IOTA is frequently referred to as the “third-generation” cryptocurrency because of how it operates, which is extremely unique. IOTA uses tangle technology, which is different from blockchain technology, which is the foundation of the majority of cryptocurrencies.
Like Bitcoin and Ethereum, IOTA is still a decentralized cryptocurrency today. Tangle technology has produced some spectacular outcomes nevertheless, as well as some unique qualities that other cryptocurrencies might not have.
What makes IOTA different?
IOTA has a few noteworthy attributes:
- It doesn’t need miners. Instead, a group of synchronized computers known as validators keeps account of value transfers. However, it might be stated that the energy and computing needs are so negligible that the costs are essentially nonexistent.
- It goes so quickly. A tangle data structure does not need to be organized linearly in order to be secure, unlike blockchains. IOTA gains versatility from this, as well as speed as a plus.
- It is extremely scaleable. Instead than making the network slower as more validators join, the validators keep the network moving.
- IOTA is a quick, scalable, and inexpensive network to use. As a result of tangling technology.
What’s a tangle?
You already know that cryptocurrencies like Bitcoin and others operate on a blockchain if you’ve read a little about them.
What is a blockchain?
Simply put, a blockchain is a chain made up of digital blocks. Every block keeps track of the exchanges that people have with one another. It must also be constructed in a linear manner, one block after another, because it is a chain. This indicates that the network can only handle a certain number of transactions per second.
But IOTA is totally different. Instead of a chain, it runs on a tangle. And as you can guess, this means that things don’t have to be in a specific sequence or structure.
Each block has the ability to link into any other block; it is not required to wait in line to become the following block in the chain.
The IOTA protocol, which mandates that each block verifies any two other blocks, is what causes the tangle. This implies that blocks may be added to the tangle in any sequence, and that they are valid as long as another block verifies them.
It also means that some of the tangle’s components may go offline for a while before linking back to the main tangle.
How can IOTA have almost no fee?
Blockchain network fees, which you must pay to have your transaction added to the blockchain, are common in cryptocurrencies.
Daily fees can vary, but they can also be fairly pricey. For instance, when the network is busy, Bitcoin transaction costs can reach up to $80.
The tangle invention for IOTA does away with the requirement for fees. Each block in the IOTA tangle verifies two other blocks, thus eliminating the need for mining. Rather of needing to pay someone (like a miner) to verify your transaction and add it to the chain, this technology does it for free.
What is IOTA good for?
We now know that IOTA is incredibly fast, able to process a large number of transactions concurrently, virtually fee-free, and extremely secure, ensuring that operations continue as usual even when nodes are down. Those are some rather potent capabilities!
These could enable whole new micro-economies that would not have been possible without IOTA’s technology.
For instance, NIWA might be interested in purchasing data from your home weather station for a millionth of a cent per data point. Currently, no one would care about such an absurdly small sum, but with free, extremely quick transactions, it might be justified.
Then your solar panel, which is also producing IOTA from drones that are recharging at it, might be used by your weather station to purchase electricity from that IOTA.
There are countless options!
And if it sounds like IOTA might become a medium of exchange for the Internet of Things (IOT), that’s exactly what IOTA (also known as the Internet of Things Application) aspires to be!
Additional IOTA usage cases
Consider that you possess a Fujitsu heat pump and that Fujitsu wants to know how its products are operating after a consumer buys them.
Fujitsu is interested in gathering a variety of bite-sized data, including peak usage hours, fan speeds, fan temperatures, and the preferred temperatures in various global geolocations.
Every heat pump has a tiny computer chip inside that collects the information Fitjitsu needs from its clients, but the transaction costs and speeds are too sluggish to obtain this information with fiat money in real time.
This is where IOTA comes in, as you can set up an IOTA wallet and have your Fujitsu heat pump automatically deliver you IOTA in real time and without any costs for every single tiny bit of data that it collects.
Another scenario where IOTA might be used is if you had a Tesla smart car and Tesla wanted to know how your battery was doing, how backed up the traffic is, how long it takes you to commute on average each day, whether there’s a pothole on the road you’re about to drive down, how loud you like your music, how often you drive the car each day, how humid the weather is, and so forth.
The value of all of this data is undeniable, but due to the high transaction costs, trading it for currency is not worthwhile.
The use case for IOTA is that your Telsa could disburse IOTA in minute amounts each time your automobile creates data on its own. You may earn money by simply existing!
Mainstream Support for IOTA and IOTA Applications
IOTA is continuously supported by large technological businesses. Volkswagen, Microsoft, Jaguar, Land Rover, Fujitsu, Samsung, and numerous other companies are among them. This is possible because IOTA apps and machine-to-machine (M2M) transactions can both be carried out over the IOTA network.
- Sending encrypted messages and RSS feeds across the IOTA distributed ledger is possible with Masked Authenticated Messaging (MAM).
- CognIOTA is already utilizing IOTA to enable users to instantly rent out idle CPU power from other network members.
- IOTA technology is already being used by Microsoft, Bosch, and Deutsche Telekom to monetize large data.
