IOTA is a distributed ledger platform based on directed acyclic graph (DAG) technology called Tangle. This validates node transactions through consensus finding without the typical blockchain.
Tangle aims to solve the scalability and transaction fee problems associated with Bitcoin and other cryptocurrencies by asking the sender to perform a kind of proof-of-work, which approves two transactions. Because the act of making and validating transactions are coupled, this removes dedicated miners and makes the system fully decentralised.
Those making transactions are the only ones who can affect the system. With other cryptocurrencies, miners are not ‘using’ the system and simply enable it to operate.
Non-profit organisation the IOTA Foundation is dedicated to building sustainable ecosystems around IOTA to accelerate its development and commercial adoption as an open-source technology.
IOTA strengths and attributes
IOTA’s Tangle ledgers can settle transactions with zero fees, allowing devices to trade exact amounts of resources on-demand. This technology also facilitates:
- Data transfer – Secure and authenticated communication channels can be established between devices. All data transferred though IOTA is fully authenticated and tamper-proof, making attacks impossible.
- Voting – Although uniquely suited for the Internet-of-Things, Tangle’s unique strengths can also be utilised for secure data transmission including eGovernance and eVoting. This is already being explored by several companies and academics.
- Masked messaging – Devices can transmit valuable and sensitive data with quantum-proof security through the Tangle. MAM, the first extensible module of the IOTA core, makes it possible to share data with multiple parties easily.
- Everything as a service – Everything from household appliances to computer storage could be turned into leasing-services similar to how Uber and Airbnb work in today’s gig economy.
- Micro-transactions – It’s unique Tangle architecture nurtures brand new business opportunities for companies, which were previously restricted by prohibitive fees for micro and nano-transactions.
- Scalable ledgers – IOTA believes that the distributed ledger revolution has only just begun and the vast majority of use cases for Tangle have not yet been thought of.
Price and volatility
The IOTA network went live in 2016 having raised 1,300 Bitcoins during a crowdfunding event in 2015. Since then, IOTA has seen more than thirty companies join its marketplace, including Cisco, Volkswagen, Microsoft, Huawei, and Samsung.
In July 2017, researchers found a critical vulnerability in it’s Curl hash function, which allowed them to forge signatures. As a result, it replaced the hash function with a version of SHA-3 named Kerl.
Some people have criticised IOTA’s partially centralised node infrastructure for security reasons. However, they have responded by saying that the mentioned hash function was not intended for cryptographic means and that the current node network will be adjusted once enough nodes come online.
IOTA’s token value was over US$5.50 in mid-December, but just like several other currencies, it began a long and slow correction during January to around US$2.40. According to David Sønstebø, founder and head of the IOTA project, coin value is not top priority though.
“We don’t want to remain in the crypto realm—we want to mature out of that and actually create something for the real world,” he told Finance Magnates.