What is IOTA (MIOTA)?
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IOTA is an open source distributed ledger designed to power the Internet of Things with feeless transactions and a highly scalable network.
IOTA is not a blockchain. In fact, IOTA aims to improve on some technical flaws of blockchain which IOTA believes are preventing adoption. The potential of blockchain is undeniable - decentralized networks can facilitate global transactions with low fees and no third party intervention.
However, as blockchain adoption has increased, scalability has become a limiting factor. Blockchains are rushing to complete network upgrades and enhance scalability, but in the meantime, users face slow transaction times and fee hikes.
What’s more, blockchains with financial rewards are becoming increasingly competitive but also increasingly centralized, working against the decentralized purpose of blockchain. This is especially true for Proof-of-Work blockchains. Despite this, the need for decentralized permissionless systems continues to increase.
IOTA uses a different, open source distributed ledger known as ‘the Tangle’. Using the Tangle IOTA aims to rectify the common issues of blockchain and facilitate a new permissionless economy for humans and machines.
MIOTA is the ticker of IOTA's cryptocurrency.
Much like a blockchain, the Tangle is a form of distributed ledger technology. The key difference between the two is that blockchain stores transactions in sequential chains, whereas Tangle transactions are stored individually in a stream and entangled together. The Tangle is a Directed Acyclic Graph (DAG).
Picture from iota.org
The Tangle has a unique transaction verification method. All players in the network have the same incentives and rewards, there is no hierarchy of responsibility.
The transaction verification process is simple - if you want to make a transaction you are required to validate two previous transactions made on the network. The reward for carrying out this task is that your transaction will be validated by others.
This verification method means that all network transactions are verified by those wishing to send a transaction. This process only requires a small amount of computational work and it introduces one of the major benefits of IOTA: the lack of fees.
Since the Tangle doesn’t offer any financial compensation, sending transactions is feeless and always will be feeless.
The Tangle is very powerful in terms of scalability. Essentially, the higher the network activity, the faster transactions will be confirmed. In theory, this means that transaction times would improve during times of high network usage, an interesting contrast to blockchain technology.
The application of IOTA
IOTA, like the name suggests, is largely targeted at IoT (Internet of Things) and Web 3.0. Since IOTA is massively scalable and has no transaction fees, the network can theoretically be used to facilitate data exchange between IoT devices worldwide. It’s aim is to become the connective tissue between the human economy and the machine economy.
IOTA is already working with some of the largest companies in the world, developing real applications and solutions that solve the ‘trust’ problem created when machines and devices communicate on an open network.
In one example, IOTA recently announced that Jaguar Landrover is using the IOTA Technology to pay drivers for car data:
In another example, IOTA, Dell Technologies, and The Linux Foundation come together to create a ‘data confidence fabric’ to verify the authenticity of data coming from sensors:
More importantly, IOTA is growing organically across the world. Since 2017, IOTA has been referenced in over 111 patents, and the number of research papers has increased dramatically in that same time period. Because IOTA is focused on industry standardization for IOT, governments, organizations, and individuals are beginning to build on IOTA naturally, thanks to one of the largest developer ecosystems after Hyperledger and Ethereum.
IOTA is also a disruptor of many industries:
Here’s how IOTA can disrupt the energy industry:
A look into IOTA and smart manufacturing:
The possibilities are truly limitless as the world becomes increasingly digital and interconnected.