IOTA is a virtual cryptocurrency that was created with the principal purpose of supporting digital transactions and secure communications between machines across the Internet-Of-Things. IOTA coin is essentially used as a payment source for machine-to-machine transactions across the IOTA network.
IOTA Coin was created to compete with true cryptocurrencies such a Bitcoin, Bitcoin Cash, and Verge, by addressing issues related to scalability and transaction fees.
IOTA is an open-source distribution ledger created to provide secure communication and payments between a network of systems and products designed to connect and share information.
The ethos behind IOTA is to improve efficiency and accuracy, while also delivering efficiency gains from less human influence.
For machines linked to the internet and the IOTA network, machine computing power is used to fuel the IOTA network, while machines are also able to use currency for the transfer of goods and services, as well as using IOTA tokens as a payment system.
Unlike more traditional cryptocurrency blockchain technologies, the IOTA team developed a platform called Tangle. Tangle is based on a mathematical theory that is referred to as Directed Acyclic Graphs (“DAGs”).
For each transaction to be verified, each node in the Tangle network is required to approve the previous two transactions at another node. Miners are not involved in the verification process, eliminating rewards, with network growth and speed dependent upon the number of users of the technology.
Senders across the network are required to carry out the verification process, similarly to proof-of-work algorithms, but instead of one transaction verification, each sender verifies two transactions. Transacting and validating are coupled, delivering a fully decentralized network. The sender’s transaction is then validated by some subsequent transaction. Each transaction is verified multiple times by different users, which increases the degree of confidence in each transaction.
IOTA was founded by David Sonstebo, Sergey Ivancheglo, Dominik Schiener and Dr. Serguei Popov in 2015.
All IOTA tokens were generated through a “Genesis” address in 2015, the total number of IOTA tokens being 2,779,000,000,000,000, equivalent to 2.79m GIOTAS. (1 GIOTA = 1,000 MIOTA or 1 billion IOTAS)
Some distinct differences and characteristics of IOTA include:
- Transactions are confirmed instantaneously, free of fees.
- Tangle retains the ethos of decentralization while delivering on transaction speed and fees.
- New blocks are created automatically and the IOTA network does not rely on miners to verify transactions.
- As the number of blocks increase, the transactions per second does not, nor does the computational power required to verify transactions.
- The entire network is not required to verify each and every transaction, supporting rapid transaction times.
- Each transaction is verified within smaller groups of similar transactions.
- Tangle blocks are in non-chronological order, facilitating transactions to occur off-line and to be included into the blockchain at a later date.
- The IOTA network also includes an encrypted messaging platform called Masked Authentic Messaging (“MAM”) that facilitates the secure exchange of data between electronic devices connected to the IOTA network.
- In addition to GIOTA and MIOTA, there are also KIOTAS (1 KIOTA = 1,000 IOTAS) and TIOTAS (1 TIOTA = 1,000 GIOTA or 1 trillion IOTAS)