As blockchains continue to grow in popularity and understanding, there will be a growing need to better differentiate them from one another. What blockchains are best for NFTs, is this blockchain good or bad for games, or which ones are best to power decentralized finance, and so on. But within each sector or industry, from entertainment to finance, there are those pioneers that got there first. That then leads us to this IOTA vs. Bitcoin comparison.
Both were the pioneers in their respective fields, with IOTA being by far the largest ‘distributed ledger' – not a conventional blockchain, per se – in the wider realm of the internet-of-things (IoT), where billions of devices around the world are interconnected to one another, and share data across the world wide web. Bitcoin, meanwhile… Well, almost everyone has heard of Bitcoin, as being among the first in the blockchain community.
Although Bitcoin's primary intentions of being adopted as a usable peer-to-peer currency have been made somewhat flawed by its own growth – and subsequently replaced by other, in our opinion, better cryptocurrencies for the whole “currencies” function – it still is by far the best equivalent to ‘digital gold' that we have. But which pioneering “blockchain” is best, one for utility, while the other for value? Well, read along in our between IOTA vs. Bitcoin article to learn more.
IOTA vs Bitcoin Comparison Table
|Native Cryptocurrency Tokens: MIOTA||Native Cryptocurrency Token: BTC|
|Market Capitalization: $5,344,836,560||Market Capitalization: $1,136,518,089,427|
|Market Cap Rating: 26||Market Cap Rating: 1|
|Token Supply: 2,799,530,283 MIOTA||Token Supply: 21,000,000 BTC|
|Transaction Speeds: 1,000 TPS (1,000,000 TPS by future update)||Transaction Speeds:5-7 TPS (Limited by small block size)|
|Real-World Use Cases and Applications: Industrial applications, and Internet-of-Things (IoT) ecosystems.||Real-World Use Cases and Applications: Peer-to-peer currency, hedging asset, or as a store of value.|
IOTA vs Bitcoin – Main Difference
Although IOTA and Bitcoin are both pioneers in their two respective fields – IOTA for IoT and Bitcoin for currencies – there are many differences between them. For a start, Bitcoin is far older than IOTA and is among the earliest blockchains. As such, IOTA's distributed ledger has accrued a lot more of the new and innovative tech developed and trickled down as Bitcoin grew older. Meanwhile, Bitcoin's pace of innovation has practically stuck with the original design.
And then, we can get back to what we mentioned earlier in our IOTA vs. Bitcoin comparison, in that they are designed for wildly different uses. IOTA's distributed ledger is meant to be highly scalable and easy to adopt, especially for billions of tiny IoT-connected sensors or embedded computers. Meanwhile, Bitcoin's makes up for its lack of scale or technological prowess by being a good investment asset, as its price continues to appreciate in value ever higher thanks to its scarcity.
What Is IOTA?
Designed as a distributed ledger, IOTA‘s goals are to be able to securely record data and execute countless actions between billions of connected devices around the world within the internet-of-things (IoT) ecosystem. This is more than just the “smart” devices that you have in your home, but IOTA has broadened its reach to include everything from low-cost sensors in traffic lights, onboard diagnostics in cars, connected factories, monitoring trade routes, or entire supply chains.
IOTA's innovative technologies were conceived to build around the supposed limitations of traditional blockchains, primarily concerning the issue of scalability. IOTA can comfortably manage scale and growth in its vision to create a new ‘machine' economy. They plan to do this by interconnecting the wider network of IoT-connected devices onto a singular and unified global framework powered by IOTA's fee-less, permission-less, and tamper-proof distributed ledger.
What Are IOTA's Unique Features and How Does it Work?
In our IOTA vs. Bitcoin comparison, we can see that IOTA is a much more utilitarian “blockchain” compared to Bitcoin, as it can be used readily in many unique applications and is very easy to adopt into existing infrastructure. IOTA's distributed ledger is mainly designed for use within large institutions or enterprises, where they require cost-effective and time-efficient computation while also requiring that data be immutable and robust, especially for processing mission-critical data.
The core of what powers IOTA's distributed ledger is Tangle, which is a new method for organizing data and executing transactions. It claims to be much faster and more efficient – both in energy usage and computational memory – than typical blockchains. Furthermore, it also solves challenges such as block sizing, mining power fluctuations, centralized mining power, or hard forks – all of which blockchains like Bitcoin have suffered before. This is what allows IOTA to scale a lot better.
