What is IOTA Cryptocurrency and How Does It Work
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
IOTA is the new cryptocurrency and a 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.
Special Features of IOTA Cryptocurrency
The minimum unit of the transaction using the IOTA is a million IOTAs called as MegaIota or Miota (Mi). 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 1
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.
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.
IOTA is a new cryptocurrency and it’s at 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 –