IOTA IOTA

About IOTA

Founded in 2015 by four programmers who are still in charge of it today, IOTA is a type of cryptocurrency that enables payments and data exchanges between appliances and machines on the internet. For example, in the future, IOTA could be used by your TV to renew your Netflix subscriptions, or by your fridge to buy new food when you’ve run out.

IOTA has been specifically designed for the next generation of the digital revolution, known as the Internet of Everything. Here, data, value and information are expected to pass between humans and machines without friction. The only way this can be achieved is through a reliable means of communication between humans, devices and machines with a strong networking system allowing for secure transfers. IOTA is attempting to be that system.

• It doesn’t have a blockchain, meaning there are no miners. Instead, IOTA uses a decentralised distributed ledger that allows users to validate previous transactions
• IOTA’s data is tamper proof
• There are no transaction fees for IOTA
• IOTA denotes its own cryptocurrency token
• You can store your IOTA in either a hardware or software wallet

How does IOTA work?

Unlike other cryptocurrency, IOTA doesn’t use the common blockchain design that we’re so used to. In fact, its makers have created a brand-new platform called Tangle. This uses Directed Acyclic Graphs (DAG) which is a bespoke mathematical formula. For a transaction to go through, each branch in the DAG Tangle must approve two other transactions.

Not only does this help to remove any potential bottlenecks in the transaction process, it means that the growth and speed of the network relates to the number of users.

While other bitcoins also use DAG, they don’t have the same system as IOTA. In IOTA, transactions don’t have to follow a sequence and can be processed simultaneously. As more branches are added, the system becomes more efficient and secure too.

Transactions are verified by a simple Proof of Work puzzle. This means there’s no need for transaction fees and also takes less power and resources to work. Whether you’re sending $1 million or 50 cents, there are no fees on the Tangle network.

Once verified, it’s also impossible for the IOTA system to go back and make any changes to the transaction. This is because IOTA uses a non-sequential distributed ledger. Plus, the more traffic the network has, the more secure it becomes. IOTA also uses cryptographic encryption for all activity to ensure your data is as secure as possible, at all times.

IOTA’s aim isn’t to become a currency replacement. Instead, it wants to establish a network of devices and machines that can communicate with each other, and make our lives easier.

Transactions involving items with sensors — like a barcode — can be simplified with IOTA. For example, the idea is that you would be able to scan an empty bread wrapper and have a fresh item delivered to your door, paying for it with IOTA funds. This would not be possible with other bitcoin due to network delays and high transactional costs.

The project that IOTA has in mind has many moving parts and is supervised by two major divisions. The IOTA Foundations is responsible for establishing and maintaining lasting partnerships whilst providing the right support to token holders, developers, entrepreneurs and stakeholders. It also focuses on the Ecosystem Development Fund which sends financial support to the IOTA developer community. As an open-source project, IOTA Technologies is responsible for giving technical support and advice necessary to the development of Tangle.

IOTA also has a strong foundation made up of software developers and the four founding programmers. This team plays a crucial role in IOTA’s project for the future.

The benefits of IOTA

• No fees
• Tangle allows for faster transactions with shorter wait times for verification
• Processing transactions doesn’t require lots of power, equipment or time
• You can send anything with value using IOTA — this includes data and information
• As a decentralised platform, there is no central authority that has control over IOTA transactions

IOTA price history

Over the past few years, IOTA’s valuation has spiked a lot. It’s believed that a strong partnership strategy has caused this. Some of the companies IOTA has partnered with recently include Samsung Electronics Ltd, Innogy, Volkswagen and Cisco Systems Inc. Together, these collaborations will see these companies establish a data marketplace that can be monetised in the future.

These partnerships are expected to raise awareness and popularity of IOTA and its platform. These companies will also help to test IOTA’s technology once development is complete and will be crucial to the project’s success. If it works, this will be key to IOTA’s overall growth, and its value.

Another important collaboration that positively impacted its value was IOTA’s partnership with Taipei’s government. Here, the citizens of Taipei were given Tangle ID cards which they could use to carry out digital transactions, exchanging information and data as and when required.

What affects the price of IOTA?

Ultimately, it may be a while before these sensored and automatic machines become a reality and this will have an impact on IOTA. While the idea of an automated world might be a good one, it takes a lot of time and effort to get it right. This is something which IOTA is only just beginning to realise.

For example, a security problem within Tangle was uncovered by the MIT Media Lab. It was found that the hash function, Curl, actually created multiple hashes with the same input. This meant that signatures could be forged on IOTA payments, putting traders and their data at risk.

Of course, another factor that affects its value is its popularity. IOTA still has a way to go in terms of being accepted, especially when you compare it to the likes of Bitcoin. Many places do accept IOTA but it’s not as widely available as others. As well as this, if other big companies, like Amazon, begin to create their own cryptocurrencies that relate to data sharing, the valuation of IOTA may be hit in the future.

The cryptocurrency space has long suffered with high transaction costs and issues regarding scalability, but IOTA has brought a solution to the forefront. While Tangle doesn’t require miners or blocks to get things done, the success of IOTA ultimately depends on the success of the Internet of Things. Unfortunately, we don’t have an answer of what this will look like in the future, and only time will tell.

Whether you decide to invest in IOTA or not, it’s crucially important that you take trading and cryptocurrency seriously. This is because the market is unpredictable and price fluctuations are common. Only invest in a figure that wouldn’t drastically impact your finances and lifestyle if you were to lose, and make sure you’ve done your research before investing in anything new. It’s also wise to remain up to date with the latest market and cryptocurrency developments as well as keeping your investments diverse across different stocks and assets.

If you have any questions about IOTA or cryptocurrency, our friendly team is always here to help. For more information on IOTA’s price, visit our price comparison here.