As of this IOTA vs Bitcoin review, IOTA can already manage around 1,000 transactions-per-second (TPS), while future updates could bring this to upwards of 1,000,000 TPS. This is far, far faster than what Bitcoin's blockchain could muster with its seven or so TPS. In its design, Tangle is a system of nodes connected together in a set pattern (like the branches of a tree), where every new transaction would need to confirm two prior transactions.
Consequently, this means that there's no mining on IOTA. On Tangle, all network users are responsible for data validation. This is run on a non-sequential Directed Acyclic Graph (DAG), which enables transactions to run in parallel. Combined, this means that the higher the number of systems that are attached to the network, the more secure and efficient IOTA becomes. Overall, IOTA's distributed ledger is very suitable for devices such as low-powered sensors.
How Has IOTA's Distributed Ledger Been Used in the Real World?
We can quickly see in our comparison between IOTA vs Bitcoin that the former is arguably has more utility in the real world. There are a number of ways in which IOTA's distributed ledger could revolutionize the IoT space by interconnecting and sharing countless bytes of data across a singular network. One example we could use is the creation of ‘digital twins', which are digitalized copies of real-world items where we can track their usage and lifecycle in real-time.
For instance, a car manufacturer can create a digital twin of a car, where they can predict how an anonymous owner is using the car, or whether there are any faults, and could then best tailor services or predict maintenance intervals better. In global trade, producers and traders can create digital twins for every single item being shipped, which could then be used to assess their condition while also expediting the process of going through customs without the need for paperwork.
IOTA's distributed ledger, owing to how it can securely and quickly share data across an expansive network, could allow for its users to monetize IoT-connected devices. Going back to cars, owners could best monetize their idling vehicles through ride-sharing or how owners of electric cars can take part in peer-to-peer energy trading. Large factories with IoT-powered robots could rent out their machines over the air through IOTA or leverage their automation capabilities.
Overall, the data gathered from thousands, millions, or billions of sensors could then be used to shape the infrastructure around us. One scenario is how smart cities could take in data collected by various IoT sensors embedded across the urban landscape to then optimize traffic flows, public transportation, reduce waste, or how to best manage energy consumption. Not to mention how IOTA's ledger can lock down and secure data, such as patient health records and clinical research.
What Are IOTA's Native Cryptocurrencies?
The native cryptocurrency of the IOTA ecosystem is the MIOTA token. Mostly, MIOTA cryptocurrencies are used for utility, as there are no network fees to pay for on IOTA. Instead, we looked earlier in our IOTA vs Bitcoin comparison how MIOTA tokens can be exchanged through microtransactions, such as monetizing your car for shared mobility or factories renting out unused machines. There are also several other ways IOTA's users could monetize data.
There are two marketplaces built by IOTA – the Industry Marketplace and the Data Marketplace. The Industry Marketplace is where factories (for instance) can automate the exchange of physical or digital goods and services, such as lending out an entire production line for use. The latter Data Marketplace, meanwhile, is a platform where you can sell your anonymous data safely to others, such as the info collected by weather sensors or topography data from a drone.
Thanks to IOTA's immense usability and growth in recent years – also compounded in how MIOTA tokens can be earned and exchanged – it has seen a healthy price appreciation as of late. As of this IOTA vs. Bitcoin comparison, the price of MIOTA stands at $1.92. Its entire supply of 2,779,530,283 MIOTA has been pre-mined and is already in circulation. In total, this values IOTA's market capitalization at $5,344,836,560, which makes MIOTA the 26th-most valuable cryptocurrency.
What Does IOTA's Future Look Like?
IOTA had already struck a huge list of partnerships – more than 100 – with many major companies, academic institutions, as well as governmental and non-governmental bodies to help develop and grow IOTA's distributed ledger in the real world. This is also helped thanks to initiatives launched by IOTA, such as the Tangle EE industry working group or the IOTA Ecosystem Development Fund, with more than $39-million worth of grants to invest in new technologies and projects.
Aside from that, IOTA also has a strong roadmap for 2021 and beyond to plan out its future. While you're reading this IOTA vs. Bitcoin comparison, the most immediate network upgrades would be the completion of the “Chrysalis” (or IOTA 1.5) update. This includes small optimizations, as well as improving their smart contracts functionality. After that, their biggest and most anticipated update would be IOTA 2.0, codenamed “Coordicide.”
One of the main criticisms against IOTA is its centralization, as they have since moved its entire network to a central “Coordinator” node in order to safeguard security. However, the effect of this is that there is just a single point of failure, as well as slow processing speeds, as it could not compute transactions in parallel. This will soon change as Coordicide will mark the removal of the Coordinator node to make IOTA fully decentralized, which would also improve its future scalability.
Ending the first half of our IOTA vs Bitcoin comparison, we can see that compared to Bitcoin's shiny golden luster, IOTA can be considered to be the working man's ‘blockchain'. Although its distributed ledger model is highly unorthodox, there is a lot of promise waiting ahead of IOTA as we continue to see internet connectivity be embedded natively into more devices, from microwaves to entire factories, including a renewed focus on intelligent software management and automation.
What Is Bitcoin?
As outlined by a whitepaper written by the pseudonymous Satoshi Nakamoto, Bitcoin was conceived as a permissionless, censorship-resistant, peer-to-peer payments network, which is powered by its native ‘electronic cash', the namesake Bitcoin token. It was the first digital currency that had been designed as a decentralized monetary system that is independent of central banks and traditional financial institutions while also being devoid of a central administrator.
Founded in the wake of the Global Financial Crisis in 2008, Bitcoin was made to create a new digital medium for peer-to-peer online payments without reliance on third parties – such as buying goods from a store or processing large settlements – while also solving the challenges of traditional settlements networks, such as needing to send monies quickly and cheaply to anywhere around the world, while also building a robust and sovereign global network.
What Are Bitcoin's Key Technologies and How Does It All Work?
Preceded by just a few other earlier forms of electronic money, Bitcoin is regarded as the first successful case of a cryptocurrency and is currently the longest-running blockchain network. Bitcoin is therefore considered to be a first-generation blockchain, as designed merely to track data records and process transactions securely. Bitcoin is also very robust in its design even after all these years, unlike some of the exploits found in other networks such as that used by IOTA.
The core of Bitcoin's blockchain is powered by a Proof-of-Work (PoW) Nakamoto consensus model, which is reliant on mining power to create new blocks and validate transactions. This makes it highly secure as it is prohibitively expensive for malicious actors to gain control – i.e. more than 51% share of the chain's consensus – as they need to invest in a lot of processing power. However, this means that Bitcoin's use of PoW has resulted in it needing massive energy consumption.
In contrast to IOTA's fee-less network, anyone using the Bitcoin blockchain will need to pay fees for transactions to compensate miners. Combined with Bitcoin's limited block size of just 1-megabyte and a relatively (but intentionally) slow block timing of 10 minutes, Bitcoin lacks far behind other blockchains when it comes to scalability, especially against chains other decentralized blockchains like Solana that could manage upwards of 65,000 TPS, let alone against IOTA's distributed ledger.
However, new solutions have been developed to alleviate Bitcoin's scalability problem. The first was Segregated Witness (SegWit), which separates witness signatures from transaction data. This soft-fork has enabled an increase in the number of transactions that can be fitted into a single block. The second was the Lightning Network, which is a second-layer micropayments channel that allows Bitcoin to process payments between merchants and customers nearly instantaneously and with low fees.
How Has Bitcoin Been Used in the Real World?
As we've noted earlier in the IOTA vs. Bitcoin comparison, Bitcoin's utility is fairly restricted compared to IOTA or even compared to other blockchains. As a monetary system, Bitcoin has been outpaced by blockchains such as Ethereum, which underpins much of blockchain-powered usage, most particularly around decentralized finance. And as a usable currency, Bitcoin's exploding value has meant that it's no longer as fast or as cheap as it once was, even compared to fiat.
In this regard, there are many other cryptocurrencies that work well as digital and decentralized versions of fiat currencies, such as stablecoins or modified hard-forks of Bitcoin like Litecoin or Bitcoin Cash. These cryptocurrencies have allowed for speedy transactions worldwide within seconds, at little to no cost. However, Bitcoin's popularity has meant that it's still widely used as a medium for payments, thanks to third-party solutions built to support Bitcoin.
Companies such as Crypto.com, BitPay, or Binance have each released their own VISA or Mastercard-powered debit and credit cards, where you can safely store and use a variety of cryptocurrencies at millions of merchants around the world, including Bitcoin. Meanwhile, payments providers like PayPal have just announced that they will support checkout using Bitcoin (as well as other cryptocurrencies) on online web stores and marketplaces.
But perhaps more importantly, Bitcoin's native cryptocurrency is currently the world's most valuable digital asset, and a lot of attention has been put on its appreciative value as the ‘digital gold'. This has, in recent years, outshined Bitcoin's initial design as a currency and has instead focused on its use as a store of value for long-term investment. Major financial firms have built specialized trading solutions for Bitcoin, as well as institutional custody for high net-worth individuals to keep some Bitcoin on their investment portfolio.
