 Welcome to Digital Asset News, taking top stories in crypto, current digital assets, and bringing on a bite-sized piece. So today we've got a pretty fantastic interview lined up. This is with Dom Sheiner. He is the co-founder of IOTA. And this was made possible by mutual friend of ours, Josh Frank from the Tide. Josh, thanks so much. And I was just interested because IOTA had gone up tremendously over the last 30 days. I wanted to know why. So just so you know, this is not a sponsored video. We've already done a sponsored video earlier in the day, which was by CryptoTrader.tax. If you're looking for your crypto needs or tax needs, go to CryptoTrader.tax. Fantastic. I've used them two years in a row, and they are just great. But for IOTA, this was just something that I wanted to know about because I invested in earlier and I thought it was a great project. I got out and now all of a sudden it's just kind of it's just coming back around again. And I was interested in that whole dag with the acrylic graph and thorough put and transactions per second and what they were doing. So I just wanted to know. So anyhow, this is what we got. Enjoy. Today, we've already talked about the news. We know exactly what's going on in the market. Not so great. What I got to do today, which is something I'm excited about is Dom. Dom Sheiner. He is the co-founder and chair of IOTA, the IOTA Foundation. And as we go through the daily process and we take a look at what is going on with the markets, one thing that jumped out at me was that IOTA was making quite a bit of a run. I didn't understand what was going on. My friend Josh Frank from the tie reached out to me and said, hey, why don't you talk to my friend Dom? And that's pretty much how everything kind of works. It's not about what you know, it's who you know. So I brought Dom on here to tell me what the heck is going on with IOTA for all this different price appreciation. So Dom, thanks for coming in. Tell us just a brief history of IOTA and I'll ask you some questions in a bit. Yeah, first of all, thank you for inviting me onto the show, Rob. There's some exciting progress. I think today we have a day of mixed feelings. But I always tell our community, the most important thing is to keep the objective in mind and to be directionally right. And the direction that we set forth with the IOTA project in 2015 when it was found, it was really that we are going to solve the fundamental problems of blockchains. We came to the space with a new DLT technology that is fee less, that removes the need of miners that doesn't consume these insane amount of electricity. And that is really fit for purpose. And the purpose for the IOTA protocol is the Internet of Things. And we already have it sort of in our name with IOTA. But our real focus is to enable these machine to machine micro payments because our big vision is this machine economy where machines start trading with each other, where they start buying and selling data or services. And where we really have this sort of economy emerging out of these machines autonomously trading with each other. And that's why we built the IOTA ledger. That's where we have most of the adoption today. And we have a very exciting journey behind us and a very exciting journey ahead of us that we can discuss today. Yeah, so this is interesting. So I remember when I got into it, I just felt like decentralized was decentralized, right? And it was distributed ledger technology and that was it. But there's different levels of DLT and blockchain is just one of those. So talk to us real quick about DAG, the acrylic graph, the centralized acrylic graph. Yeah, directed ACP graph. So basically, the main concept there is that instead of having blocks and a chain, you have a transaction that references transactions in the history, right? And through that, you can start getting this sort of mesh structure, right? One transaction references transaction in history. And what you basically have is that this transaction actually attests that these transactions in the history are valid. So through that, you start to get this accumulation of confirmation, right? More attestations actually means that more confirmations are happening and that more validity that this transaction is more valid to the point where it can no longer be reversed. So like the most simple explanation of this DAG architecture, obviously, there's some very complex math behind this to actually make it secure. But that's basically how it works, right? And what we have been working on over the last few years is to move towards the system that is relying on this coordinator. And to give you a quick explanation of what the coordinator does, it basically helps or assists the network in this validation of transactions. And it's still like a fully distributed network where every check and balance is in place. So there's no single node that can alter the history or can make decisions. So it's decentralized in that regard. But what we've always said that we are out here to do is to really come to the space with a well-researched and well-engineered protocol that is Phyllis, that has no miners and that is really fully scalable. And that's exactly what we are releasing to the market this year with Cortesite and with this new consensus approach of IOTA. Gotcha. So let's jump in. So that was interesting. We talked about no miners and Phyllis, which is a radical departure from what we are used to, right? So let me do this. Let me share my screen. So first of all, here is the little data that I pulled up for IOTA. Not so great today, but everything else is down. However, as we see like 14 days, 56%, 30 days, 150% and 314% in a one-year time frame. So not too bad. And this could be one of those reasons why. So IOTA, we talked about, you guys had a mainnet launch in, when was it, 2016? 