What is IOTA?
IOTA is a centralized distribution ledger based on “Tangle,” a directed acyclic graph. IOTA was launched in 2015 by David Sonsbeto and a group of developers. IOTA is a centralized cryptocurrency with its headquarters in Berlin, Germany. IOTA’s Tangle is a directed acyclic graph which means that IOTA can process millions of transactions per second, there are no fees, and there is no need for miners and massive electricity consumption. I will explain further in this article. This design differentiates IOTA from other cryptocurrencies. IOTA is focused on changing how the Internet works.
IOTA is gaining global recognition, various companies are partnering with IOTA. REFUNITE, a company that majors in reuniting missing people with their families, in 2017 REFUNITE signed a partnership with IOTA to use its technology to help reunite missing people with their families after a conflict, natural disaster or terrorist attack must have happened.
Also in January, a city in the Netherlands used IOTA’s technology to build a proof of concept system which will enable residents in that city to verify the authenticity of their official documents without necessarily going to government offices to do so.
IOTA has a foundation which is charged with the responsibility of building a sustainable ecosystem for IOTA. It also seeks for ways to increase the development of IOTA and its commercial adoption as an open source technology.
Features of IOTA
There are various features that are significant. In this article, we will be discussing these features. They are:
1. The adoption and use of Tangle:
Tangle makes use of directed acyclic graphs (DAG). This is a hierarchy of nodes, where no node is a descendant of itself, which ensure that the structure moves in a single direction without going in circles like the typical blockchain system. That’s where acyclic comes from: no cycles. The more nodes are added, the faster the transactions confirm in contrast to blockchain.
The deal is the following: every time someone makes a transaction, he references two different transactions. So, to have your transaction confirmed, you confirm two other transactions. It is a self-regulated consensus that doesn’t need miners. This is why there are no fees. You pay your transaction by confirming other ones.
2. IOTA’s Consensus:
Unlike blockchain that uses a competitive mechanism where people vie for different blocks and the rewards and token that comes from ownership of these blocks, IOTA does not mine nor do their users battle to gain tokens for owning blocks. Other cryptocurrencies pass consensus to a group of people called miners within the network but for IOTA consensus must be done by every user on the network.
3. With the help of Tangle, real-time micro transactions are done in IOTA.
4. Another feature of IOTA is its transfer of data. This is done in an authentic and tamper-proof way as enabled by Tangle.
5. Masked Messaging:
With the help of Tangle, nodes are able to transfer and exchange full encrypted and authenticated data. This further means that data can be transferred with a quantum proof security through Tangle.
6. Millions of transactions can be processed by IOTA with no exact limit of the number of transactions it could process in a second.
Just for comparison VISA’s capacity is 2 million transactions per second.
7. IOTA has no transaction fee.
Difference between IOTA and other Cryptocurrencies
There are various core features that differentiate IOTA from any other cryptocurrency in the world, some of the differences are:
*IOTA’s use of Tangle instead of the traditional use of blockchain has set them apart from other cryptocurrencies. This Tangle is used to verify node transaction through consensus finding, but without the typical and traditional blockchain system adopted by most Cryptocurrencies.
*Unlike most Cryptocurrencies, IOTA has no blocks, no miners, and zero transaction fee. A distinct feature that separates IOTA from other cryptocurrencies is its internet of things usage.
*Another feature that separates IOTA from other cryptocurrencies is that it does not generalize smart contracts. Although IOTA allows for micro transactions and scalability it cannot generalize contracts because it does not have strongly ordered transactions.
*Another feature that separates IOTA from other cryptocurrencies is its interest in the internet of things. Let me explain what this truly means, IOTA is interested in things like cars, toasters, washing machines etc and how they are connected to the internet. To illustrate, let’s say your car or freezer is faulty, IOTA is creating a system where you can order the supplies you need for things online.
IOTA Terminologies Explained
During the course of this article, we have mentioned a few core Terminologies that every potential IOTA investor should know. For this article we will discuss just two, they are:
IOTA Internet Of Things:
Internet of Things also called IOT is IOTA’ s application. Internet of things can be said to be a network of physical devices, home appliances, and other embedded software, sensors and connectivity that enables these things to not just connect but also to exchange data. Experts have revealed that by 2020 over 30 billion objects will be included in the Internet Of Things application. They also speculate that its total market value would be soar to a whopping $1.7 trillion by 2020.
Tangle: it is a part of the Internet of Things. Its main feature is to validate nodes through value consensus but without the typical blockchain system. Tangle uses a directed acyclic graph to carry out its functions.
IOTA Pros and Cons
- Tangle is a great innovation that will ensure a faster processing of transactions
- Zero transaction fee
- Strong security system. The use of quantum proof secures IOTA’s networks.
- Experts are predicting an increase in the value of IOTA.
- Smart contracts are not generalized
- The use of numeral systems by IOTA will result in inefficiency in its systems in the long run as predicted by tech experts.
How do you buy IOTA
IOTA can be bought through a crypto exchange. You can’t directly purchase it through fiat money. You must buy other cryptocurrencies using fiat money and then exchange that coin for IOTA. To illustrate, let’s say you want to buy IOTA, all you have to do is use your flat money to acquire either Bitcoin or Ethereum. Some of the popular options of buying IOTA are; Coinbase, Blockchain.info, and Xapo.