IOTA – Addressing The Downfalls Of The Blockchain

IOTA is an open-source cryptocurrency that throws the focus on offering safe communications and ensuring secure payments between devices on the IoT. Its main goal is to set the grounds for a fully sustainable ecosystem that enables the creation and growth of open source technologies. It relies on the directed acyclic graph technology which validates node transactions via consensus funding. No blockchain is used in the process, since the main purpose of the creation of IOTA was to address the downfalls of the blockchain technology.

 

IOTA transactions are free indifferent of their size; they are also speedy and the system can handle an unlimited number of simultaneous transactions. IOTA is overseen by the IOTA Foundation, which is a non-profit organization that strives to constantly grow and maintain the technology in its license-free form.

Who Created IOTA?

IOTA was founded by David Sonstebo, Dominik Schiener, Serguei Popov and Sergey Ivancheglo in 2015. The IOTA Foundation has worked together with Volkswagen and Innogy in order to create CarPass. This is a special technology that offers safe automotive charging networks, along with audit trails and digital identities via IOTA. But the collaborations did not stop here. The Foundation has also worked together with Samsung, Microsoft, Deutsche Telekom and Fujitsu to open up a data marketplace that relies on its technology. Moreover, the non-profit organization has contributed to the creation of the Trusted IOT Alliance, together with Cisco and Bosch, to name just a couple of the giants that are also part of it.

 

In 2017, the Foundation started a collaboration with REFUNITE, the largest database of missing persons on the planet. The purpose was to use the new technology to bring families back together during a conflict. The Flash Network was also activated, enabling fast speed and instant nano payments. This happened prior to Bitcoin and Ethereum got a chance to launch their own versions. A UK based cleaning company made it public that they would accept IOTA as a payment. Sopra Steria also expressed their willingness to partner up with IOTA in order to improve intra-device security.

 

Bitfinex Outlier Ventures invested a seven-figure sum into IOTA, and this was their very first investment into a distributed ledger technology.

 

The Foundation has a $100 million fund that can be used in order to promote the use of IOTA. The funds are received via tokens distributed to those companies that have chosen to build their technology with the help of IOTA. The fund does not support start-ups.

 

IOTA’S Technological Characteristics

Tangle is the name of the data structure that relies on the Direct Acyclic Graph; it does not require any miners or data blocks. Any network member who wishes to perform a transaction has to become an active participant in the network consensus. This is done by having two former transactions approved and it should be regarded as an attestation of validity. The more individuals adopt the IOTA model and complete transactions on it, its scalability will continue to expand. A transaction that has been sent has to accumulate a satisfying level of verification so that its recipient can confirm it. IOTA has just one administrator – referred to as the Coordinator – responsible for confirming all transactions. When the network reaches a satisfyingly large size, the Coordinator will be removed from it.

Approved participants will enjoy the unique IOTA functions, high transaction capacity with no limits on the number, zero transaction commissions, as well as a higher degree of decentralization compared to the blockchain. Higher levels of security are also to be expected along with the rest of the advantages of using IOTA.

All IOTA coins were released as soon as they were created, and no new IOTA coins can ever be mined. This also means that there is lots of room for new developments, since all the tokens that will ever part of the network are already present on the market. There are zero risks of any increased supply causing inflation. In other words, the only way direction IOTA can follow is an ascending one.

Since there are no miners, IOTA has no processing or transaction verification fees specific to other altcoins.

The Data Marketplace

IOTA has also developed a public marketplace that can be found here https://data.iota.org/. The marketplace is used for data that is generated by sensors from third parties. The main goal is to properly monetize the market for 2.5 quintillion bytes of data created every day and growing by the minute. The project attracted the interest of more than 20 international organizations in all parts of the world. This means that regular netizens will be allowed to sell their data on the marketplace.

What Are Flash Channels?

IOTA allows users to benefit from the advantages of instant, high throughput, bi-directional payment channels that are not on the Tangle. Parties can complete transactions at incredibly high speed while eliminating the need to wait for the regular confirmation. Whenever a new channel is made, each of the parties involved deposits the same amount of IOTA into an address with multiple signatures that will be managed by everyone involved. After every deposit is confirmed, the channel no longer needs to keep in touch with the network until it is time to close it. At the end of each transaction, the final balances are published to the IOTA network. This is a highly useful approach that can dramatically cut the large number of regular transactions (usually, a few thousands) down to only two.

One practical example is that of issuing a payment for someone who wants to charge a smartphone via the wireless technology in a coffee shop. If both the phone and the shop would open a IOTA Flash Channel, the payments would be completed from the smart device to the coffee shop. When the charge would be completed, the channel would be closed and the payment would be recorded on the Tangle. It’s that simple.  

The Official IOTA Wallet

This waller can be downloaded from GitHub and it asks users to generate their own private keys also referred to as keys.

IOTA can be traded for fiat currencies, Bitcoin, and Ether. You can use numerous online exchanges to complete your trade, including Bitfinex, CoinSpot, Binance, or Exrates.

At the time this article was written, the IOTA was worth $0.53 and it has a market cap of $1,497,902,378 USD, or the equivalent of 222,560 BTC.

What The Future Holds

IOTA plans on allowing companies to introduce new business-to-business models, in an attempt to turn all technological resources into potential services that can be sold in real time and with zero charges on open markets. The Tangle will be used to create safe and fully authenticated communication channels between different devices.

Physical resources tied to the IOTA network will be available for rental in the near future. This includes, but it is not limited to equipment, data storage volumes, and computer capacities.

Tangle is also getting ready for new opportunities for secure data transfers to eGovernance; electronic voting is a hot topic under discussion, and there are already a few companies that have initiated their research on the topic.

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