What is IOTA? IOTA is a revolutionary new, next generation public distributed ledger that utilizes a novel invention, called a “Tangle”, at its core. The Tangle is a new data structure based on a Directed Acyclic Graph. As such it has no Blocks, no Chain and also no Miners. Because of this radical new architecture, things in IOTA work quite differently compared to other Blockchains.
The major difference that is worth mentioning (apart from the DAG vs. Blockchain) is how IOTA achieves consensus and how transactions are made. As mentioned previously, there are no miners. What this means is that each participant in the network that wants to make a transaction has to actively participate in the consensus of the network by approving 2 past transactions. This attestation on the validity of two past transactions ensures that the whole network achieves consensus on the current state of approved transactions, and it enables a variety of unique features that are only seen in IOTA.
IOTA is the missing puzzle piece for the Machine Economy to fully emerge and reach its desired potential. We envision IOTA to be the public, permissionless backbone for the Internet of Things that enables true interoperability between all devices.
IOTA has a range of features that are uniquely enabled due to its architecture:
- Scalability: IOTA can achieve high transaction throughput thanks to parallelized validation of transactions with no limit as to the number of transactions that can be confirmed in a certain interval - No Transaction Fees: IOTA has no transaction fees. - Decentralization: IOTA has no miners. Every participant in the network that is making a transaction, actively participates in the consensus. As such, IOTA is more decentralized than any Blockchain. - Quantum-immunity: IOTA utilized a newly designed trinary hash function called Curl, which is quantum immune (Winternitz signatures)
According to consultancy firm Bain, the IoT market is expected to be worth $470 billion by 2020. Through IOTA Foundation, the German nonprofit behind the cryptocurrency, IOTA is an early mover in this space. It has already partnered with companies which will play a leading role in IoT, such as Cisco Systems Inc. (CSCO) and Samsung Electronics Ltd. (SSNLF), to create a data marketplace that can be monetized later. IOTA has also partnered with Innogy, an energy company.