The cryptocurrency revolution which started about two years ago during the latter part of 2017, seems to be in full flow in 2019, with more than 2000 active cryptocurrency projects in existence. They are developed for a variety of different use cases, apart from the usual currency use case that is associated with currencies such as Bitcoin and Ripple.
Among the numerous projects that have experienced growth, both in terms of usage as well as technological implementation, IOTA is one of them – which is also the focus of this article.
IOTA is described as an open source cryptocurrency, one having a distributed ledger which primarily focuses on providing secure communication and payments between devices on the internet of things (IoT). For those of us who are not aware of the term “internet of things”, it basically refers to the collection of interconnected devices, encompassing several technologies, focusing on Addressability., communication, identification and a host of other functions.
Supervised by the IOTA Foundation, which is a non-profit organization developing unpatented technological updates for developers to use for free. The company has already established big partnerships with Volkswagen and Innogy for implementation in the vehicle charging networks. It is also involved in projects such as Deutsche Telekom, Microsoft and Fujitsu among others.
At the time of writing (07/06/2019), IOTA tokens are valued at $0.429291 USD with a total market cap of $1,193,228,337 USD and a total supply of 2,779,530,283 MIOTA Tokens. It is currently trading in more than 47 markets across major exchanges such as Huobi Korea, Coinmex, Bitfinex and Binance.
What is IOTA’s Tangle and How does It Work?
IOTA has always been ahead of the competition by a long margin, which is most evident in the latest IOTA offering, the Tangle. The Tangle, which is described as one of the main driving forces behind the IOTA ecosystem, was first mentioned in the IOTA whitepaper and has finally come into fruition. Thus, in the simplest possible terms, the IOTA tangle refers to a stream of interlinked as well as individual transactions, which are in-turn, distributed and stored among a large network of participants.
One of the first things that catches the eye is the fact that Tangle doesn’t use a blockchain, using a Directed acyclic graph, or DAG to store its ledger, with a keen focus on scale-ability. The main motivation behind this change was the blockchain’s transaction limit, with the DAG offering a significantly faster throughput.
What is a DAG?
DAGs is like a blockchain network, only with vertices representing transactions and edges representing approvals. Thus, a new vertex is added every time a new transaction is recorded.
Even though DAGs and Blockchains have some similarities, DAGs have a considerable advantage over the former in terms of scalability. IOTA’s Tangle taps into this potential as well as using the Winternitz Signature Hash based cryptography instead of the usual Elliptic Cure Cryptography (ECC) cryptography.
How Is IOTA Planning to Shape Our Future?
2018 saw great advances from the IOTA team, with the release of the Trinity mobile wallet being one of the highlights. Additionally, 2019 is no different, with improvements being made with scalability, performance, and security. As the IOTA ecosystem grows, the project is expected to provide significant advantages in sectors such as faster transaction rates, micropayment facilities, scalability as well as security.
- Faster Transaction Rates: With an expeditious transaction protocol, which is aided by the DAG, transactions rates are considerably faster than normal blockchain networks. This is because of the presence of Tangle, which allows different branches of the DAG to eventually merge, rendering more resources for transaction processing. This much faster transaction rates are not possible in most blockchains, where forks and side branches are discarded and wasted.
- Micro-Payments: Micropayments have become a key part of modern economics and should always be tracked. However, this is difficult in normal blockchain networks where the transaction fee is usually set by the initiator. By using IOTA’s Tangle network, small payments can be made in exchange for negligible transaction fees.
- Improved Scalability: IOTA’s Tangle network facilitates faster transactions with the time between recording a transaction and validating it is nearly zero. As the number of transactions and subscribers increase, the process becomes more efficient.
- No Miners: IOTA has eliminated the need for miners, which eliminate conflicts of interest in the network as there are no incentives to slow down the network.
While the IOTA Foundation is a relatively newer organization, the IOTA project has already overtaken many of its competitors. While 2018 was the year of advancements in bootstrapping and creating a solid fundamental, 2019 is focused more on scale-ability, with the future looking bright for the remainder of the year.
If you enjoyed reading this post consider following the blog for more updates on the market!