IOTA is a new decentralized technology that could be the focal point for the Internet of Things (IOT). By using a new protocol called Tangle instead of blockchain, IOTA offers a decentralized network on which information and value can be exchanged between systems without transaction costs.
Thanks to the Tangle protocol, the IOTA technology is unique and therefore difficult to understand. If you want to delve into the possibilities of IOTA, it is useful if you already have knowledge of blockchain technology. Is that not yet the case? Then we recommend reading our introduction to cryptocurrency.
IOTA is a cryptocurrency which is built on the Tangle protocol and can be used for the IoT ecosystem. The technology is designed to create a safe and decentralized financial ecosystem for the Internet of Things.
IoT, or the Internet of Things, refers to a situation that arises when all kinds of devices have a network connection (internet) so that these devices can exchange data with each other. As an example you can think of a refrigerator that automatically orders milk when the supply is low, but in practice there will still be many applications for IoT.
IOTA is a technology that can help to verify that information that is exchanged between devices is always correct and cannot be manipulated. This then mainly relates to the execution of financial transactions. After all, to return to the earlier example, when a refrigerator orders a carton of milk, it is important to ensure that the payment is actually made and reaches the right party. In addition to data integrity, costs, scalability, security and availability are also important factors for the success of an IoT network. IOTA can meet all these important criteria thanks to Tangle.
The blockchain protocol has the property that there is no central authority and that recorded data is indelible. At the same time, the capacity of a blockchain is usually limited, because a block must be mined every so often and a limited number of transactions fit into 1 block. The miner receives a fee for verifying or mining a block. Without this payment, the transactions would not be confirmed and therefore not added to the blockchain. A miners compensation is therefore essential in a blockchain, so that nano and micro payments are not always profitable. However, in the Tangle, the biggest innovation behind IOTA, this is not the case.
The Tangle has no mining, no blocks, no difficulty and no transaction costs. The Tangle is the IOTA pseudonym for a Directed Acyclic Graph: a cryptographic decentralized network that is infinitely scalable and uses a different form of hash-based encryption that makes it resistant to attacks by quantum computers. Confirming an IOTA transaction does not require much computing power thanks to the Tangle, making this possible on all modern computers and smartphones. All devices with which an IOTA payment is made are automatically a node (part) of the IOTA Tangle. For each transaction that sends a node, the node 2 must confirm other transactions. In this way there is always 2x as much capacity available as needed to confirm all transactions at that time, and the network becomes faster as more transactions are executed.
IOTA is a new technology that can already be used at the moment, but in principle still in the initial phase. There are still many new developments on the planning of the IOTA foundation that should ultimately make the technology a huge success. One thing is certain: a payment system without transaction costs is something that many organizations will be interested in.
The concept of IOTA is well thought out, but the rollout on a large scale as well as the adoption of the technology has yet to take place. There is already a user-friendly IOTA wallet, but there are for example few exchanges or other places where you can invest in IOTA. Selling or buying the IOT / MIOTA digital coin is therefore not yet very easy.
In 2017, the crypto currency reached a position in the top 10 largest cryptocurrencies, based on market capitalization. With a market capitalization of more than 1 billion euros, IOTA certainly has a strong share in the cryptocurrency market. If the developers succeed in increasing the adoption of the technology by making the purchase and the use easier, we expect that the IOT / MIOTA cryptocurrency will certainly achieve good results.