IOTA cryptocurrency: what is it?

The Internet of Things application is generally referred to as IOTA. It facilitates the transfer of money on the Internet, and they claim that “Tangle” is a more efficient and faster alternative to the typical blockchain used in cryptocurrencies.

The blockchain pertains to the block rather than the “Tangle” pertains to the web. Blockchain technology adds blocks to the chain after each successful transaction, but the “Tangle” transaction takes place once individuals confirm the transaction online at IOTA. This is similar to the Ripple cryptocurrency.

IOTA’s history

Serguei Popov, David Sontesbo, Sergey Ivancheglo, and Dominik Schiener created and announced it in October 2015. On June 11, 2016, the project was launched. The main goal of the project is to make an Internet payment system that is cheaper, easier, and faster. Since the launch of IOTA, it has been managed by the IOTA Foundation, which is located in Germany.

IOTA’s workings

You may already be aware that it is not a blockchain-based project like Bitcoin, Litecoin, Dogecoin, Ethereum, etc. It is based on Tangle, also known as an Acyclic Graph, in which all nodes are connected to two other nodes. Please refer to the image below for more information. Considering IOTA does not have any blocks or chains, this means that there are no miners as well, as it is based on new technology. Therefore, it differs greatly from Blockchain technology.

The consensus mechanism is used to verify and complete a transaction if there are no miners present. Consequently, every participant in the network who wishes to make a transaction must approve two prior transactions in order to participate in the network’s consent process.

What are the advantages and disadvantages of IOTA?

Advantages

• There are no transaction fees
• Scalability without limit
• Data can be processed in any format, not just financial transactions
• Aims to achieve instant transactions
• It is not possible to mine
• Contributions by both parties
• A quantum-resistant material

The disadvantages

• The product is not yet finished
• There is no clear timeline for the completion of the project
• Lots of technical bugs and flaws have been encountered
• Utilizing a centralized coordinator at present
• Many (including MIT) believe it has a very weak security system

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