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What is IOTA? A Introduction into IOTA
Feb 4, 2022
While it used to be quite difficult to get hold of IOTA, these days are finally over, which is why we’re bringing you this guide to show you how to buy IOTA using US dollars or euros with ease.
What is IOTA?
IOTA is a cryptocurrency founded in 2015 by a team of four programmers who are still in charge of its development to date.
IOTA stands for Internet of Things Application and is a type of cryptocurrency technology that facilitates payments between machines and appliances that are connected to the internet. In a future not so far away, IOTA could be the system that allows your TV to pay for its own subscription, or for your fridge to order supplies as soon as they run out.
What's special about IOTA?
IOTA was designed to address the issues of scalability and high transaction fees that came along with a blockchain. The technology eliminates both, the block and the chain.
As a result, IOTA has no need for miners, but instead uses what is known as a directed acyclic graph (DAG), popularly known as the “Tangle”, where its users verify each others’ transactions.
When a user submits any record of transaction on the IOTA ledger, their device will first verify two previous transactions before processing that one. Think of it like holding a door open for two people behind you to pass, before someone else holds the door for you.
In such a method of verification, there is no need for a central ledger or miners to power the network. Moreover, computing power in the Tangle expands as the size of the network grows. As a result, IOTA promises free and fast transactions even as the network grows. In fact, IOTA is able to process 1000 transactions per second.
IOTA’s fee-less transactions and its ability to run on devices with simple processors makes it viable to achieve its long-term goal: that is, to be the currency of the Internet of Things.
With the roll-out of 5G technology in the near future, all our devices will be able to connect to the internet. At this stage, machines will need to make all kinds of transactions between each other, and IOTA promises to bridge this gap rather gracefully.
Current concerns and weaknesses of IOTA
However, various cryptocurrency experts have raised doubts on the practicality of IOTA as a platform. They argue that it is unlikely for the system to be flawless considering the number of new technologies the system is trying to implement at the same time.
In simple terms, some people are concerned that the technologies behind IOTA have not been put under enough scrutiny to establish how they will perform at scale or how they would withstand attacks. This general lack of peer review is the biggest problem cited by IOTA’s critiques.
Furthermore, since IOTA is one of the younger cryptocurrency technologies and still under heavy development, there may be software and security flaws. For instance, researchers at MIT and Boston University uncovered a crucial security in IOTAs hash function back in 2017. Even though this issue has been resolved, there is no 100% guarantee that your funds are secure. This is important to remember whenever you invest in any cryptocurrency.
Reasons to buy IOTA
Unlike other cryptocurrencies, IOTA offers a unique architecture and value proposition. Therefore, investors looking to own a varied portfolio, or those just seeking to be at the center of exciting technological evolution, usually consider buying IOTA.
Before buying IOTA, however, it is crucial to ask yourself a few important questions regarding as to what you want to do with your coins. For instance, is this a one-time experiment or are you going to do so regularly? Secondly, are you buying IOTA for short term trading or are you investing for the long-term?
Answering these questions will guide you into making the right decisions when choosing which wallets to store your IOTA coins in as well as which exchanges and brokers to use.
How to buy IOTA
Being a rather new cryptocurrency, it used to be quite difficult to buy IOTA in the not so recent past. IOTA was almost exclusively listed on pure crypto exchanges that do not offer a fiat gateway to deposit US dollars or euros. As a result, you often had to go register an account with two different exchanges, one to buy Bitcoin using fiat currencies and one to buy IOTA using Bitcoin.
Gladly, this is no longer the case. Nowadays there are a number of marketplaces that enable you to buy IOTA directly. Just follow these four, simple steps to buy IOTA in no time:
- Choosing a cryptocurrency exchange
- Creating an account at a cryptocurrency exchange
- Buying IOTA using US dollars or euros
- Storing your IOTA securely
1. Choosing a cryptocurrency exchange
Choosing a digital currency exchange or broker can be a daunting process considering that there are hundreds of them. Factors to consider when choosing a cryptocurrency exchange or broker include:
- Security: the selected platform should have a good security track record and offer best-practice security features such as cold storage or two-factor authentication.
- Payment methods: the exchange service of your choice should ideally support your preferred payment methods (e.g. bank transfer, credit card payment, Skrill, etc.).
- Supported cryptocurrencies: the supported digital currencies across various exchanges varies widely. If you plan to buy several different cryptocurrencies beside IOTA, it makes sense to choose a platform that provides support for all of these.
- User experience: for the average digital currency investor, the user interface and functionalities of an exchange or broker service is crucial. An intuitive user interface enables you to be more informed and efficient with less chances of making errors.
- Fee structure and rates: transaction fees and fee structures vary widely and can range from 0.1% per transaction to up to 10% per transaction. Choosing a cryptocurrency exchange with low fees can save you money, but sometimes comes with trade-offs such as hard-to-use user interfaces or a very limited number of accepted payment methods.
- Trust: Last but not least, you should check if the marketplace is trustworthy. You can read reviews to get valuable experiences from other users.
How to use Cryptoradar to choose a cryptocurrency exchange
Cryptoradar helps you cut through the clutter by providing you a comprehensive yet compact overview of marketplaces that allow you to buy IOTA with US dollars or euros.
Currently, there are two cryptocurrency marketplaces listed for users paying in US dollars (BC Bitcoin, Bitfinex) and three for users paying in euros (Bitfinex, Bitpanda, Coinmerce).
By default, exchanges on Cryptoradar are sorted by price, which always gives you the cheapest option for buying cryptocurrencies. The listings also provide you a quick overview of important factors to consider, such as ease-of-use, verification times and fee structure.
To further narrow down the list, you can also use the filters in the sidebar. This way you can, for instance, filter exchanges based on your preferred payment methods or exclude exchanges with a bad rating.
2. Creating an account at an exchange
Creating an unverified account is easy. Simply enter your personal details on the signup form of the desired exchange. However, before being able to perform actual purchases, you’ll need to verify your account and this can be a bit more daunting. Depending on the exchange, the process will require you to either upload your identification documents (usually a copy of your passport and a recent utility bill as a proof of legal residence) or to start a video chat with a support agent who will verify your identity using above mentioned documents.
Hint: Look for exchanges offering instant verification via video-chat (such as Bitpanda) or requiring no verification at all to save time.
3. Buying IOTA using US dollars or euros
If your desired exchange is not supporting direct purchases, then another prerequisite is to deposit money on the exchange first. You can deposit money using instant payment methods (such as by credit cards or Skrill), or via a regular international bank transfer, which may take a day or two. Once your payment is received by the cryptocurrency marketplace, you can finally go ahead and buy IOTA. After jumping through these hoops, performing the actual purchase is actually the easiest part of the story. On most marketplaces it’s as easy as selecting the purchase amount (in US dollars or euros) and clicking the buy button.
4. Storing your IOTA securely
After finalising the purchase, your IOTA will be credited to your IOTA wallet on the exchange. Nevertheless, we strongly encourage you to store IOTA in your own wallet if you buy IOTA as a long-term investment for security reasons. Unfortunately, there are only very few wallets that support IOTA at this time.
From today’s point-of-view, we recommend the Trinity wallet to store IOTA. The Trinity wallet is a wallet provided directly by the IOTA Foundation. It is user-friendly and available as a beta version for desktops and mobile phones. To withdraw IOTA to your Trinity wallet, please follow the download and setup guide as well as the instructions on how to receive IOTA provided by the IOTA Foundation’s website.