IOTA is a ‘revolutionary new transactional settlement and data transfer layer for the Internet of Things (IoT)’.
IOTA is a new distributed ledger-based technology developed for the management of smart devices. With the continued expansion of IoT, there is a continued need for resource sharing and interoperability. IOTA helps smart devices communicate and settle transactions without fees.
What is IOTA (MIOTA)
IOTA is the new cryptocurrency and technology based on a third generation distributed ledger (Tangle Ledger). It was founded in 2015, and as of December 2017 is the 7th largest cryptocurrency in circulation with a market capitalization of $ 10 billion. The currency is being maintained by the IOTA foundation, a non-profit venture that is developing it further and maintaining it license free for all developers to work with. The foundation has collaborations with many big corporations like Volkswagen, Microsoft, Fujitsu etc.
IOTA Value, Supply & Market Cap
The minimum unit of the transaction using the IOTA is a million IOTAs called as MegaIota or MIOTA (Mi).
|MIOTA Price (6th April 2019)||$0.347654 USD|
|Market Cap||$966,315,442 USD
IOTA Explained in Simple Words
The name IOTA is derived from the Internet of Things (IoT). This cryptocurrency is focused on ensuring secure communication and payments between machines based on the Internet of Things. However, unlike traditional cryptocurrencies, IOTA does not work on the blockchain. Instead, it uses the directed acyclic graph technology. IOTA’s directed acyclic graph is called “The Tangle”, and the number of transactions it can handle simultaneously is effectively unlimited.
The reason IOTA exists is to enable frictionless microtransactions to take place. These transactions will enable the Internet of Things to function smoothly, and they will also allow idle pieces of IoT-enabled equipment to mine for their owners.
How Does IOTA Work
Unlike the Bitcoin and other cryptocurrencies, IOTA does not use traditional blockchain technology. Instead, it uses a directed acyclic graph (DAG) also called the Tangle.
The main innovation behind IOTA is the Tangle, a revolutionary new blockless distributed ledger which is scalable, lightweight and for the first time ever makes it possible to transfer value without any fees. Contrary to today’s Blockchains, consensus is no-longer decoupled but instead an intrinsic part of the system, leading to decentralized and self-regulating peer-to-peer network. – IOTA.ORG
The blockchain technology is like a single ledger that keeps track of all the various transactions that a particular Bitcoin has gone through in order to prove that the value is truly there and that you are not exchanging worthless digital currency. This ‘ledger’ is verified by what is called as ‘miners’ who charge a certain transaction fee for their mining work.
The Tangle Ledger is significantly different in this respect. The verification of value is not done by designated ‘miners’ but by the users themselves. Every time you make a transaction, you automatically validate two random transactions. Thus the transactions are validated but using the power of the crowd instead of designated people.
How to Buy IOTA Cryptocurrency
IOTA is a new cryptocurrency and it’s at the developing stage, therefore very few wallets support this cryptocurrency. You can buy IOTA cryptocurrency using Bitcoin or Ethereum and store it in different types of wallets such as Desktop, Mobile or Paper Wallet. To understand the step by step method to buy and store IOTA cryptocurrency, you can check this post –
Future of IOTA Cryptocurrency – Review & Comparision
OTA is better than traditional blockchain using cryptocurrency for the following reasons:
- no transaction fees,
- faster confirmation times,
- a higher number of transactions that can be handled,
- security, and
- scalability of the system.
The traditional Blockchain depends on ‘miners’ to verify transactions and as a result, they charge a transaction fee for mining work. This creates a problem for small transactions that would make the user spend more money in transaction fees than the total value of the transaction itself. Also ‘miners’ usually verify transactions which are bigger in value in order to be able to charge a higher transaction fee. As a result, a lot of mid to small sized transactions are not confirmed or take a lot of time. With the elimination of transaction fees, confirmation times take a huge dip.
IOTA Advantage– The Tangle Based Cryptocurrency
Each transaction in the Tangle is assigned a certain score on the basis of the number of transactions that directly or indirectly confirm it. As the number of overall transactions increases, older transactions get more and more secure as the score is directly proportional to the amount of computing strength it would take to duplicate the transaction and thus cause a fraud.
Also one of the major drawbacks of blockchain is that there is a limit about how big the ledger can get, and thus how many transactions it can handle per second. As the Tangle is a distributed ledger, the problem of increasing ledger size with an increasing number of transactions does not occur. Already the number of transactions per second by IOTA has bypassed both Bitcoin and Ethereum, another blockchain based cryptocurrency.
Real Applications in IoT – Example
Another huge opportunity with the IOTA system is the fact that it can operate using the IoT (Internet of Things) backbone. This means that machines could now have their own unique wallets and exchange money for services and data. For example, a connected car could transfer the exact amount of fuel money to the fuel station without you having to interfere, or pay the toll on highways, or parking without you having to hunt for your credit card or retrieve change. This potential will be realized over the next twenty odd years as smart cities become the norm.
All of these advantages point to the fact that IOTA could replace not only Bitcoin but blockchain technology in general. While there are currently concerns about the feasibility of IOTA, closely following the IOTA foundation could give you a better idea of how this new disruptive cryptocurrency shapes up.