IOTA is a new type of cryptocurrency that is/was a first of its kind.
IOTA began back in 2014 when their small team developed a new type of microprocessor that was useful in devices connected to the Internet of things (IOT) or for distributed computing. Faced with the inflexibility of blockchain technology they created a concept where machines could transact with other machines by trading resources effectively and securely on demand using a network called a Directed Acyclic graph (DAG) instead of a regular blockchain. They called this DAG the ‘Tangle‘.
This led to the launch of IOTA network which was a more efficient, secure, lightweight and flexible crypto network compared to other traditional blockchain crypto currencies.
In 2016, IOTA conducted over 3 million successful transactions (all fee free!).
IOTA is the first crypto currency that is based on blockless blockchain technology making it truly scalable, decentralised, modular and without any fees!
Tangle vs. Blockchain
The Ethereum network is made up of a decentralized network of users, these Ethereum users make transactions on the network while the Ethereum miners (or nodes) are only ensuring the security of the network. They aren’t ‘users’ of the the system, rather they are enabling it to operate securely.
IOTA is a brand new system where unlike a blockchain the users and the nodes are the same entity, this tangle technology means that in order to send a transaction you must also verify a transaction meaning transaction speeds increase as the number of users increases.
The tangle is a scalable blockless distributed ledger set out in a Directed Acyclic graph (DAG) instead of a regular blockchain.
The DAG allows for zero-cost transactions, infinite scalability and offline transactions that regular blockchain technology cannot do.
The tangle does this by requiring the sender in a transaction to approve two transactions before completing said transaction; therefore combining the act of making a transaction with that of validating other transactions. This also means that the network speed increases as the number of users increased opposed to blockchain currencies which get slower as user increase. It also removes the need for ‘miners’ or ‘nodes’ thus making it a no fee network.
Operated as an asynchronous network, each sender validation may not necessarily be seen by the same set of transactions it validates, IOTA provides multiple protection strategies against various attacker scenarios making it extremely secure (see their whitepaper for crazy maths and examples).
How can IOTA be used?
With zero transaction costs, the potential for indefinite scalability and offline transactions, IOTA can be used in a variety of situations including:
- Micro transactions without fees
- The ability to securely transfer data through the tangle
- The possibility to establish secure and authenticated communication channels between different devices
- With secure data transmission, it also opens the ability to conduct secure voting polls and secure sharing
- It even has the ability to sell idling power or spare computer storage (from users) as part of a “everything as a service” idea!
Although CanYaCoin (the token that powers the CanYa P2P services marketplace) is an ERC20-based token, we can’t help but be impressed with the IOTA project. Other projects that we like will be shared in the coming weeks and months; there are so many!
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