IOTA (MIOTA) is a nascent technology designed to enable interoperability between billions of devices in the Internet of Things (IoT) ecosystem.
With no mining, blocks, and transaction costs, IOTA aims to reduce the limitations of blockchain-based payment systems. Unlike Bitcoin and other blockchain-based networks, IOTA is highly scalable, quantum-proof, and inexpensive. The ability of IOTA to facilitate fast microtransactions is one of its defining features.
Read on for more about what IOTA does and how to invest in it.
What is IOTA?
IOTA is a distributed ledger that facilitates machine-to-machine transactions between devices that populate the Internet of Things (IoT). The native cryptocurrency of this non-blockchain-based platform is MIOTA.
The consensus mechanism used by IOTA to validate transactions is based on Directed Acyclic Graph (DAG), a network of nodes (computer or group of computers) that does not follow a specific sequence. This way, each node can be connected to a variety of nodes, allowing the network to expand infinitely. The Directed Acyclic Graph (DAG) used by IOTA is called Tangle. When a node issues a new transaction on IOTA, it is required to approve two previous transactions, allowing nodes to issue transactions without fees.
Though a standard blockchain is also referred to as DAG, IOTA uses a parallel system that enables the transactions to proceed simultaneously rather than sequentially. As more nodes enter into the system, Tangle becomes more secure and faster at processing transactions.
IOTA has become a faster alternative to its blockchain-based counterparts by enabling microtransactions associated with machine-to-machine communications. The fees associated with everyday Bitcoin transactions are so extortionate that they render micropayments virtually impossible.