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IOTA - A Beginner's Guide to Why IOTA Matters

IOTA is not your typical cryptocurrency.  IOTA, which typically stands for the Internet Of Things is a completely new approach to managing a blockchain.

Blockchain technology is what made coins like Bitcoin (BTC) possible.  BTC is just a coin that uses the blockchain technology.  As I've said many times before, the "real" invention here was coming up with a blockchain that works.  To show that it works they created BTC.  The success of BTC is a very good indication of how well blockchains can work.

Blockchains are what provide the audit trail of each transaction.  It is what allows you to purchase a digital "product" and be assured that the product is authentic and that you are the only one who owns that particular product.  It is what allows us to use BTC as money because it protects against counterfeiting. 

Blockchains do have their limitations, most notably transaction speed, and IOTA solves these limitations.  This is hugely important because almost all the news you read about BTC and "Forks" has to do with the programming community trying to solve the transaction speed problem and the controversy around the different approaches in solving that issue.


IOTA replaces the blockchain with what they call the "Tangle".  Instead of a nice orderly series of blocks, which you can picture as dominoes all lined up edge to edge, IOTA's approach appears more like a spider web with the transactions being the points where the strings of the web intersect each other.

The benefit of this approach is very dramatic.  With a tangle, the speed of transactions actual improve the more the tangle grows.  This is just the opposite of what is happening with the BTC blockchain.  There are times when you might have to wait for hours for a BTC transaction to be confirmed in the blockchain.  With a tangle, transactions are verified in fractions of a second.

The problem with IOTA is that it's greatest benefit, increased speed with increased size is also it's Achilles heel.  When the tangle is small, it needs to be artificially managed in order to protect against attack.  So when the tangle is young, as it is now, there is a certain amount of oversight required to keep it running and the crytocurrency community doesn't like anything that requires any kind of central oversight.  They want something that can run on it's own without any central authority.

The good news is IOTA is so impressive and has so much potential, that most people are willing to overlook this initial downside.  Therefore the tangle is growing as we speak.  If and when IOTA gains traction and it has enough users to no longer need this oversight (called the Coordinator), then it becomes a very serious contender as a replacement to BTC.

The are many additional benefits to IOTA that taken alone are enough to make it an outstanding coin.  For example there are no fees to do transactions on the IOTA network.  When BTC first started out the fees were so minimal it was as if they didn't exist.  Now it is common to see transaction fees in the multiple dollar range to do a BTC transaction.  Therefore IOTA is perfectly suited for small online transactions and even micro payments, payments of fractions of a cent, which might have future uses such as email delivery fees or computing power payments.

IOTA has quickly become one of my favorite cryptocurrencies.  It certainly is the most impressive one I am aware of at this point in time.  Unfortunately it is only traded at a few exchanges right now.  I purchase mine at Binance.com.  I suggest you purchase some as well. 

Here is a very good, somewhat technical article about the pros and cons of IOTA:

https://hackernoon.com/what-is-iota-5da4446602a



Comments

  1. Josh JarniganMay 27, 2018 at 10:05 PM

    Thanks for sharing. Unlike other cryptocurrencies, NEO works on a share-based system. So, when thinking about what NEO, it’s better to think of it as a security than a cryptocurrency. In fact, each NEO is considered by the “NEO Smart Economy” to be one share of the NEO blockchain. So, essentially, NEO is a portion of ownership! Get more informationa at: Neon Beginner

    ReplyDelete
  2. RashmiJuly 16, 2018 at 11:15 PM

    Thanks for sharing this informative post.
    IOTA

    ReplyDelete
  3. МилошAugust 25, 2018 at 6:31 AM

    Thanks for this article. Here is also a good article from CryptoDetail about IOTA and Open-Source Distributed Ledger.

    ReplyDelete
  4. UnknownSeptember 17, 2018 at 4:40 AM

    This is a very nice article. thank you for publishing this. i can understand this easily. Blockchain Online Training

    ReplyDelete
  5. Jack JohnnyApril 16, 2019 at 3:00 AM

    There is definately a great deal to know about this subject. I like all of the points you've made. iota

    ReplyDelete
  6. mahaDecember 24, 2020 at 3:43 AM

    Great Post!!! I have read your blog and it's very informative & really impressed .
    Thanks for sharing it. Keep continue your post.

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    ReplyDelete

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