2016, exactly. So now we're going into IOTA 2.0. Why is that happening? And what are the improvements? Yeah. So the main reason why that is happening is because we've always said that we want to cross this chasm. And what I mean with that is that every technology and today is a proof of concept. Every distributed ledger today is a proof of concept. And we actually need to make them production ready, where they can be utilized in the real world, where they're not just speculative crypto assets, but where their real technologies being embedded in the real world. And that has always been our objective at the IOTA Foundation. And what we realized early on is that we obviously need to do more research, but also a lot more development in order to make IOTA production ready. And IOTA 2.0 is really, and even just the next upgrade that is happening now in March that we could discuss on Chrysalis and is our path towards production readiness. And what we mean with that is, first of all, the protocol is fully decentralized. There's as many nodes, as many validators represented in the network. Every node in the network is validating transactions. So the goal with IOTA is we need to build up one of the largest networks of validators. And we are on a good path there. But also really to make sure that the protocol itself is well engineered, as I mentioned. And we have this path towards IOTA 2.0 with different release candidates. What we have right now is the Polar Network, which is the current testnet for this future of IOTA. And actually in Q2, we have the Nectar release. And Nectar for us is this incentivized testnet. And what I mean with that is that you can join this network and you can actually earn money by participating there. And we have some very exciting ideas on how to spice it up a little, I would say. And we're going to release more information on that soon. But basically what that means is that with Nectar, we have all of the different components of IOTA 2.0 implemented. And now it's about testing, testing, testing, and providing these incentives for attackers to actually participate in the network. And once that is done, we move towards the last stage, which is Honey. And Honey is sort of this release candidate that we feel comfortable with bringing on to the mainnet. And all of this brings forth a very interesting discussion. If we look at Bitcoin today, Bitcoin basically is taking a stance where they are, I wouldn't say anti-innovation, but they're anti-progress. And where they really want to take an approach where it takes not just a few months, but even years to upgrade certain features onto the Bitcoin mainnet. Now, technologies like IOTA and even Ethereum, they take a very different approach because for us, we have to further innovate. We understand that the only way to progress is to innovate. But at the same time, we have protocols that are worth billions of dollars. So it's an interesting kind of dynamic. You want to be fast, you want to innovate, but there's billions of dollars on the protocol. And we at the IOTA foundation, we have about 130, 140 full-time employees today. And about 70, 80% of that is just engineering and research. And so for one, they are engineering and validating the protocol. And everything has been implemented. But we also have our research partners that are validating it. And in addition to that, we now have these incentivized test nets so the broader community can also better test it. Yeah, look how, I mean, what you're just talking about, look how early we are. Because all these different processes that you guys are doing right now, just to get to a point where you have a workable, viable product, that is a big thing. So there's actually a couple of different things I'm going to talk about. First of all was when we talk about getting this actually out to production and actually use for like real use case scenarios. This is what a friend of mine, Pat Ackerman talks about all the time with the Voyager token Celsius. He says, you know, it's really about Metcalfe's law and the amount of connections that you can actually make. And you have to ask yourself, what does your project actually do right now? Not what is it going to potentially do, but what is it actually doing right now? So when I hear these things about, oh, we're going to, you know, start to not partner up with, but be in talks or have some kind of groupings with like an IBM and a Dell, this kind of piques my interest. I like to hear these types of things. So when we hear these things going on, this is a positive step, but let's, I want to take a take a step back and really dig into something which is this everybody who has ever built a business, they always wish they could go back and go, man, I wish I wouldn't have screwed that up. So tell me, or just, yeah, it's just me and you, Dom, no one's going to watch this video, it's just us, right? So, so, so, uh, tell us, no, it's going to be a lot of news. Tell, tell me like some of your biggest mistakes where you could just go back in time and go, damn it, I wish I wouldn't have done that. And here's how we're going to fix this because to me, those are the things that actually drives a business. Right. No, that's, that's, that's