What is IOTA?
IOTA is a public distributed ledger that makes use of a system called the Tangle. It is a new type of distributed ledger based upon a directed acyclic chart. That means there are actually no blocks, no chain, and no miners. IOTA was initially launched through a December 2015 crowdsale. The team successfully raised around $500,000 in Bitcoin and other cryptocurrencies. All of the token supply was released to the crowdsale participants. The team didn’t reserve any tokens for creators, designers, or consultants.
Instead, the community chose to support the job’s vision by donating roughly 5% of the IOTA supply to the non-profit IOTA Foundation. The IOTA procedure intends to enable this maker economy. It’ll do that by allowing feeless payments and supply a scaling option for the upcoming development of the Internet of Things. The Internet of Things is defined as the interconnection through the internet of calculating devices.
What is The Tangle?
Instead of a blockchain, where consensus is decoupled and requires miners, a transaction on the Tangle should confirm two previous transactions– resulting in a decentralized and self-regulating peer-to-peer network. This is how IOTA transactions will always remain feeless, regardless of how large the network grows. There are no miners to pay because the individual sending out a transaction is required to use a percentage of their computing power to verify two previous transactions. As a transaction on the Tangle gets confirmations, and the transactions confirming it get confirmations, the cumulative weight of the initial transaction develops. As the cumulative weight constructs, the transaction become more trusted immutable and protected within the Tangle permanently.
Benefit #1: Zero transaction costs
The inner-workings of the Tangle offer the ways for transactions that need no fees on either end of the transaction. This gives it a benefit over blockchain, especially for micro-transactions that take place quickly on the Internet of Things.
Benefit #2: Scalability
Unlike blockchain-based networks, the Tangle becomes more efficient as more users and transactions go into the network. Bitcoin, Ethereum, and other blockchain networks are dealing with significant scaling obstacles that IOTA will not need to handle in the future.
Benefit #3: Fixed token supply
There is no inflation within the IOTA procedure, meaning no new tokens will ever be created. The IOTA supply is forever repaired at 2,779,530,283,277,761.
Benefit #4: Quantum resistant
Although quantum computer systems have only been theorized and not actually built, they will likely have a large effect on systems that rely on cryptography (particularly hash-based signatures) in the future. IOTA uses the Winternitz one-time signature plan (W-OTS) which has been researched as existentially unforgeable.