With Blockchain related technologies crawling into every inch of our modern space, new innovations in this space is not rare. One such interesting technology that has it’s roots from both Blockchain and IoT (Internet of Things) is IOTA — the new kid on the cryptocurrency block.
So what makes IOTA unique? Will it survive the gang-war amongst the existing thugs on the street? Would it be able to achieve widespread adoption or just slowly die out? Let’s look into it.
IOTA is designed as a new open-source distributed ledger specifically designed for Machine to Machine interactions on Internet of Things. By using DAG or Directed Acyclic Graph, IOTA is not actually based on Blockchain but rather on Tangle.
Tangle is very similar to Blockchain and relies on a peer-to-peer networking model with the same validation mechanism. In IOTA, there are no “blocks”, but each transaction references and verifies the past two transactions. Thus, the entire network of devices on the IOTA network is responsible for each transaction.
Since IOTA consensus is achieved without the help of miners, the transaction fees on IOTA is zero. Yes, zero indeed. This means if you wanted to tip your favourite store abroad for a couple of dollars (or even cents), the entire amount would be credited as it is. This is such a far-cry from Bitcoin transactions where one has to shell out a variable transaction fee, depending on the current number of pending transactions. IOTA makes nano transactions possible.
Also, as consensus is parallelised and not done in sequential intervals of batches as in blockchain, the network is able to scale dynamically as with the number of transactions made, i.e. more the transactions are, the more secure and efficient the network will be.
Recent tests have shown IOTA to handle around 180 transactions per second effectively, which is pretty impressive considering how new the technology is.
Any new entrant into the domain of cryptocurrencies will have a tough time competing with the existing players. IOTA seems to have some trading limitations with regards to the lack of available platforms to trade in with IOTA. At the time of writing Bitfinex is the only major exchange allowing IOTA trading with USD, BTC and ETH. This is possibly because of the difficulty involving integrating IOTA network module into the exchange backend.
Users are also finding it difficult to hold IOTA due to the lack of available wallets and possibly confusing terminologies that prevent an average user from using the official IOTA wallet. Let’s hope such issues will be looked into as IOTA starts to get its dose of mainstream adoption. Interestingly, a noob-friendly GUI interface is in the development according to devs on Reddit.
Note that IOTA was distributed as an ICO in early 2015 and zero tokens were reserved for developers and founders. The IOTA Foundation based in Berlin, Germany is a non-profit foundation built to develop IOTA and all the technologies alongside. The project is currently aimed more towards developers and is definitely one of the most innovative projects around.
You can follow more about the cryptocurrency IOTA on the official Slack channel. Keep an eye out for the scams on Slack.