the very important point. And, and we just recently had the blog post that was basically titled a new Dom. And the, this next main net upgrade that is coming now in March is sort of this new dawn for Toyota, because we've completely re-engineered the protocol. And why did we have to re-engineer your protocol is because we made these decisions to remove some of the components that basically no longer fit with the overall vision of the project. That didn't really bring us towards this, achieving this objective of being production ready. And either way to summarize one mistake, it would be to make these, like we should have made these decisions faster, quicker, earlier. But now, now, you know, now is the second best time to make these decisions and to, to make them quickly and to move forward. And that's exactly what we've done. And I think one thing that kind of proves our, our path forward is that we are willing to make difficult decisions, right? Even if it means to completely reinvent ourselves. And even if it means to admit to mistakes, right? I am the first person that, that admits to the mistakes that we've made in 2017 and 2018. And now, now we have a new project forward. And I already in 2021 is 130 people touched in the foundation, right? We have a huge ecosystem. And we are no longer, and we no longer taking this position of us versus the rest of the space, but it's more about how can we make the entire space bigger? And how can we build bridges towards other projects? I think that will be a common theme of 2021, building bridges towards other crypto ecosystems. Do you think like, like some of these mistakes that you made in the past, just, I mean, just give us like, not to go too technical, but what are the one of the things that you just threw away, said that does not work. And let's do this. I mean, I mean, there, like, like, there was many assumptions on the future, right? And, and two of those core assumptions was to go with ternary encoding instead of binary. So it's a different way to represent data in the ledger instead of having binary encoding of ternary. And the other second one was to go towards being a quantum immune, right? So instead of using more traditional cryptography, like elliptic curves, like Bitcoin, Ethereum and so on and so do, we utilize something called them winternets one time signatures. That means you have this special cryptography where you can only utilize an address once. If you reuse the address, it loses its security. But the benefit there is that it's quantum robust, right? And we remove both of these components simply because either it's too early to think about quantum cryptography or that we think that the path is simply feasible at this point, right? And, and that's exactly what we did. Yeah. So these are good points, because we have to get to some place where we're actually using the product and it's actually usable today, not in 20 years, not in 50 years, because that's going to do us absolutely no good, especially your employees who count on you, you guys to make the right decisions. So let's get into what we talked about before, as far as like these, these posts, because so we have those, those three processes you were talking about, Iota 2.0. Now we're going to talk about smart contracts. I think there was, I mean, smart contracts are smart contracts, but there was this one piece that kind of jumped out of me. Talk to me about this one, the three demo dapps, proof of concept smart contracts. Is this something like a non-technical person like myself could go there and then just write a smart contract? Or am I going to need to hire a developer to go write this on Iota and go this way? No, it's a very good question. Maybe just to take a step back, right? The vision of smart contracts, Iota today does micropayments and it does data integrity, basically securing data. Now the next stage for us is to actually enable smart contracts, because it's really a key component for this machine economy vision. And we released the first pre-alpha version, I think in October last year, right? And now over the next few weeks, we actually have the alpha release coming out. And exactly there, we are going to read some of these proof of concept or like really demo showcases so that you can make tokens, you can make NFTs, and you can start auction them off all fully based on our smart contract. So we're really moving not just towards something that is usable for developers, but that can really be utilized in an easy way. So with the next release over the next couple of weeks, I can definitely encourage everybody to look at that. And just to quickly provide the overview of our smart contract solution is really there to be fully EVM compatible. That's sort of like the mid-term goal for us. And to really show to the entire crypto community that there's a different way to do smart contracts where you don't need to have this world computer, what is more contained towards smaller committees that are secure in the smart contract. So it's very exciting that in that regard. Not only that. So we talked about IOTA was fee-less, but for the smart contract, I think there is a small fee, correct? You can charge fees. It's really up to the validators to decide how and if they want to charge fees. You don't have to pay them in IOTA tokens, but you can also pay them in stable coins, for example, or in NFTs, right? It's up to the validators and the smart contract owner to decide. Our vision for smart contracts is to provide the fully flexible environment so that you can choose the virtual machine to run it with and the fees. Gotcha. This is exciting times because as we know, there's other projects out there that charge an arm and a leg and a head and a back and everything else. So it is one of those things that like, okay, if we have this, maybe this might be just because we don't want to be pigeonholed into one thing. Okay. So that takes care of that. Gotcha. So now let's talk about oracles. So the oracles were interesting because now we have IOTA 2.0, smart contracts. Of course, oracles had to go through it because as you talked about here, garbage in, garbage out. If we get happy data and oppose it in, what does that really do for us? So it's all about validation. So talk to us real quick about how that actually works so we don't get a bunch of junk data coming in and screwing up the whole process. No, exactly. IOTA oracles is a very exciting release because it's like one of the most obvious products that IOTA as a distributed ledger can offer to other DLTs and we already are working on the integration with other DLT projects, which is very exciting. Now the focus on IOTA, as mentioned previously, is to secure data and to do micro payments. And today we have a framework on IOTA called IOTA Streams where you have these encrypted and authenticated data streams. And because our focus is on IOTA and running IOTA on an embedded level, we can really also start securing data from the source. And this data from the source can then provide it on our DLT network and can then be provided to smart contracts. And that's exactly also where Project Alvarium fits in, because there we are focused on actually building a sort of industrial oracle solution that can be utilized by large enterprises and also by smart contracts. Right. So interesting. Yeah, especially with, you know, so if you have data streams that are encrypted, what kind of application are you going to use for those types of things that you guys see? Yeah. So one very interesting one is, let's say, for example, we have a dynamic contract that takes input data from a sensor and the sensor data actually triggers certain actions in this small contract. Very simple example is we have a refrigerated container that is delivering vaccines. Right now, right? Right. And the sensor is submitting the data via the IOTA Oracle, then the IOTA smart contract gets the data continuously checks it, right? We have the full audit trail of the data. And then if a certain threshold is reached, we can trigger an action like for example, say, notifying somebody like, hey, these vaccines can no longer be utilized because they reached this tipping point. That's a specific example. But there's also something else with delivering price data to DeFi applications. All of that is really possible with our Oracle implementation. There can be a lot of options out there. So let's move into the last piece, which kind of pulls into everything we just talked about. Now we're talking to about Alvarian. So this is the one that talks about the trustworthiness of data, which I thought was interesting, like we just talked about, you know, because if it, and then of course we, this is for the oracles and it pulls the right stuff in, got you. But talk to us about this. Dell Technologies and Fabric. Because Fabric, as I was learning, because we had done a video probably like six or eight months ago, how Fabric is actually a centralized application for mostly Fortune 500 companies, which are really contained within Dell and IBM. So how are you guys working with them as decentralized versus centralized? Yeah. No, so the very exciting part about this is that Dell and now also Intel and other parties are getting involved into the Alvarian project. And as you already mentioned, the goal here is to really show the trustworthiness of data because no data is equal in that regard, because it's a garbage in garbage out. And if we want to automate, we need to be able to trust the data. And that is exactly where this data confidence fabric comes into place. So initially, the project was built on IOTA and Hyperledger Fabric. And now we're really building more components just on IOTA, specifically on IOTA streams. And I think that also shows this very exciting progression because as we progress with our tech and mature it and make it production ready, those partners and those enterprises that we work with also become more confident to really build their products solely on IOTA. And just so you also know, tomorrow we have a very exciting webinar together with Dell, Intel, Accenture and other entities on the data confidence fabric so that the community can learn more about it. But more importantly that other enterprises joined this journey of making data secure. I got you. So I want to be very clear on this last point, which is IBM and Dell, these aren't partnerships. These are, what would you call them? I would say that they're collaborators, right? They're very excited about Project Elbarum. They're excited about what Dell and we have built. And who knows, like obviously our goal is to build open source tech to solve real world problems. And the more companies that we work with and that join our ecosystem, the better. Gotcha. Okay. Yeah, I want to make that clear because every time you see these streams about like a project, people are like, will they talk about a project? They're like, well, is that a partnership? Or what is that? And then people go crazy. So I just want to make sure that we are 100% accurate. So