What is IOTA?

The ‘oil’ of the Internet of Things

In this article, we will tell you about the new IOTA cryptocurrency, which appeared on June 13, 2017 as a tool for trading on the Bitfinex exchange under the designation IOTA. Moreover, on the same day she took the sixth position in the rating of the authoritative resource coinmarketcap with a capitalization of $ 1.5 billion, which made the whole world attract attention.

A bit of history For the first time, the cryptocurrency community found out about this currency in 2015, and all this time the developers were busy bringing their ideas to mind, and they look like this. Cryptocurrency should not be controlled by miners. Cryptocurrency users should be able to make micropayments. The absence of a commission for transactions, and the speed and conduct - these are one of the most important criteria. All these ideas are implemented in the iota blockchain.

What is IOTA cryptocurrency?

First of all, you need to deal with such a thing as the Internet of things (“Internet of things” IoT). We all live in a world of communications, in which human interaction with technology is expanding every day. Currently, software is being implemented in many devices (cars, household appliances, furniture, etc.), which allows them to save data and exchange them with other devices. At the same time, the idea of the “Internet of things” is that objects can interact with each other through a global network. According to experts, in the medium term, IoT will already represent billions of devices in contact with each other.

IOTA working principle

Unlike the classic blockchain, the IOTA system in its work uses a directed acyclic graph - DAG (Tangle). Translated from English, it means “tangle”. A DAG-based network consists of transactions. So, when a new deal appears, she must approve the other two that were posted in front of her on the network. The nodes of the system, in turn, check for conflicting transactions, and if the latter are detected, they do not approve them. The idea of the creators was that the new transaction, receiving indirect and direct approval, is better accepted by the system.

Advantages of IOTA Blockchain over Bitcoin Blockchain

As noted above, IOTA developers decided to provide for a number of problematic issues specific to bitcoin. Below we will dwell on them in more detail so that you can understand what are the main distinguishing features of the new currency.

• Centralization of cryptocurrency mining. It is known that in order to get more coins, miners try to pool. However, this speeds up the centralization process and makes the network more vulnerable to hackers. In IoT technology, this is not possible.
• Old cryptography technology. With the advent of new platforms based on the latest developments in the field of cryptography, the idea of bitcoin is becoming less and less relevant every time. It is more a prototype for further progress.
• The complexity of microtransactions. As stated above, high transaction fees are not acceptable for the Internet of Things.
• The impossibility of separation. Many decentralized currencies cannot function when separating any part of the system. It is also difficult to voluntarily separate a part of the network.
• Discriminatory policy. Classic cryptocurrencies are homogeneous systems where the role of each participant is clearly visible. This often creates conflict situations by forcing blockchain users to spend their own resources to localize conflicts and resolve them.
• Set scalability limit. As you know, most digital money has certain restrictions on the maximum speed of the transaction. And most importantly, these restrictions cannot be eliminated due to the decentralized nature of the system.
• Demanding for hardware. Bitcoin and its descendants use their unique script, which is based on the PoW method. Other currencies use PoS. Due to the complexity of these methods, the requirements for devices ensuring their operation have grown significantly.

Key Benefits of IOTA Coin

The founders of the new cryptocurrency tried, by implementing their idea, to eliminate the main problems that are characteristic of other blockchains, which we have listed above. In this regard, it has its own unique advantages. The main ones are:

Lack of transaction fees. The Tangle system, based on the principle of its work, provides for unpaid transactions. So, ordinary transactions with other cryptocurrencies are checked and approved by the miners who mine it. In the new technology, each new transaction forms a new block of the chain and confirms itself by confirming the other two going in front of it. And so on ad infinitum. The chain is scalable and self-identifying. Experts believe that such a feature of IOTA can in the future become a driver for many new business models.