Have you heard about the Internet of Things (IoT)? No? What if we say that you are already having IoT devices in your home, car, or office? But I don’t know about IOTA. Yes, you don’t but this is what technology is all about. You are using it and yet you are unaware of it. IOTA includes sensors in your car that indicate tire pressure, internet televisions, smart refrigerators, or Nest thermostats among others.
IoT devices are those which are connected to the internet, specifically with Wi-Fi or a cellular network. However, IoT devices are a bit challenging despite facilitating transactions and payments online. IOTA is a ledger that strengthens power microtransactions among IoT devices.
What is IOTA?
The full form of IOTA is the Internet of Things Application. It is just another cryptocurrency similar to bitcoin. IOTA is a decentralized cryptocurrency used to initiate communications among businesses and online transactions. While most of the other cryptocurrencies are based on blockchain technology, IOTA is not based on it.
The role of IOTA has rapidly increased in our day-to-day lives. Devices like cars, electronic devices, buildings, etc are all connected. IOTA allows an exchange of data among themselves.
It is pertinent to mention that the IOTA coin was established on the interface of the present and future industrial revolution of the Internet of things (IoT).
Is IOTA a blockchain? What exactly is the IOTA technology of the blockchain?
Before we explain IOTA to you, let’s make one thing clear IOTA and Blockchain are not similar. They might sound similar but they work on different lines.
Blockchain-based cryptocurrencies are created by miners and the process of mining is like solving a difficult mathematical problem with over 64 digit solution. Once each problem is solved, a bitcoin is generated.
On the other hand, the IOTA reduces the heavy transaction cost and an IOTA coin is an open source and a nonprofit organization focused on establishing IoT solutions.
Notably, IOTA does follow the traditional blockchain design that is used by most cryptocurrencies. Instead, IOTA has established a new platform which is known as Tangle. It uses a mathematical concept of ‘Directed Acyclic Graphs (DAG)’. In an order to validate its own transaction, each node in a DAG Tangle has to give a green flag to the two previous transactions at another node.
At first, it removes the “miners” as entities in an order to validate the transactions, removing a possible bottleneck at a time when the transaction speed and numbers are high. Secondly, the growth and speed of the network become directly proportional to the number of its participants.
How does IOTA work?
IOTA has been established on a distributed ledger technology which is somewhat different from that of the blockchain. It uses a technology called the Tangle, an algorithm that requires users to validate the previous two transactions to complete their own IOTA transactions.
A Tangle is a direct acyclic graph (DAG) algorithm and this method doesn’t contain miners, validators, blocks, and transaction fees. According to the official website of IOTA, it allows the crypto to surpass the cost and scalability issues of the blockchain.
The DAG algorithm has been designed to eliminate the scalability issues related to the blockchain. It allows no-fee payments, lower computing costs, and the potential to connect to IoT devices.
Experts believe that IOTA’s structure attracts users in the IoT economy as it removes the friction of high transaction costs. Currently, the “smart contracts” platform is redesigning its ledger technology and its protocol for consensus. In the meanwhile, it has been reported that IOTA’s 2.0 version is said to be fully decentralized.
How is IOTA different from Blockchain?
The Bitcoin Blockchain adds 1 block after another to its “chain of blocks” and the current maximum limit is about 7 transactions per second (TPS). With IOTA Tangle, each transaction confirms two others and the more transactions get confirmed, the faster the network becomes. If reports are to be believed then the IOTA has achieved a maximum limit of more than 1000 TPS. Besides, IOTA has no transaction fees.
It’s like sending funds within 10 seconds and that too without paying any fees. Notably, the first blockchain, Bitcoin (BTC), was developed to become a peer-to-peer cash system. The concept of Bitcoin was developed in response to the financial crisis in 2008. The experts argue that the development had exposed the extent of the greed of some bankers but the suspicion of middlemen filling their pockets was theoretically solved by the blockchain.
Blockchain is a chain of entries in a “ledger” which is a list where entries cannot be changed. You can download the blockchain as a file and it is accessible to anyone. However, it requires huge energy consumption and thus, it is said to be its big disadvantage.
IOTA differs from Bitcoin in several ways and these are:
– IOTA is fees less.
– Instead of blockchain technology, the transactions are processed on the tangle.
– Currently, over 1000 TPS are possible while Bitcoin’s limit is at 7 TPS
– With more transactions, the network becomes faster
– With the low computing power required, IOTA is currently one of the green cryptocurrencies.
IOTA is used for:
– Automotive Smart Charging Station without any transaction fees
– Earning money while driving with Jaguar Land Rover
– Adaptable insurance
– Portable devices and smartwatches
– Changing to the best provider on the basis of your location
– Collection of data without charges
– Reduction of cost of insurance with fitness
– Collection of energy and distributing it among others
– Networks’ Decentralization
– Selling energy with nano payments
– Immutable data in the supply chain
– IDs of Product
– For quality assurance
– Supply chain
– Sustainable and verified conditions for Fair Trade
– Guaranteed quality along with sensor paths
– Optimization of urban processes
– Sharing WLAN securely
– Connecting to Smart city and retaining data sovereignty
– Industrial revolution
– Communication between satellites and planets
– Digital Identity
So, IOTA is not at all a blockchain and it doesn’t even work the same way the Blockchain network does. Indeed both platforms have significant features and it’s up to the users who have to choose on the basis of their own interests.
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