What should you know about IOTA
IOTA is identified as an open-source distributed ledger, or cryptocurrency concentrated on giving secure communications and payments. Within the Internet of Things using directed acyclic graph (DAG) technology instead of the traditional blockchain.
What is IOTA?
It is a revolutionary new transactional settlement and data transfer layer for the Internet of Things. Based on a newly distributed ledger known as the Tangle. This ledger has a new way to make consensus using a decentralized peer-to-peer system. Which works differently than the usual Blockchain. Through IOTA, it will be the first time people will be able to transfer money without actually paying any fees. Allowing infinitesimally small nano payments through IOTA.
It is the eleventh-biggest cryptocurrency market cap, for 2018, users think its price is going to be around the $4.98. Its unique technology makes it an exciting opportunity for investors. Like the fact that IOTA does not operate on a blockchain. It uses a “revolutionary” stated as an upgrade to blockchain’s architecture.
What is the Internet of Things?
The Internet of Things (IoT) is the network of physical machines, house appliances, and any other objects embedded with electronics. Software, sensors, actuators, and network connectivity, allowing them to connect and transfer data.
In theory, a cryptocurrency system could be used to power the Internet of Things. And connect internet-connected devices to a cryptocurrency wallet. And operate through it, for example, an internet-connected washing machine could use bitcoin to buy new detergent when needed.
A directed acyclic graph (DAG) is a finite directed graph with no directed cycles. According to Wikipedia “it consists of finitely many vertices and edges, with each edge directed from one vertex to another. Such as there is no way to start at any vertex and follow a consistently-directed sequence of edges until. It eventually loops back to the previous vertex again.”
Instead of using a blockchain, IOTA uses a directed acyclic graph. IOTA’s DAG is colloquially referred to as the “tangle” and is a generalization of the blockchain protocol. The Tangle is a DAG as a distributed ledger. It stores all transaction data of the IOTA networks. As implemented in IOTA, The Tangle is the first public distributed ledger to achieve scalability. No fee transactions, as well as quantum-computing protection. Opposite to regular Blockchains, the consensus is no-longer decoupled, but alternatively. It is an intrinsic part of the system, heading to a fully decentralized and self-regulating peer-to-peer network.
Transactions fees with IOTA
In IOTA, they are no miners or validators to pay a transaction fee. The consensus instead is entirely decentralized, and every network participant who makes an operation, direct and indirectly confirms previous transactions.
If there are no fees, it means I can’t mine IOTA’s?
IOTA’s Proof of Work purpose is to prevent spam and also to prevent Sybil-attacks. A person cannot earn IOTA‘s through mining thanks to the way consensus is achieved. And because there is no “mining” process, the rewards go to the users as there are no fees on transactions.