Dom, thanks so much. And then just some questions I should have asked in the beginning was I remember when I did some research on IOTA before when I was actually investing in these things, talk about because of the tangle, the actual throughput, the actual transactions per second, because I remember some kind of crazy figure you guys were tying at like 100,000 TPS, 50,000, a million somewhere on there. Right. So basically one, one thing that I want to make sure that I really commit properly here is like, I think those TPS, TPS numbers are sort of the wrong indication in general to see if a project is worthwhile because I remember some other projects, for example, say like, hey, we can do 50,000 TPS, but then you actually look at how they did their stress test. It wasn't with any sort of validation. Right. And so for us right now, what we can do on the IOTA mainnet is 1000 TPS unreliably. Right. But we are already working on sharding. Right. And we have a very exciting and data sharding white paper coming out over the next few weeks that really explains how we care how we're going to really fully scale IOTA. And just to make sure that everybody understands it. Right. Our objective is to be production ready. Our objective is not to reach such a market cap because that leads from being production ready. Us being production ready means that we are fully scalable and that we are fully sharded network as well. And that's exactly where on the journey that we are. And as I already mentioned, we have 130 people in the IOTA foundation today. So we are definitely one of the largest organizations. And we are deleting research organization when it comes to DAX. And so we have a very exciting journey ahead of us. Yeah. It sounds like things are going in the right direction. The last question I have because if I don't ask this question, I will get slaughtered. So we talk about IBM being very centralized. Yeah. And then with IOTA being decentralized. And I know we kind of, we talked about it a little bit, but tell us about how IOTA would actually flow into that because it sounds to me like IOTA is going to be more working towards a centralized hyper system in a decentralized way, but it's still going to be centralized, correct? Am I wrong? No. So the vision of IOTA is to be fully decentralized because that's the only way to make sure that it's secure, censorship resistant, and that nobody can really control it. And that's exactly what we are achieving this year. And our vision of the future is it to really help large companies to be comfortable with building on permissionless networks like IOTA, right? And so the way that our smart contracts are going to work, for example, is that you as a company can also run permissioned networks on top of IOTA. But the IOTA network itself is sort of this permissionless backbone that secures these permissioned use cases. That's why, for example, we also worked on an integration with hyperledger fabric. So all of those large companies can actually benefit of utilizing hyperledger fabric. But very importantly, the IOTA ledger itself gives you access to this entire economy that's being built on top of it because it's this sort of interoperability layer. So you can go from a permission network towards the permissionless IOTA network back and forth. So that's a very exciting vision of the future. Yeah. To me, it sounds like a pretty good marriage between the two, and it's kind of like a great compromise. On top of the fact that IBM is so enormous, Dell is so enormous. I've worked in these enormous industries, and it's kind of hard to get anything done because there is so much, not just to a better term, but bloat in between the different layers. So it's like, can we do this? Well, let's do this. Let's have a meeting. Let's have a meeting before you know it like nothing ever happens. So, okay, it makes sense. So, Dom, anything, any parting words? I think you answered most of my questions. I'm sure we'll have more in the comments and we'll get back to you and maybe have you on again. But any other last pieces of wisdom from IOTA team? Yeah, no. I think one important thing is right. We have the Chrysalis mainnet upgrade happening in March. Okay. We basically rebuilt the entire protocol from the Node software to the libraries to the wallets. So we also have a new firefly wallet coming out, which looks absolutely gorgeous. And I think for many people, IOTA in 2021 will be one of the leaders in terms of the adoption, but also in terms of tech progress. So you can expect a lot from us this year. And we are fully committed towards this journey of decentralizing not just ourselves, but decentralizing entire industries and making sure that they benefit from the technologies that we create. So I think we have a very exciting journey ahead of us. And I and the entire IOTA team and community are really, really excited about what's coming. Yeah, that sounds good. All right. So, Dom, thanks for stopping by. We appreciate your time. Yeah, thank you, Rob. Yeah, great stuff. And then what we're going to do is over at DanTeachersCrypto.com. We're going to do a deep dive into IOTA. I'll do that separate video, where we just do like a review of the actual project. And you can find that over there. Link in the description. That is it. So, hey, everybody, thanks for watching. If you liked that video, give it a thumbs up. Also consider subscribing as everything's time sensitive, except for stuff like this. And that is it. So thanks so much. And we will see you on the next one.