HomeAltcoin NewsIOTA Becomes Six-largest Currency by Market Cap yet no one can Explain...

IOTA Becomes Six-largest Currency by Market Cap yet no one can Explain its Value

-

Cryptocurrency users were quite surprised to see IOTA become the sixth-largest currency by market cap all of a sudden. For a project successfully completing its ICO in 2015, that is quite surprising, considering the trading markets only opened yesterday. In fact, it can only be traded on Bitfinex, which is a bit strange. Moreover, there is the bigger question of what is it that gives IOTA value. Right now this question is fairly difficult to answer.

Figuring out what gives IOTA value is not all that easy. The benefits of this particular ecosystem are quite significant, though. It is the first blockchain-based value token to not incur any transaction fees. That is rather remarkable, considering everyone has gotten sued to pay a fee to send coin X from user A to B. IOTA is different, as it requires computing power to process transactions. This “power” has to be delivered by the users themselves. This does not give the native token any specific value, though.

IOTA – An Initial Pump or Here to Stay?

Moreover, it does not appear IOTA is deflationary, even though it has a fixed market supply. Holding IOTA is interesting from a speculator’s point of view, but there appears to be little use of the token itself. Relying on users providing the resources is one thing, but it doesn’t add value to the token itself all of a sudden. A lot of people are confused as to why they would or should own IOTA in the first place.

There is no mining process involved either, which is both a good and a bad thing for most people. All of the IOTA in circulation have been premined and distributed according to the ICO the project team organized back in 2015. Moreover, it does not appear IOTA has a traditional blockchain to verify transactions, but more of a “mesh” network of transaction verifications. In a way, users are asked to verify other people’s transactions. It is an interesting concept, but it is still unclear what gives the token value.

Although IOTA seems quite promising, it isn’t capable of solving everything either. It fixes some of Bitcoin’s problems for sure. However, it does not provide smart contracts as we know them. It remains to be seen if the fee-free structure is enough incentive to make people use IOTA as well. Plus, the network can still be attacked by an assailant, assuming he or she exploits a temporary drop off in computation power provided by the network. It will be interesting to see how this project evolves, to say the least.

Header image courtesy of Shutterstock

FOLLOW US

JP Buntinx
JP Buntinx
JP is a freelance copywriter and SEO writer who is passionate about various topics. The majority of his work focuses on Bitcoin, blockchain, and financial technology. He is contributing to major news sites all over the world, including NewsBTC, The Merkle, Samsung Insights, and TransferGo.

Upcoming Events

Most Popular