Getting Ready to Tangle — Meet the New World of IoT: IOTA

One of the major problem that we have with cryptocurrency and Blockchain, is that most people think that it is just about value and Bitcoin. If Bitcoin goes down in value, we have the headline of “The Bitcoin bubble has burst”, but cryptocurrencies are not about the value of Bitcoin, they are about the trading of trusted electronic tokens, which have some value — not just money — attached to them. This might relate to some work that we have to perform, or just the tiny transaction cost of a device entering a network. To pay a small fee for a device joining a network, for example, might be the true cost of registration, and could stop non-trusted devices joining it.

Bitcoin has thus been a victim of its own success. But our world works on tokens — we just defined these tokens as our trading currency. But cryptocurrencies allow for the most trust worthy trading of tokens, and where we can exchange for work done, goods bought, and so on. If we need to covert them back to money, we do this through an exchange, but increasingly we could actually just trade in whichever tokens we needed — and create whole ecosystems which created nominal values of things and then enacted through well defined smart contracts.

Amir Hagafny for example [here] defines that there has actually been three generations of cryptocurrency: