IOTA is a new type of digital cryptocurrency that focuses on solving the transaction problem between machines and machines (M2M). Build a blueprint for the future machine economy (machine economy) by realizing payment without transaction fees between machines. IOTA provides efficient, secure, lightweight, real-time micro-transactions without transaction fees. It is an open source, decentralized digital cryptocurrency designed specifically for the Internet of Things, it is real-time micro-transactions, and can be easily and easily expanded. IOTA goes beyond blockchain technology. It is the first non-blockchain-based cryptocurrency for the entire ecosystem. IOTA may be considered another altcoin, but the truth is that IOTA is far from an altcoin, it goes beyond blockchain technology and is an extension of blockchain technology. IOTA is based on Tangle rather than blockchain technology.

1. Technology application

IOTA's distributed ledger, the Tangle, is based on a data structure called a Directed Acyclic Graph. For any transaction in the IOTA network, both parties to the transaction need to verify the previous two transactions by doing a small amount of proof of work. The premise is that IOTA’s network can scale faster as more transactions are processed because it is able to conduct multiple verifications at the same time.

As the technology is still in its infancy, IOTA relies on "coordinators" supported by the IOTA Foundation to ensure that the network is not vulnerable to specific attacks. The "coordinator" acts as a checker for every valid transaction. In the past, due to the outage of the coordinator, the official IOTA wallet could not be used for a period of time, which led to criticism from all walks of life on the centralization and centralization of the network. So the IOTA team itself is planning to remove the Coordinator from the network in the future.

In August 2017, a team at MIT published an article detailing their investigation into the IOTA coin. The article pointed out that the IOTA team actually developed their own cryptographic hash function, and this hash function has a fatal loophole, that is, when different hashes are input, there will be the same output, which should never happen.

Second, what is the difference between IOTA Tangle and blockchain?

Comparing IOTA (or more specifically, Tangle) and blockchain, there is a big difference between the two before, because they are two completely independent architectures, but they are based on the same rules .

1. IOTA data structure
Tangle (Tangle) is based on a directed acyclic graph (DAG), rather than a continuous chain architecture, adding blocks regularly. Through DAG, IOTA is able to achieve high transaction throughput (through parallel verification) and does not charge transaction fees. With the continuous development of Tangle, more and more participants will initiate transactions, the whole system will become more and more secure and faster, the confirmation time will be shortened, and the transactions will be completed faster and faster.

2. IOTA Consensus Mechanism Innovation
The blockchain consensus is completed through a very strict mechanism. Adding the next block in the blockchain requires multiple parties to compete and obtain the block Block rewards or transaction fees. Because of this, consensus and transaction generation are separated and done by a small subset of the network, often with a high threshold (like Bitcoin), which leads to further centralization.
In the IOTA system, every participant in the network can conduct transactions and actively participate in consensus. More specifically, you directly locate two transactions (the main transaction and the branch transaction), and indirectly locate other transactions in the child tangle. In this way, the verification can be carried out simultaneously, and the network can remain completely decentralized, without the need for miners to transfer trust or pay transaction fees.

3. IOTA has no transaction fees
This is achieved through IOTA's unique consensus method. Usually in order for a transaction to be verified and included in the next block, a transaction fee needs to be paid, but there are no miners or verifiers in the IOTA system (to complete this work, so there is no need to pay a fee). IOTA's consensus is completely decentralized, and each network member can initiate transactions and directly or indirectly confirm past transactions. It is precisely because of the inherent characteristics of this consensus (transaction terminal selection and computing requirements) that you do not have to pay fees.

Third, the similarities and differences between IOTA and Bitcoin

Bitcoin transactions are processed by miners in ordered groups called blocks. There is a limit to the number of transactions that can be processed in a block, which has sparked intense debate over how to proportionally distribute bitcoins.

The IOTA coin team is working on eliminating the need for blocks and distributing them more rationally. Unlike Bitcoin or most other blockchains, IOTA does not have the concept of "miners" who verify transactions on the network. On the contrary, for every transaction conducted with IOTA currency, the initiator of the transaction needs to perform some computer-based operations, and use the previous two transactions to provide proof of work (Proof of Work, referred to as PoW) for this transaction. So you also understand that the reason why there is no transaction fee for transactions with IOTA coins is because it is used as a reward for helping to maintain network security.

Because there are no fees to pay, IOTA currency can support extremely small transactions, which are called "nano-scale transactions". Due to Bitcoin's current network congestion from time to time, transaction fees are relatively high (as of this writing, the average transaction fee for Bitcoin is more than $40), which makes high-frequency small transactions unrealistic. The IOTA team believes that prioritizing small transactions facilitates transactions between devices connected to the network.

December 2015. IOTA issued all tokens in the form of crowdfunding, and the total amount raised was more than 500,000 US dollars denominated in bitcoin (that is, the total amount is equivalent to 1337 bitcoins). Since the IOTA team did not reserve any tokens for themselves before the fundraising, the IOTA community decided to support the continuous development of the IOTA project through donations, and registered the non-profit "IOTA Foundation" in Germany. Donated 5% of the tokens to enable the foundation to better promote the development, research and education of related technologies to promote the development of IOTA.

4. What is the main purpose of IOTA?

At present, IOTA can do two things very well: transaction settlement (especially micropayment) and data integrity. Most of the use cases derived from these two features are meaningful and mostly only possible with IOTA.

IOTA is mainly dedicated to the Internet of Things, where resources, services or licenses are paid for by machines. Use cases including smart cities, smart grids, infrastructure, supply chains, etc. are all possible goals that IOTA can achieve. In this blog you will continue to discover more use cases for IOTA. You can choose a guide for your favorite programming language, or even write a programming language yourself.

The total supply of IOTA is (3^33-1)/2 or 2,779,530,283,277,761. All IOTA is created at the initial block, the total amount is not convenient, and there is no need to mine, IOTA is non-inflationary.

For simplicity, IOTA uses the SI system (International System of Units) for measurement.

IOTA's main features (for now) are fee-free micropayments and secure data transfers and data pegs. With these two features, coupled with IOTA's scalability and partition tolerance, we are able to distill a large number of use cases that can only be achieved with IOTA.

The main area of ​​focus is clearly the Internet of Things, in particular areas such as smart cities, infrastructure and smart grids, supply chains, transportation and mobility. In addition, IOTA can become the backbone of any P2P transaction settlement, such as network payments or even remittances.

Related links:
https://www.iota.org/
https://iota.org/IOTA_Whitepaper.pdf