Updated: Dec 20, 2019
IOTA is a next-generation, German designed distributed ledger. The associated cryptocurrency is called MIOTA (short for mega IOTA or millions of IOTA.) The digital currency is currently part of the top 10 spots in the cryptocurrency sphere by market capitalization.
This short guide will talk about the purpose behind designing IOTA, its creators, the way it works, and its applications.
What is IOTA Designed For?
IOTA was designed keeping the next industry revolution – Internet of Things (IoT) in mind, which just happens to be the future network of all physical devices that can be connected. IOTA aims to provide secure, real-time transactions between machines. It was developed keeping machine to machine (M2M) payment and communication in mind. The designers aimed to make it the go-to currency for all IoT transactions.
MIOTA was developed to underpin the upcoming revolution and wanted to be effectively be treated as its backbone. IOTA’s founders also claim that MIOTA attempts to solve multiple problems plaguing other blockchain-based cryptocurrencies. The problems range from low network speeds, mining issues, and scalability to increasing the number of transactions processed per hour.
IOTA successfully utilizes Tangle to organize data, confirm transactions, and side-step these issues. It has been publicly supported by multiple big corporates and digital currency exchanges.
Who Is the Team Behind IOTA?
IOTA was co-founded by Sergey Ivancheglo, Serguei Popov, David Sønstebø, and Dominik Schiener in 2015. It was devised in the ‘jinn’ concept. The four co-founders remain at the core of IOTA, with each one of them being involved in the crypto space for several years previous to that.
IOTA is also involved in numerous partnerships with some of the biggest multinational corporations. For instance, it recently partnered with Fujitsu and Microsoft to launch a new data marketplace. It has also partnered with Bosch XDK, to enable a user in the IOTA marketplace for buying or selling MAM (Masked Authenticated Messaging) encrypted data.
How Does IOTA Work?
IOTA works by leveraging Tangle, an innovative and new data structure that is based on DAG (Directed Acyclic Graph.) The important thing to understand about Tangle is that there are no:
There is no other cryptocurrency besides MIOTA that uses the Tangle concept. Unlike other cryptocurrencies, like Ethereum and Bitcoin, MIOTA is not mined.
The consensus in IOTA is achieved very differently. Essentially, participants that want to make a transaction have to actively participate in the network, by approving any two past transactions. This approach has a flavor of ‘Proof of Work’, but otherwise, is unique in the crypto space.
This is the reason behind IOTA’s infinite scalability and quick transactions. Since each transaction on Tangle requires a sender to verify two other transactions, more transactions can be confirmed as the number of users increase. And, more the users and transactions, quicker each of them will be confirmed.
What are Current and Future Applications of IOTA?
You can find IOTA right beside IoT in most verticals, including mobility and automotive, industrial IoT, global trade, supply chains, eHealth, and smart energy.
IOTA has partnered with the ElaadNL foundation (a consortium of leading Dutch grid companies) to build the first concept of charging stations for electric vehicles, which run entirely on IOTA. The platform also essentially makes a vehicle’s life cycle transparent using a process called digital twin, which allows tracking of all parts on the Tangle.
Blockchain entered the Energy industry in 2016, and IOTA has taken it to new heights by focusing on the development of smart charging solutions and prototypes. The IOTA car charger has already been made public. However, users without the required hardware and software can also send MIOTA directly to the charger, using a regular IOTA wallet app.
In the health segment, IOTA is aiming to enable the transition from the current institution-centric model, to a more citizen-focused model of healthcare. Remote patient monitoring, free and seamless health data exchange, and research data integrity are some of the free and open-sourced projects being developed.
Though the Initial Coin Offering (ICO) for IOTA was in 2015, the actual trading happened only in 2017. The interest for MIOTA was so large that Bitfinex’s platform crashed for half a day, due to the enormous trading volume. The interest has continued because of the several, powerful differentiating characteristics, such as no transaction fees, no mining, and blocks. Unlike other blockchains, IOTA also has the potential to scale infinitely.
The team at the IOTA foundation is also growing. While the IOTA project seems ambitious, it is a lot like NEO, aimed at capitalizing upon other innovative projects in the digital world. There is a good chance that MIOTA will prove to be a very successful digital currency if they enable IoT.