IOTA is a kind of open source digital currency that uses distributed ledger technology and focuses on providing secure connections and payments in the Internet world. Compared to Blockchain-based currencies, scalability, decentralization, and low cost are features of this digital currency. Currently, according to market trading volume, this cryptocurrency is ranked 11th among the digital currencies with a market cap of $ 7.91 billion.

IOTA uses the Directed Acyclic Graph (DAG) instead of traditional blockchain technology. On this network, transactions are free regardless of transaction value. Transaction verification is also very fast. The number of transactions that the system can perform simultaneously is unlimited and the system is capable of scalability.

How IOTA was created?

2015: IOTA was founded by David Sønstebø, Sergey Ivancheglo, Dominik Schiener, Dr. Serguei Popov. Fixed IOTA supply was created for 2,779,530,283,277,761 units. Since no mining process exists, no more units of this currency will be created. A few months later, this digital currency began running its beta version.

iota history

2016: While the beta test was still ongoing, trades began between users in 11 months ahead.

2017: Outlier Ventures, an investment company, invested in IOTA through 7 different methods. This was the first direct investment in the”Public distributed ledger” technology. SatoshiPay announced that this digital currency can be used as an alternative to bitcoin (due to its high transaction fees).

IOTA currency units

The smallest currency unit in this digital currency is one Iota (a letter in the Greek alphabet). The name of the larger units is created by adding the prefixes of the metric system to the word, for example one million IOTA called MegaIota. By size, the names of the units are:

Iota= 1 Iota= 1i= 1i
KiloIota= 1 Kiota= 1Ki= 1,000i
MegaIota= 1 Miota= 1Mi= 1,000,000i
GigaIota= 1 Giota= 1Gi= 1,000,000,000i
TeraIota= 1 Tiota= 1Ti= 1,000,000,000,000i
PetaIota= 1 Piota= 1Pi= 1,000,000,000,000,000i

How is IOTA payment system designed?

  • Transactions

In order to be able to make a transaction on this network, the user must also randomly approve other two transactions. A transaction sent on the network should collect a sufficient level of verification (that is, it must be verified by other users). This cryptocurrency works with an admin called the Coordinator, which verifies all transactions at specific intervals. Without this coordinator, IOTA-DAG is not safe enough in its early stages. When the network is large enough to scale, the coordinator will be deleted.

  • The Tangle

Instead of using the blockchain technology, this system is guided by a linear graph (DAG). IOTA-DAG is a generalized blockchain protocol (blockchain is a special case of DAG).

iota tangle

As for the IOTA Tangle (IOTA-Tangle); Each of the squares in the above figure represents the transaction that is being sent. For each new transaction, two random and unconfirmed transactions are validated in the field of validation. Each validation (n) increases the probability of a real transaction to the threshold (c). In this figure, the red squares represent the transactions when n> 0. Gray boxes represent the time when n = 0. Green boxes also represent trades that have confirmed a sufficient number of confirmations. (N ≥ c)

  • Cryptography

IOTA uses Hash-based encryption instead of elliptic-curve encryption (ECC). Hash signatures are much faster than ECCs.

This cryptocurrency uses a hash function called Curl, which it has designed itself. In July 2017, researchers discovered a critical vulnerability that allowed them to sign up. In general, researchers criticized their extended cryptography. On August 7, developers replaced the hash function with a version of SHA-3 called Kerl, which works with triple operation (rather than binary) and has effectively solved the vulnerability.

  • Flash Channels

Flash channels are among new services of this cryptocurrency. With the idea of systems like the Lightning Network and Raiden, flash channels are designed for private and outsourced transactions. They provide conditions for trusted groups to carry out transactions out of Tangle system.

The transaction in this protocol is done without paying fees. The initial data set in the market includes specific environmental measurements, African agricultural data and anonymous health data related to wearables. Ordinary people can also sell their information on the market.

IOTA price changes

iota price chart

In December 2017, this cryptocurrency rose more than 600% and reached $ 5.5 from $ 1 (early 2017). One of the main reasons for the increase in the value of this cryptocurrency was the belief in the cooperation of IOTA and Microsoft. The CCN reported that large companies, including Samsung, Cisco and Volkswagen, have partnered with this currency to use the Tangle-based solution to monetize information.

For analysts, if everything goes well, this cryptocurrency should be stopped at $ 15 by the end of 2018. After reaching this stage, the possibility of short-term correction is very high. We are currently seeing an unstoppable upward trend.

 

Leila

Author Leila

Leila is a technology enthusiast and an avid blogger who holds a Master's degree in English literature. If she is not writing blog posts, you can find her cozying up in bed with an e-book or watching a movie.

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