In the following interview, Crypto News Flash spoke to Dan Simerman, Director of Financial Relations at the IOTA Foundation, the most requested questions from the community regarding Colored Coins, Chrysalis and Coordicide.
In a tweet on June 30th Dominik Schiener declared the start of Pollen as a big step towards adoption and production readiness. As an introduction, could you please outline why this step was important, what obstacles were recently involved and how the progress will show in the next weeks and months.
Pollen is incredibly important due to it being the first time that Fast Probabilistic Consensus is running out on a public testnet. Until now, much of the work has been theoretical and backed by the research of our incredible research department. It’s also important because it’s the first step in running IOTA in a fully decentralized manner. In the coming weeks, we will see that the foundation we’ve created for IOTA 2.0 will make it easier to release functionality to the testnet in quicker, more iterative fashion. We’re really looking forward to Nectar, our second of three phases on the path to IOTA 2.0 in a few months.
With Chrysalis and the new Coordicide approach IOTA has made quite a 180° turn. What were the reasons for this and how do you assess in retrospect the situation of two years ago when today’s solution was not yet in sight? Did people rely too much on CFB?
Up until late 2019, there were some members of the IF that were very much fixed on the original vision of IOTA. Being flexible and looking for ways to improve and streamline technology processes and development are a natural part of any startup. Reflecting on past choices and future direction has been a part of our DNA since our inception. This is part of the reason we have been able to grow and mature successfully as an organization and technology over the past couple of years. As we assessed our path and how to best serve our community and partners, it became apparent that some optimizations and considerations had to be made. Specifically, after hearing feedback from some of our most trusted corporate partners, it became clear that we needed to make some user experience (UX) improvements such as single address reuse, so we could be more widely adopted.
The roadmap for Coordicide according to your official website ends on December 31st, 2020. The incentivized testnet is supposed to end by the end of December. Does this mean we will see Coordicide implemented on the IOTA mainnet on January 1st, if everything goes according to plan? Will there be a big launch party, and if so, what can we expect?
The roadmap serves as a general guideline, so the community and others who follow IOTA have a clear sense of our progress and future direction. Although we try not to give specifics on deadlines, we definitely plan to celebrate this significant milestone. The reality is that the testnet will take as long as it needs to take in order for the community to feel comfortable with the final release candidate. Community feedback has always been a part of IOTA Foundation and it’s something we take very seriously.
Please let’s get down to the topic of Colored Coins (ICCs). Could you please start by telling us what you think are the best use cases?
At IOTA, we are using the term “tokenized assets” going forward. The best use cases are most likely around the tokenization of physical assets like real estate. Because we’re so focused on industrial use cases, I’m sure we will see plenty of examples where tokenized assets represent devices on an IOT network. Companies will probably get really creative, like tie a token raise to the output of a non-fungible token tied to a physical device.
We will likely also see a lot of coupon/crediting systems on the IOTA protocol once more complex scripting capabilities come with UTXO and Smart Contracts. Once people realize that they can have a feeless currency they will be drawn to our platform over others.
There has been an outcry in the Twitter community that Colored Coins could have a negative impact on the IOTA price. Our assumption is that Colored Coins will increase the demand for IOTA and therefore theoretically be positive in terms of price. The argumentation by the community was that Colored Coins will compete with IOTA tokens if they can be traded on an exchange, for example, and therefore negatively impact the price. What is your view on this theory?
I agree. I also think there is a bit of screwly logic in that thought process. If a company wants to create a token, they are not going to give up on their vision and use IOTA tokens if the use case requires it. Instead, they will go over to another platform. Which is better…Building a currency on top of the IOTA token/network or having them go over to a competitor?
There are also intangible assets that will incentivize groups to use the actual token. For example, if they need institutional custody, or a regulated, liquid secondary market, they might want to consider going with the IOTA token as a payment method. With tokenized assets, they might have to build all of that functionality out on their own, which I tend to think most third parties will not be inclined to do.
Are there already concrete plans with companies that want to use the function? Where do they see the advantages and disadvantages?
Yes, we’re already in talks with a leading tokenization group in the industry to support the IOTA mainnet at launch. The primary use case right now seems to be the tokenization of real estate and debt.
Who will be able to change the coloring of the ICCs, only the one who owns the seed? Will the coloring of a coin be a function of the new wallet?
Only the person who created the tokenized asset can modify the attribute.
Will the coloring of the ICCs be application specific? For example, if a Colored Coin is used in a video game, will it remain a “normal” IOTA token outside the application?
Yes, this creates a level of interoperability between different tokens in the network. Keep in mind that there may be future implementations where new tokens are generated completely from a feeless dApp or a smart contract. This will have a different set of characteristics.
Beyond the Tokenized Assets, there was a great interest in the community in particular in the adoption of IOTA. For this we received the following questions.
When can we expect the completion of the measures around the standardization of IOTA, or how long will it take until IOTA can be declared as an official standard?
I suggest following the work that is coming out with OMG and Tangle EE.
What is your ultimate vision of IOTA? What is the maximum possible that you can imagine today?
The ultimate vision of IOTA is to become an impartial, unbiased, decentralized communication layer for this next generation of infrastructure being developed right in front of us. We need a resilient network that can support the exchange of data and value (IOTA Tokens) between billions of people and devices. Ideally, this becomes something of a ‘public good’ that the world can be responsible for but no single entity owns. In this way, we might be able to mitigate many of the issues plaguing current ‘big tech’ around privacy, security, and trust.
This is why we are in such a strong position based on how the IOTA Foundation was established, funded, and how it positions itself. Rather than just being a blockchain company with a product, we truly believe that being an open standard is the way to win adoption and acceptance in the global market (and companies outside of the blockchain sphere).