IOTA stands for Internet of Things Application, and it’s a crypto technology that facilitates transactions between devices on the Internet of Things (IoT). IOTA addresses the transaction fees and scalability issues of blockchain technologies by getting rid of the block and chain. Instead, in order to submit a transaction to the IOTA ledger, you must verify two other previous transactions.
This method of verification means there’s no central ledger, and there’s no need for miners to power the network.
As the devices on the network randomly verify each other’s transactions, they build consensus through the web of connections between transactions. In cryptography, this type of verification is known as Directed Acyclic Graph (DAG), but the creators of IOTA call it the Tangle.
Since computing power in the Tangle grows as the network grows, IOTA is promising free, fast transactions. It’s also designed to process micro-payments and payments between machines, facilitating a whole machine-to-machine micro-economy.
While IOTA makes big promises, the technology is still new, and it’s not without its detractors. In this article, we’ll look at
How Does IOTA Work?
Companies are creating cameras, sensors, and other devices to monitor conditions in factories, shipping lanes, farms, stores, and homes. According to research from Gartner, IoT grew to 8.4 billion devices in 2017, and the outlook for future growth is exponential.
IOTA’s vision is to be the platform for machine-to-machine (M2M) transactions. IOTA’s founders started the company after working in the IoT industry, and they argue that in order for IoT to be most useful, the devices in the network need to share and allocate resources efficiently.
This means the devices need to be able to purchase more electricity, bandwidth, storage, or data when they need it, and sell those resources when they don’t need them.
Even on a small network, this means potentially dozens of transactions per second as devices communicate and use resources. With so many transactions, at such a small, fast scale, IOTA’s founders believe blockchain technology isn’t adequate for IoT applications.
Blockchain networks struggle with scalability, and they often resort to charging fees in order for miners to include your transaction in a block sooner. IOTA aims to solve both scalability and fees with its new network so that billions of IoT devices can use it.
Team & Progress
Launched via crowdsale in 2015, the network is now developed and supported by the IOTA Foundation, a German non-profit. David Sønstebø and Dominik Schiener lead the foundation as co-chairman of the board of directors. The rest of the leadership team includes the founder of Nxt, Volkswagon Chief Digital Officer, Fujitsu Head of Central Europe, and several experts across a wide variety of industries.
The 50+ member team has been making steady progress since the platform’s launch. One of the most important releases in the past year was that of the Data Marketplace at the end of 2017. The marketplace uses IOTA’s technology to facilitate the storing and selling of data streams. It already has several notable companies, such as Accenture and Bosch, participating on the network.
The team has also recently begun working on smart city technology for Europe and other parts of the world. This technology will include such things as biometric palm readings tied to digital identities as well as the combination of city IoT devices with the Tangle.