IOTA (cryptocurrency)

IOTA is a distributed ledger technology based on a data structure called the "tangle". The tangle retains similarities to blockchain while removing the block structure in favor of a directed acyclic graph structure. There are no specialized miners in the network. Every user who generates a transaction on the network must do a small amount of proof-of-work to validate two other transactions. This enables a zero transaction fee model in which the only cost paid by users is the proof-of-work needed to validate two transactions per transaction initiated.

The smallest indivisible unit of currency is called an IOTA. There is a fixed supply of 2,779,530,283,277,761 IOTAs in existence.

Introduction to IOTA.

The IOTA token sale took place from November 25, 2015 to December 21, 2015.

IOTA runs a centralized close source Coordinator as announced in their blog post on transparency. The purpose of the coordinator is to provide a milestone checkpoint to resist against attacks on the network while it the network is young. The coordinator has been a source of discussion on decentralization for young distributed ledgers.

Neha Narula, Director of the Digital Currency Initiative at the MIT Media Lab, along with colleagues posted an investigation into cryptographic vulnerabilities in IOTA. Contact with the Neha Narula prior to this blog post inspired IOTA to temporarily switch from a cryptographic function of their own design known as Curl to the more standard Keccak (SHA-3). IOTA's Sergey Ivancheglo posted a response to the investigation suggesting the vulnerability was previously known and intentionally included as a copy protection mechanism. This inspired debate from various members of the cryptocurrency community including a constructive criticism from Vitalik Buterin and other members of the Ethereum community.

Bitfinex was the first major exchange to list the IOTA token on June 13, 2017. At the time of listing IOTA market cap was valued at over one billion dollars among the highest public listing price at the time.

The IOTA team claims the tangle architecture allows for infinite scaling whereby speed is limited by the amount of transactions on the network. IOTA is written in ternary rather than traditional binary.

Consensus on validity of blocks is reached in a probabilistic way.

IOTA has four co-founders, and their names are Sergey Ivancheglo, Serguei Popov, David Sønstebø and Dominik Schiener.

According to the IOTA Foundation, the initiative has rapidly grown since then — and team members are now based across more than 25 countries.

Sonstebo and Schiener are collectively co-chairmen of the board of directors, while Popov is a board member and the foundation’s director of research.

Ivancheglo resigned from the Berlin-based project back in June 2019 but continues as an unofficial advisor. At the time, he said in a statement: “I no longer believe that the IOTA Foundation is the best setting for me to realize what we set out to create back in 2014 and 2015. I have always done my best work in a less rigid environment. I am looking forward to continuing the work on both hardware and software development of IOTA independently.”

Well, as we alluded to a little earlier, the fact that it’s effectively a blockchainless blockchain is rather unusual to say the least. IOTA's key innovation is Tangle, a system of nodes used for confirming transactions. IOTA claims that Tangle is faster and more efficient than typical blockchains used in cryptocurrencies.

Tangle’s more technical name is the Directed Acyclic Graph — and as Sønstebø explained in a blog post back in 2015, this technology aims to retain blockchain’s ability to execute secure transactions. The only difference is that it does away with the notion of blocks.

He also wrote: “IOTA should not be considered an alternative coin (altcoin) to existing cryptocurrencies such as Bitcoin, rather it is an extension of the growing blockchain ecosystem. It’s meant to work in synergy with these other platforms to form cohesion and symbiotic relationships. IOTA is designed to provide one solution that no other crypto does: efficient, secure, lightweight, real-time micro-transactions without fees.”

New transactions are validated by approving two previous transactions from another node — and this is a novel approach because it means that the network’s size and speed will be directly related to how many people are using the platform.

And whereas some cryptocurrencies are run as a business, the IOTA Foundation says it is firmly not for profit — adding that it has the sole goal of making the network as prosperous as possible.

Finally, IOTA has distinguished itself from many other crypto rivals by establishing high-profile partnerships with the carmaker Volkswagen, and helping the city of Taipei to pursue smart projects.