were signed, etc. It is about having a single "single source of truth" and thereby creating new confidence.

Now we have talked about benefits such as high scalability and lack of transaction costs. Another important aspect is safety. Blockchain is considered extremely forgery-proof and transparent. What about security at IOTA?

Unchangeable data storage and system security are core elements of the IOTA protocol. It is estimated that by 2025 each of us will own at least 12 smart devices that will communicate with each other. It is vital that integrity is guaranteed and we can trust the system. Transparency is part of our vision: a self-regulated ecosystem that is accessible to everyone without restrictions, thereby ensuring transparency. With the number of participants increases the robustness and security of the system. We've hired leading mathematicians and researchers who deal with security and are constantly evolving IOTA.

Nowadays, the topic of quantum computers is frequently applied. Researchers claim that quantum computers could threaten the security of the blockchain due to their high computational power. Do quantum computers pose a potential threat to IOTA as well?

No. IOTA was the first project that took the quantum computer and the danger it can take seriously. That's why we no longer use traditional public-key cryptography that has keys. Rather, we use hash-based signatures and a cryptographic system that is thought to be safe from quantum computers.

With regard to the upcoming introduction of the GDPR: where is the data if IOTA is used?

IOTA itself is very agnostic in terms of mapping the data. When I map the data in the tangle itself, they are of course encrypted. That is, only I or the other parties to whom I give access can read the data. For us, the party wishing to back up data only has to map the hash, ie the fingerprint of the file, in the tangle, ie it can still verify the data. But the data itself is stored in a local database. Important here is the verification component, which makes IOTA agnostic. The user himself can decide how he wants to do that.

On the IOTA website, the term "sharing economy" comes under visions. What is meant by that?

Sharing economy for us means that all resources can be shared. On the one hand, for example, a machine that still has storage space left in the production process can sell it to another machine. That would be a sharing economy between two machines. On the other hand, it's also about leasing machines yourself. Why should I own a drill if I only want to drill a single hole? I would like to borrow the machine from my neighbor and pay him via micropayment a contribution. For example, per second in which the machine is used. Translated to Industry 4.0, this means: Why should I own this particular robot arm if I only want to make one product with it? That's what we mean by sharing economy.

And that runs off practically without intermediary or platform?

I agree. There is no party that owns the platform, as is the case with AirBnB or Uber, for example. We want to build a decentralized network where the people who participate are also owners of the platform. There is no one who has the upper hand.

In the context of the IoT, there is much that speaks for IOTA - the micropayment issue, the scalability, the real-time capability. Nevertheless, there are companies that rely on Blockchain, such as the machine tool manufacturer DMG Mori. Will we have two competing systems, or will there sooner or later be a cutthroat competition?

In itself, that would probably be partly competing. Of course, that depends on which technology you use there and for which use case. The problem is that many large companies form consortia and in these consortia they use their own private network. In this context, both blockchain and IOTA actually make very little sense. It makes much more sense if it is a public network that anyone can participate in. Then the security is guaranteed. That's why we're working hard to convince big companies to use our technology or join the foundation.

Given the high energy consumption of generating blocks, the time-consuming consensus algorithm and the limited granulation and scalability, what else is in favor of blockchain technology?

Definitely the degree of maturity. Technologies like Ethereum are years older than us. That's why I said that this year we want to professionalize ourselves and the technology - so that it is no longer just a beta protocol, but "production-ready" for the industry. That's why it's important for us to have close partners from the field who show what we can do with the technology here at the show.

You have been able to experience great success in recent months. What are the plans for the future?

This year we want to raise the foundation big, so that it is not just a German project or a German foundation, but an international, global project. We also want to bring the IOTA technology even more into the industry. We want it to be no longer just "proof of concepts", but really case studies are emerging to show the added value of the technology. And generally, it's all about professionalizing everything now.