What Are Bitcoin's Native Cryptocurrencies?
Thus far in our IOTA vs Bitcoin comparison, we can see that there's not a whole lot of practical applications for the Bitcoin blockchain other than supporting its payments channels, as well as being the primary power source for the namesake Bitcoin cryptocurrency. More popularly known by its ticker name, ‘BTC‘, Bitcoin's native tokens are used within its native blockchain ecosystem to pay for transaction fees, which has risen since Bitcoin continues to grow in popularity.
Outside of the blockchain, Bitcoin has made itself quite a compelling investment proposition for investors seeking to diversify from conventional assets like precious metals, commodities, stocks, bonds, and so on. The value of Bitcoin has skyrocketed to gains of 92,757.58% from its all-time lows since mid-2013 and has risen in value by at least 6x from mid-2020 alone. Currently, Bitcoin carries the bulk share of the total market capitalization of all cryptocurrencies, valued at more than $1.1-trillion.
As of this IOTA vs Bitcoin review, the price of one BTC is $60,845.86. Bitcoin's total supply of 21,000,000 BTC is set in a deflationary pattern to maintain scarcity – part of the reason why it's so valuable – with a well-defined supply cap. The rate of new Bitcoins being created is cut in half through an event called ‘halving' every 4-years or 210,000 blocks. The current block rewards for miners are 6.25 BTC – down from 50 BTC originally – to Bitcoin's current supply of 18,678,643 BTC.
What Does Bitcoin's Future Look Like?
Bitcoin doesn't have a set roadmap, and compared to other blockchains, it is fairly slow at implementing new features. While writing this IOTA vs Bitcoin review, there is at least one major upgrade to the main Bitcoin blockchain that is being planned out. Mainly, this comes in the form of ‘Taproot,' which is a new digital signature model made to replace Bitcoin's current signature algorithm. Powered by a technology called ‘Schnorr signatures', there are some benefits.
The use of Schnorr signatures works by combining a set of addresses into one. For example, if multiple people were to send Bitcoin tokens to one address, the old signature method would necessitate that each transaction would require its own signature. With Taproot's use of Schnorr signatures, all those signatures would be combined into one, as they all go to the same address. The first key benefit would be increased privacy and token fungibility.
But more importantly, Taproot helps to improve Bitcoin's scalability when working alongside earlier updates such as SegWit and the Lightning Network. Since multiple signature data can be combined into one, the Bitcoin blockchain network could store more transactions into a single 1MB block. Another added benefit would be a reduction in transaction fees, as multiple addresses could split the transaction fees that would otherwise be incurred to each individual address by sharing signatures.
Now we've come to the latter half of our IOTA vs Bitcoin comparison, and we can see quite clearly that Bitcoin has nowhere near as much versatility when it comes to its practical applications. But what Bitcoin represents is highly symbolic as the king of the blockchains. Practically everyone, even those who know little about finance or technology, has heard of Bitcoin one way or another. That popularity and its immense ability to store a value that appreciates like there's no tomorrow make it a no-brainer to own.
IOTA vs Bitcoin – Conclusion
Finally, we've come to the end of our IOTA vs. Bitcoin comparison, and in understanding more about what makes these two building blocks for the new age of mankind very compelling. They are both very different from one another in their focus, with IOTA's push towards IoT and Bitcoin's rush forwards as a store of value. But between two pioneers, is it possible for us to pick a winner? In other words, if you had to pick one token to invest in, which one would it be?
Naturally, our first instinct is Bitcoin. We'd argue that there are many other cryptocurrencies that work best at being ‘currencies' to pay for things in the real world. However, no other cryptocurrency has yet to come close – let alone match – Bitcoin's proposition as a store of value and an appreciative asset. It seems as though Bitcoin has gotten more valuable since we've started writing this, as people continue to speculate whether a singular BTC could be worth $100,000, $1,000,000, or even $10-million in the near future.
But as we learned through our IOTA vs Bitcoin comparison, there's a strong argument to be made in the value of utility and whether something could be better served towards humanity if it was more practical. IOTA is just that, as a distributed ledger that disrupts the currently chaotic and siloed in nature of the internet-of-things ecosystem by creating a new unified environment in which every single machine, device, or computer could “talk to one another.” Suffice to say, either Bitcoin or IOTA are incredibly fascinating in their own right.