In four words or less: Powering the Internet of Things
IOTA is an ambitious crypto team that aims to solve the inefficiencies of current blockchains by implementing an alternative distributed ledger technology called“The Tangle”. IOTA wants to be the missing puzzle piece that powers the emerging Machine Economy at the heart of the Internet of Things.
What problem does IOTA solve:
In the years ahead, the Internet of Things will be integrated into everyday life. Soon every device, sensor and machine in your home will be connected to each other. Your fridge will handle your food orders. Your Toaster will gossip with your coffee machine. Boom, your coffee and toast will be ready at the same time. Smart Homes and workplaces will be the norm. Everything will be operated from your phone or whatever it evolves into. Beyond that, as AI, AR, the Internet and the machine economy converge, the planet will become populated with billions of machines and sensors. They will need a way to communicate and pay each other micro transactions. Imagine driverless Uber cars that can pay each other to give way depending on who’s in a hurry. The Internet of Things is likely to be a very big thing indeed, and IOTA wants to provide the backbone to make it all possible.
Properties of IOTA:
- Instead of a sequential blockchain, IOTA is based on The Tangle, a form of distributed ledger technology that references a complex web structure known in mathematics as a Directed Acylic Graph (DAG)
- The DAG structure allows transactions to be issued simultaneously and continuously, as opposed to the slower time intervals and linear direction of a Blockchain. This is intended to scale IOTA for global use
- In the tangle, each transaction is its own block: transactions are linked to a few others instead of being arranged into chronological blocks
- There are no miners in the Tangle and no transaction fees. The value sent is always equal to the value received. This enables feeless micro and even nano-payments which the emerging machine-to-machine sharing economy will require to operate at scale
Adoption and penetration:
IOTA are concentrating on making the IOTA platform developer friendly. They have some live collaborations including a partnership with InnoEnergy to demonstrate the IOTA Tangle on a smart community testbed to explore new business models for smart community energy markets.
Management and governance:
IOTA is governed by The IOTA Foundation. It was established in Germany as a formal, non-profit organisation in 2017. The foundation is funded by holdings of IOTA tokens from community donations and unclaimed tokens from the crowdsale, and grants from governments for research and development.
Risks and limitations:
IOTA is very ambitious and will have to solve numerous technical challenges to achieve its goals in the years to come. IOTA has faced a number of critiques. These include: the fact that there is a foundation behind it, so it is not decentralised. The IOTA coin supply was premined and distributed to developers and investors. New coins can’t be mined, they must be bought. In 2017 MIT/Boston University researchers found a cryptographic vulnerability in the IOTA code. This has since been fixed.
Competition: Ethereum Classic, Raiblocks