June 22, 2018

The Most Straight Forward Guide To IOTA In Cryptocurrency

IOTA is a cryptocurrency designed for the Internet of Things. Internet of Things is nothing new. We’ve been seeing a lot of things related to the Internet of Things from big companies like Amazon.

IOTA aims to be the first open-source distributed ledger that is being built to power the future of the Internet of Things with feeless microtransactions and data integrity for machines.

So you might be wondering if IOTA is nothing new, then why do we need anything related to cryptocurrency for IOTA?

Let’s quickly go over the problem that IOTA is trying to solve.

Anyone with a bank account is familiar with the concept of a ledger, containing records of their debits and credits. Collectively, we have all entrusted financial institutions for generations to safeguard these highly sensitive records and their accuracy.

But this does not mean that we have the ability to verify the data that we receive on the Internet today, and with cybercrime on the rise, this delegated and unverifiable trust has become a major obstacle for an inclusive and permissionless economy.

With the advent of distributed ledger technologies, we are now able to distribute and synchronize ledgers of data and money in secure, distributed, decentralized and permissionless environments. By removing the need for trusted third-parties as the gatekeepers and arbiters of truth, enormous efficiency gains, innovation opportunities and new value propositions emerge.

By solving the inefficiencies of the Blockchain, IOTA, based on the revolutionary distributed ledger technology, the Tangle, is the missing link for the Internet of Everything and Web 3.0. Powering a secure, scalable and feeless transaction settlement layer, IOTA will empower machines and humans to participate in flourishing new permissionless economies – the most important one being the Machine Economy which is what IOTA is putting together to make it possible.

In simple terms, IOTA is bringing a powerful and secure solution for the internet of things without the need of a third party middleman.

 

A more in depth look on how the transaction process works

In order to participate in this network, a participant simply needs to perform a small amount of computational work that verifies two previous transactions.

Rather than creating a hierarchy of roles and responsibilities in the network, every actor has the same incentives and rewards.

Unlike Bitcoin which uses a blockchain architecture for maintaining it’s ledger, IOTA uses the ‘Tangle’ which is a Directed Acyclic Graph, known as a DAG. In summary, the Tangle solves both the scalability and transaction fee issues faced by Bitcoin (And most cryptocurrencies) by requiring the Sender in a transaction to perform a kind of proof of work which approves two transactions.

In order to make a transaction in the Tangle, two previous transactions must be validated with the reward for doing so being the validation of your own transaction by some subsequent transaction.

With this ‘pay-it-forward’ system of validations, there is no need to offer financial rewards. Transacting with IOTA is and will always be completely fee-free.

This structure also enables high scalability of transactions. The more activity in ‘the Tangle’, the faster transactions can be confirmed.

IOTA is aiming to be the backbone of the emerging machine-to-machine (m2m) economy of the Internet-of-Things (IoT), data integrity, micro-/nano- payments, and other cases where a scalable decentralized system adds value.

 

IOTA advantages and features

IOTA has 4 HUGE advantages over Blockchain cryptocurrencies in that it is:

  • Scalable
  • Decenteralized
  • Modular
  • Low fees

So far, so good. IOTA looks to be feeless and scalable. This alone makes IOTA incredibly promising as a technology for a huge number of applications.

With the low fees, IOTA allows developers and Internet of things companies to build applications in the Internet of Things space with low fees.

Now, since IOTA is not a Blockchain, we have a lot of differences here.

  • IOTA is based on a directed acyclic graph (DAG) aka the Tangle, not a Blockchain
  • IOTA has no mining, no blocks, no difficulty
  • IOTA has no transaction fees
  • IOTA scales almost infinitely, unlike Blockchains
  • IOTA is not solely made as a currency but as an interoperability protocol that solves the problems of the IoT
  • IOTA wants to enable the machine economy (M2M concept)

Born in 2014 and created in 2015 IOTA offered an Initial Coin Offering (ICO) where approximately 1337 Bitcoin were invested.

All 2779530283277761 iotas have been created in the Genesis transaction.

The iotas have been distributed among the shareholders. Not only extern investors but also the founders and developers had to invest with their private money.

 

IOTA price predictions and conclusion

The one-year forecast is around $ 11. This means from the current price, it will rise almost fourfold. The IOTA price prediction for 5 years is $ 38. This means that from the current price, it will be able to increase significantly.

While volatility in the cryptocurrency will stay but if you’re willing to hold the cryptocurrency for a longer period of time, it will indeed become easier for you to make some good returns as well. Also, in the current downturn as well it was able to stabilize much quicker as compared to some of the other cryptocurrencies. That is why it will be able to protect your portfolio in case of any downturn as well. When you’re diversifying across IOTA as well as other cryptocurrencies, it will be able to protect during the downside.

If you’re looking for cryptocurrency which can rise significantly in the next 8 to 10 months, you should definitely look at IOTA. It is able to provide good upside potential to the investors from the current level where it is trading.

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Wilson

Wilson is a 3x Startup Entrepreneur. He is passionate about the cryptocurrency space. You can catch him tweeting about cryptocurrency often @itswilson8

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