October 2, 2018

Coin Profile: IOTA (IOT)

iota iot

A permissionless distributed ledger for a new economy.

Coin Market Cap Rank: 11
Current Market Cap: $1,587,847,694


Every person with a connection is consistently creating a large number of data when using apps, websites or other internet-connected services. This data is often made private using a cryptographically secure SSL certificate.

“Our vision is to enable all connected devices through verification of truth and transactional settlements which incentivize devices to make available its properties and data in real time.” says the IOTA platform.

The success of using IOTA depends on access to a “single source of truth”. In the vision of IOTA, data is valuable if it is valid. In this case, validity is ensured using distributed ledger technology.

But, IOTA has no ordinary blockchain. It is the first open-source distributed ledger developed to empower the Internet-of-Things (IOT) using feeless microtransactions and data for machines.


The birth of the IOTA (IOT) cryptocurrency

IOTA believes that the number of connected machine devices that will be in use will approximately be 75-billion by 2025. In addition to that, societies are becoming interconnected through the use of these devices and data; and this does not only refer to computers.

Apart from the many perks that having connected devices may bring, it has its quirks. For example, broadband speeds. With the growing rate of device usage, broadband speeds will increase significantly and wireless communication is limited by the interrelation of electric and magnetic fields. As a result, causing a bottleneck in the seamless flow of machine data – it’ll be impossible for devices to connect to centralized cloud systems for all their data at a consistent rate.

Of course, a solution would be to distribute these resources. But, how can we go about doing this?

This is where IOTA comes in.

IOTA allows devices to essentially share these technological resources in real time within a distributed network; using zero fee transactions. Here, the shared consumption is compensated for the exact usage.


IOTA’s sharing economy

In terms of use cases, IOTA’s shared ecosystem has a few implications for holders of IOT:

  • Disposes of wasteful subscription models and trust-dependent pay after/before.
  • Users pay for exactly what they consume and when it is consumed – hence, paying for usage rather than ownership.
  • Manufacturers are incentivised to create long-lasting and recyclable products.

With IOTA’s goal to remove the process of creating products that will eventually become outdated, new value chains and a sustainable supply chain are expected.


What is IOTA (IOT)?

IOTA, also known by its cryptocurrency ticker ‘IOT’, aims to solve the inefficiencies promised by the original blockchain, which hasn’t exactly been executed in full as a result of technical flaws:

decentralized networks allowing open innovation and peer-to-peer transactions without intermediaries or fees.


Today, many blockchain users experience slow transaction times, high transaction fees, competitiveness invalidating blocks and centralised networks; causing a demand for permissionless systems.

According to the IOTA platform, in solving these inefficiencies for the Internet-of-Things and Web 3.0, IOTA makes use of the “Tangle” distributed ledger technology. Using Tangle, IOTA is able to ensure a “feeless, secure and scalable transaction settlement layer”; and in turn, allow machines and humans to enjoy a new permissionless economy.


The IOTA (IOT) ‘Tangle’ distributed ledger and how it works

The blockchain is a growing list of records – also known as ‘blocks’ – which are linked using cryptography. These blocks include a cryptographic hash of the previous block – such as a timestamp and transaction data – and are stored in sequential chains (refer to the below diagram).

Unlike your normal blockchain, IOTA’s distributed ledger, Tangle, does not consist of transactions grouped into blocks and is not stored in sequential chains. Instead, it groups and stores data as a “stream of individual transactions entangled together.” – think of a spider web (refer to the below diagram).

iota blockchain distributed ledger

Image: IOTA

In participating in the Tangle, each participant has the same incentive and reward.

To participate in IOTA and create a transaction in the Tangle, users need to perform computational work that verifies 2 previous transactions. The reward for doing so is the validation of your own transaction by a subsequent participant transaction.

In this way, IOTA transactions are made free through a ‘pay-it-forward’ model and are not limited to transaction value settlements. Information is stored within Tangle transactions, and transactions become scalable and faster through more transaction confirmation activity in the Tangle (refer to the below diagram).

iota tangle distributed ledger

Image: IOTA


How does IOTA it work?

In reading this guide, you’re using data – be it through a mobile or desktop app. Although this data is private, you may receive the common call from call centres advertising or promoting branded products. This is because data is valuable and has, most likely, been made available to freemium services to sell to others for advertising purposes.

This is why IOTA has developed a model where IOT users can pay microtransactions at 0% fees and maintain possession of their data, which they can sell to whomever they wish.

IOT (Internet-of-Things) will generate zettabytes of data. Through IOTA, users receive an incentive to trade the data with data integrity. Much more insights will be scooped from this data trade.

It is important to note that IOTA cannot be mined or minted for new IOTA tokens, as the total supply of IOT tokens was minted on the Genesis transaction and will never change.


So, Why should I buy IOTA (IOT)?

IOTA (IOT) not only offers users irresistible benefits but also many IOTA cryptocurrency use-cases for business and individuals seeking transaction settlements and data integrity.

Here are the benefits of buying IOTA:

  1. Highly Scalable – more activity on the Tangle means faster transaction settlement times.
  2. Low resource requirements – participation is designed for small devices, such as sensors.
  3. Zero-fee transactions – with no miners in the Tangle, the value of the transactions sent is always equivalent to the value of the transaction received.
  4. Secure data transfer – data transfer is secured with an encryption.
  5. Offline transactions – devices do not require an online connection to make transactions.
  6. Quantum Immune – IOTA uses special signatures to ensure resilience towards the next generation of computing.

IOTA aims to be the data integrity and transaction settlement not just for the IoT but also for the Internet of Everything. In terms of practical use-cases, IOTA fills the gap for many business models that did not previously support legacy financial systems and other distributed ledger technologies developed on the blockchain.

Practical use cases for IOTA (IOT) include:

  • Supply chains – immutable data history tracking.
  • Energy and data – real-time streaming payment services.
  • Bandwidth, CPU and data storage – computational resource sharing.
  • Smart grids, infrastructure, peer-to-peer payments, smart cities, financial services, insurance and more.


Where to buy IOTA (IOT)

With mining IOTA (IOT) made impossible, the next best and safest alternative is to buy IOTA from a secure cryptocurrency wallet or peer-to-peer marketplace.

Coindirect, available in 25 countries worldwide, offers new and seasoned cryptocurrency investors a comprehensive cryptocurrency wallet and peer-to-peer marketplace that supports IOTA (IOT). Here, you can buy and sell IOTA (IOT) to local buyers and sellers using your most convenient local payment method. Our platform also supports Bitcoin (BTC) and over 40 altcoins for you to invest in.

Alternatively, the Coindirect cryptocurrency exchange can be used to trade 15 trading pairs.


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Disclaimer: This article should not be taken as financial advice. Never invest what you can’t afford to lose as the cryptocurrency market is volatile. Always research as much as possible before buying any coin.