Proof of Work - transaction generators will be spending money on electricity and chips (requires IOT device to have a work chip on it) which could be saved if only PoS security is at work
Dec 31, 2014
It is the first open-source distributed ledger that is being built to power the future of the Internet of Things with feeless microtransactions and data integrity for machines.
David Sønstebø, Dominik Schiener
No transaction fees, Primed for scalability, Has a huge slack user base to answer various questions, With great funds to empower research and development, Quantum-proof
IOTA is an open-source distributed ledger protocol launched in 2015 which goes 'beyond Blockchain' through its core invention of the block-less ‘Tangle’. The IOTA Tangle is a quantum-resistant Directed Acyclic Graph (DAG), whose digital currency 'IOTA' has a fixed money supply with zero inflationary cost. IOTA also aims to establish itself as the fuel for efficient machine-to-machine (M2M) transactions.
In the Tangle, every single transaction forms a new block and is essentially verified by itself. This means that in order to conduct a successful transaction, you first have to verify two randomly chosen transactions in the network. This is accomplished with the help of a very simple version of proof-of-work. Because of this, one could argue that transactions are not really zero-cost. But, the transaction costs are essentially non-existent, as the needed PoW is so low that every single device is able to independently carry it out. IOTA, via the use of subtangles, can carry out offline transactions. These subtangles reattach to the main Tangle at a later time when the node comes back online. This property offers great promises for applications in supply chain or other industries, as nodes don't always have to be online over the whole process.
It was created by David Sřnstebř as the founder and has Dominik Schiener, Sergey Ivancheglo, and Prof. Serguei Popov as Co-Founders. Since it is no Blockchain, here are the things that make it different from other cryptocurrencies:
IOTA has no mining, no blocks, and no difficulty
IOTA has no transaction fees
IOTA scales almost infinitely, unlike Blockchains
IOTA is not solely made as a currency but as an interoperability protocol that solves the problems of the Internet of things
IOTA wants to enable the machine economy
IOTA uniquely offers zero-fee transactions and no fixed limit on how many transactions can be confirmed per second. Scaling limitations have been removed since throughput grows in conjunction with activity; the more activity, the more transactions can be processed & the faster the network. Further, unlike Blockchain architecture, IOTA has no separation between users and validators (miners/stalkers); rather, validation is an intrinsic property of using the ledger, thus avoiding centralization.
IOTA is focused on being useful for the emerging machine-to-machine (m2m) economy of the Internet-of-Things (IoT), data integrity, micro-/nano- payments, and other applications where a scalable decentralized system is warranted. As every new transaction verifies two new transactions in the network, scalability rises with adoption. The network could become indefinitely scalable once more and more people send transactions. IOTA offered an Initial Coin Offering (ICO) where approximately 1337 Bitcoin were invested. Note that the currency IOTA is a very small unit that is why you normally see MIOTAs especially when buying. 1 MIOTA is equaled to 1 000 000 IOTAs.
All 2,779,530,283,277,761 IOTAs have been created right from the start in the Genesis transaction. Simply, all IOTA tokens are pre-mined, so it means that no mining is needed and no new coins are added to the system. The IOTAs have been distributed among the shareholders. Not only external investors but also the founders and developers had to invest with their private money.
All IOTAs are distributed and part of the markets (except the unclaimed from a few ICO investors). Sometime last year, the IOTA Foundation was announced and since then, it grew in numbers and expertise. The IOTA Foundation has the four co-founders as members and this Foundation is registered as an NGO in Germany.
To understand what IOTA really means, you have to look at the use-cases that are in development and the technical limitations seen this time and expect in the future.
The Internet of Things, the Internet of Everything is, as parts of the 4th industrial revolution and uncharted areas, promise lots of possibilities. But due to the mentioned limitations, uncertainties are also seen. A global network, with connections into vital infrastructures, is boon and bane. Emerging markets, exponential growth, and progress are not that only ones that were seen, but also insecure terrain.
IOTA as a data and settlement layer is able to create a system that relies on decentralization, data actuality, and tamper-proof algorithms.
How to Buy
For now, the only way to buy IOTA is to first purchase Bitcoins, then look for an online Exchange, a reputable one with proven track record to swap it, like Bitfinex. There are a number of Exchanges that allows for such transactions.
Using Exchanges like Bitfinex is simple. Just go to its site then open an account. Deposit BTC or USD to fund your account. You can then head over and start buying IOTA. Just place your order and fill the necessary notes. After acquiring the desired amount of IOTA, it is recommended to move your funds to your secured wallet.
In order to trade with IOTA, you will have to make use of an Exchange that is meant specifically for that. The reason you only have this option, for now, is that not all merchants are ready to start accepting it as means of payment, although there are some investment holding companies that allow for this transactions.
Here are three reputable exchange websites that can help you trade your IOTA holdings for goods and services.
There are two types of wallets for IOTA where you can run as a full or as a light node. The IOTA Light Wallet and Full Node GUI wallet is one and can be switched with a simple "toggle" action between the two. The Light Wallet is the simplest and fastest way to get an IOTA wallet. Identical to the Light Wallet is running a Full Node with the GUI.
Pros & Cons
- No transaction fees
- Primed for scalability
- Has a huge slack user base to answer various questions
- With great funds to empower research and development
- Proof of Work - transaction generators will be spending money on electricity and chips (requires IOT device to have a work chip on it) which could be saved if only PoS security is at work