Again and again I am confronted with the same question, why should the IOTA coin ever increase in value in a fee-free system? How this question can be answered and why this will be extremely important for all IOTA hodlers, I would like to go into more detail in today's article with the explanation of a technical update. A comment on the long-term performance of the IOTA coin.
Tokenization Framework und Dust Protection
The hope of many investors has always been that through adaptations by governments or industrial companies and the associated demand (of course also by many speculators on the stock exchanges), the price for the IOTA coin will also be reflected in rising prices relatively early.
In fact, to this day and the many related projects, partnerships and prospects, potential in the area of smart contracts (assembly) or through the Shimmer test network, relatively little has been set in motion. However, two new technical updates will soon come into play, which will raise the price of IOTA to a level that many cannot yet foresee. These are the two concrete technical developments:
The Tokenization Framework (we already reported in another article)
Dust Protection
And especially in the second point combined with the first development is the long-term potential and the performance of the IOTA coin. Some technical developments behind the improvement of the network are terms such as SimpleOutputs, ExtendedOutputs, token foundries, aliases or the NFTs that are currently on everyone 's lips . In order to make the whole thing more tangible, however, we have to go into a little more technical depth.
This means the "DustProtection" for IOTA
We all know that the IOTA network is completely free of charge, which, in addition to many advantages, will also lead to a big problem in the future. With IOTA, too, all addresses that are present in the system will have to be stored in the network, which will lead to physical storage space problems or occupancy, especially due to many small transactions.
In the case of Bitcoin or Ethereum, for example, a high fee is charged for each transfer to occupy storage space. For the IOTA system, this means that the more addresses there are, the more memory space will be occupied. Imagine you have 1 MIOTA (MI) available and now want to send 1 IOTA (I) each to a total of 1 million addresses?
The result would be a completely overloaded database, which the IOTA Tangle could no longer handle. To prevent this from happening, IOTA speaks of DustProtection, i.e. protection against dust, a kind of pledge to counteract this.
The solution to the problem: tokenomics and dust protection
Each database is limited in size for basic understanding. Every transaction that is carried out requires memory on the database. The big idea of IOTA is that the right to use this storage space is linked to the possession of IOTA tokens (= tokenomics and dust protection). This can either be with the recipient or partly stored in the sender's transaction.
In the second case, the sender can either give it away to the recipient or request it back later, for example by using smart contracts, in order to automatically recover the "deposit" after a certain period of time. Important for understanding: There is no active payment or fee, only a deposit obligation with MIOTA.
According to current estimates, a deposit of around 1 MIOTA could be required for a normal transaction. Of course, it is also significantly higher for special applications such as smart contracts.
That is why the IOTA price will now increase in the long term
Let's think back to the two technical innovations at the beginning of the article. Two conclusions can be drawn from these two innovations:
With the help of the tokenization framework, the number of use cases on the Tangle will increase enormously
With the help of Dust Protection, each use case will be linked to the IOTA coin
Due to the high completely free use of use cases (of course also the creation of meme coins, think for example of the current value of Shiba Inu or Dogecoin), the Dust Protection will ensure at the same time that each individual use case increases the demand for the IOTA token will.
Now, for example, we could create a new NFT from Krypto-Guru, but whoever wants to receive them must have a minimum of IOTA tokens in their possession. Any type of use will thus increase the demand for IOTA tokens.
The principle applies here: Supply and demand regulate the price. Due to the higher demand for IOTA due to the conclusions described, the individual IOTA coin price will also HAVE to increase in value in the long term!
Conclusion on the further development of IOTA
We are currently talking about around 2.8 billion available MIOTA in the entire ecosystem. If every machine and every human being had to keep around 1 MIOTA as dust protection or deposit, there would not be nearly enough database space on the Tangle for all the resources of our planet.
This means that IOTA data space will be a very lucrative proposition for the current holders with high IOTA holdings, as the data space will get smaller and smaller month by month and thus the price will increase. It is also clear that we do not have to talk about this at the moment, as it will still be some time before the coordinator is finally approved and the full technical integration and full acceptance.
At IOTA, the mechanisms for microtransactions are currently being heavily examined and the process, as described in today's article, is to be significantly simplified. However, it is also clear that IOTA will not do completely without dust protection, which should answer the initial question for investors and hodlers about the price increase of the IOTA coin and potentially allow them to look very relaxed into the future.
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