Many of the improvements in the cryptocurrency have been aimed at perfecting some of the previous glitches in the already functional cryptos. IOTA is no exception. IOTA is a cryptocurrency based on an open source distribution ledger with a sole purpose of creating a new currency. The cryptocurrency is to be used as a building block for technological growth of the Internet of Things (IoT).
In this article therefore, we are going to discuss the IOTA currency and some of its related features. Additionally, we will take a look at its journey since its creation. I will also include a case study to help you understand the use of this cryptocurrency.
History of IOTA
The basic concept of this cryptocurrency was conceived by a team of developers;
- David Sonstebo
- Dominik Scheiner
- Sergey Ivancheglo
- Dr. Serguei Popov
The official release of this currency was on November 2017. The IOTA currency is monitored by the IOTA Foundation which is a non-profit organization with aim of maintaining the cryptocurrency’s building blocks as well as opening it up for developers to continue working. Additionally, they oversee any upgrade and other changes to the currency’s technology stack.
The currency has 2,779,530,283,277,761 IOTAs which were created in 2015. Well, since there is no mining in this currency, we do not expect any changes in the total number of IOTA in circulation. The first beta test of this currency was done in 2015. The concept of how the currency has no mining is explained below.
After the release of this cryptocurrency, it began the use of its flash network (high speeds which support instant payments) in August. This was ahead the other cryptocurrencies for example Bitcoin and Ethereum. It was then registered as an official entity by the German law on November 2017. The company then moved on to hire cyber crypt to work on its development of the Hash technology which was going to contribute on its maturity. This was marked as the beginning of a new cryptocurrency.
Each user of the currency before completion of any transaction has to validate two other transactions that are randomly selected. A transaction must accumulate a substantial amount of validation in order for it to be marked as completed by the recipient. The cryptocurrency is less likely to succumb to brute force attack by a Quantum computer.
IOTA, however, uses a central administrator known as Coordinator which confirms all transactions. The developers say that the coordinator is only a temporary solution until the cryptocurrency reaches a sufficiently large capacity. Without the Coordinator, the developers say that the currency is not as safe as it should be. But with a larger size of users, the security will be beefed up since transaction will be validated by a larger group of users.
Well, since the cryptocurrency does not rely on mining, it uses a different beast all together; Tangle. This technology differs from the normal blockchain routine in several ways. The new tech employs ledgers which store transactions in the tangle system. The transactions are connected via edges which are a representation of the so far valid transactions in the network.
The overall routine is you must validate two other transactions before your transaction is validated. This essentially makes every user in the system a miner which is a different routine as compared to the Bitcoin mining system. The hashing used at this network as a proof of work is known as Hash-cash which allows connecting to any device.
Through the use of this technology, different machine will be able to communicate with each other and also transact. Houses could pay for their electric bills and cars could pay for their fuel bills as well. The limitation here is only your imagination.
Due to the set up of the Tangle technology, the scalability of this cryptocurrency is almost infinite. In addition, the tangle technology is much faster as compared to the blockchain technology. This is because as the number of users increase, the validation of transactions also increases.
The Tangle also has made the reality of ‘micro transactions’ come true. Since each user validates two transactions before transacting, it removes the charges for transacting in the network. Moreover, the tangle network allows free transactions with other networks.
IOTA Use Case
To make you understand better this cryptocurrency’s technology I will use a case study. Imagine a teacher comes to class and asks for your individual home work. He then goes to his office and goes through the entire work on his own. In this case, the teacher is considered a miner while the assignments are considered as the transactions. The pupils are the parties involved in the transactions.
In the case of the tangle system, instead of the teacher doing all the hard work, he makes each of the pupils validate the work themselves. In addition, each individual is required to validate two different home works meaning there are some of the pupils who won’t have something to do. This advantage ensures that even with few users transacting, the system still stays alive. I hope with the above description you now have a better understanding of IOTA.
In conclusion, the IOTA platform has introduced a new player in the cryptocurrency market. With the IOTA, developers are able to create new ideas. The most luring thing is that it has no transaction charges like other platforms. The best part is that it has a very secure network and also authenticates channels within the system which can be built in the Tangle protocol.
Well, even with all the advantages, this cryptocurrency still has a long way to go and more critics to disapprove. In case you are planning to invest in cryptocurrencies, you need to do some research as well as stay updated about the current events and different market prices. This is because of frauds and scams from different platforms. Take you time to find the right place to invest. In addition, always be prepared because the market is volatile and anything can happen.