IOTA announced in 2015, by a developer team consist of Sergey Ivancheglo, Serguei Popov, David Sonstebo, and Dominik Schiener. It is an open source distributed ledger to power the internet of things ecosystem (record and perform transactions between machines and devices). IOTA purpose is to improve technical flaws of blockchain which IOTA believes it’s preventing adoption. In fact, IOTA aims to solve the Bitcoin’s scalability problem by replacing its blockchain with a new designed ledger called Tangle. Tangle is a system of nodes for confirming transactions.
As a result, In this new designed ledger, each new transaction confirms two previous transactions. The ledger uses a cryptocurrency called mIOTA to account transactions in its network. IOTA claims that Tangle is much faster and more efficient in compare to other typical blockchains used in cryptocurrencies. The IOTA foundation signed agreements with megacompanies such as Bosch and Volkswagen to extend the platform’s utility among connected devices.
What is IOTA?
IOTA stands for Internet of Things Application, and it’s a crypto technology that facilitates transactions between devices on the Internet of Things (IoT). Its plan is to become the standard mode of conducting transactions on devices. It means, it will enable transactions between connected devices, which anyone can have access to it.
According to researches, by the year 2020, more than 20.4 billion devices will be connect to the internet and IOTA could be a solution to connect all users together. The founders believe that it could solve multiple problems such as centralization of mining and scalability that most cryptocurrencies with standard blockchain are struggling with. These problems occur in the network for the reason called backlog. The backlog happens because two reasons, small block size and the difficulty of puzzles that miners have to solve to earn the reward. IOTA solves these two problems by restructure the blockchain backbone into a new version called Tangle. Basically, Tangle is a new way of organizing data and confirming transactions.
In this new method of verification not only there is no central ledger, but also there is no need for miners to power the network. In fact, the devices on the network randomly verify each other’s transactions and build consensus through the web of connections between transactions. Although, in cryptography, this type of verification known as Directed Acyclic Graph (DAG), its developers call it the Tangle.
How does IOTA work?
In IOTA network there is no miners. It means that each participant in the network who wants to perform a transaction has to participate in the consensus of the network. In fact, it happens by approving two past transactions. The validation of two past transactions ensures that the whole network achieves consensus on the current state of approved transactions. In fact, it enables variety of unique features that are only exist in IOTA.
There is no limit as to the number of transactions that can b confirmed in a certain interval.
No transaction fees
It has no transaction fees.
It is decentralized more than any blockchain, because there are no miners in the network. Every participant is making transaction, actively participates in the consensus.
IOTA utilized Curl, which is a newly designed trinary hash function and it’s quantum immune.