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A Complete Guide to the IoT Cryptocurrency

01/24/2019
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  • Guide_ Cryptocurrency
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The IOTA cryptocurrency product appeared on the market a few years ago, but it has already gained strong positions in all the ratings, which says a lot about the development and prosperity of the project. Being in the top ten ranking of the most promising and advanced digital coins, IOTA has a great number of cool features.

IOTA is one-of-the-kind cryptocurrency and an online platform designed specifically for the concept of the Internet of Things. Unlike any other project or money unit, IOTA is expected to become transactional fuel that will make it possible to implement smart enterprises with the participation of machines united into a single network. Taking into account all the features and prospects of IOTA, we have decided to prepare a detailed guide to this project and look into the prospects of the Internet of things.

Creation of IOTA

The history of this project began in 2015 with ICO. During the crowdfunding, the IOTA team managed to collect 1,337 Bitcoins, which at the time was a very small amount. But it is worth noting that ICO was held infrequently in 2015 and they were all in the shadow of Ethereum.

Almost all of 2016 went on beta tests, and by 2017 the innovative project got up. Solid funds were allocated for development, marketing, and new projects. And by June IOTA (or rather MIOTA) debuted on one of the world's largest stock exchanges Bitfinex. In the fall, a number of strategic deals were concluded with large consortia: Samsung, Fujitsu, Volkswagen, Microsoft, Deutsche Telekom.

Several German companies on this list are no coincidence. It was in Germany that the Foundation for the Development of the Project and the Internet of Things as a whole was created under the name IOTA Foundation. Already by the fall of 2017, its budget exceeded $100 million. The role of the project person is performed by Norwegian David Sunstebu. His team also includes Sergey Ivancheglo, Dominic Shiner and Sergey Popov. Sunstebu is an active contributor to the concept of the Internet of Things. Even before the launch of IOTA, he founded the startup Stealth, which is engaged in the production of processors with ultra-low consumption of resources for IoT.

How Does It Work?

IOTA is not like Bitcoin or Ethereum since it does not actually use blockchain. This platform uses a special log Tangle, which works on the basis of DAG - directed acyclic graph. In the Bitcoin or Ethereum blockchain, everything is kept on blocks, where transaction information is recorded. In Tangle IOTA there are no blocks, and the transactions there are connected according to their own particular pattern: each new transaction that has arisen (let's call it A) confirms two old ones (B and C). Verification can also occur indirectly - a transaction D occurred, confirming A and conditional Z. But, at the same time, it indirectly confirmed B and C.

IOTA Technical Specifications

IOTA is based on Tangle - the unique technology associated with a direct acyclic graph. The essence of this technology has something to do with the fact that each new operation on the network creates its own block. In order to confirm his transaction, a user needs to confirm the two other operations that were carried out previously. The network, in turn, tracks conflicting transactions and prevents them from conducting in case of detection. All the operations made through the network are absolutely free, so no one receives a transaction confirmation reward here.

Another great feature of Tangle is that users can join groups through local networks and perform transactions in an offline mode. It will be only necessary for them to synchronize with the main network. For you to realize the work of IOTA better, we have briefly outlined the main options provided by the developers of the solution:

  • microtransactions - nano- and micro-transactions of even less than $1 are available in the mode of simultaneous multiple sending and instant processing with no commission being applied to the operation;
  • data transfer - Tangle provides information transfer, making the interaction between devices and users secure;
  • high-security level - electronic voting for choosing governments provides a high level of security. This option is already becoming increasingly popular among users around the world;
  • message encryption - as the first extensible core module of the solution, MAM provides the ability to exchange information through Tangle. Encrypted and authenticated channels guarantee absolute security and privacy, eliminating quantum attacks;
  • power rental - the system provides users with the opportunity to rent and lease not only computer devices but also any other equipment where the chip is installed.

How Does IOTA Differ from Bitcoin?

Bitcoin is generally associated with the two fundamental concepts: decentralized digital currencies and blockchain. Just like its digital predecessor, to create a new infrastructure designed to expand the network of machines or smart devices that stay connected to the world wide web, this digital currency is built on the same principles. It is primarily intended for transactions carried out at the “machine-to-machine” level, without focusing on peer-to-peer transactions.

The main distinctive feature of IOTA that makes it different from Bitcoin or any other classic cryptocurrencies are listed below:

  • No commission for transactions in the network, regardless of the transaction amount;
  • No miners or validators for IOTA
  • High network scalability thanks to the Tangle structure;
  • Complete system decentralization: economic and technical;
  • A more modern form of cryptography used for data encryption;
  • Min requirements for the nodes computing power;
  • Availability of IOTA Foundation;
  • Application area with massive growth potential.

IOTA Features

To effectively use the new virtual coins, it is worth understanding what IOTA is as well as its unique features. This project has become quite popular in the digital money market in a short time, as the developers have implemented the unique idea instead of the standard production of cryptocurrency.

The most critical factor that makes the IOTA project one-of-the-kind is the Tangle used for running the project. The greatest advantage of this technology is related to the speed of operation realization and confirmation, which increases due to the raise the number of participants in the network. In addition, the translation network inside IOTA is structured in such a way that the participant must confirm 2 transactions placed by other network participants in order to send a new transaction.

There are no scaling issues in IOTA. The situation is opposite here - as the number of transactions raises, the bandwidth increases as well. Each transaction immediately approves itself by confirming two previous operations. Therefore, the IOTA network can carry out thousands of transactions per second. In addition, due to the lack of commission fees, it is easy to conduct micro-transmissions.

According to its creators, IOTA has several advantages with regard to a large number of micropayments. In classical cryptocurrencies, micropayments deal with high commissions and a fairly long transaction confirmation time. In the blockchain, users are not involved in the verification process; you simply need to pay commissions to miners or holders of a share to confirm transactions.

There is no such a rule in IOTA; it is a fully self-supporting network with no miners. Users confirm the operations of other users themselves. Another great feature of the solution is that there are absolutely no fees charged for the operations within the network. This feature allows for micropayments in real time, and the system is infinitely scalable.

When creating IOTA, the developers took a swing at the implementation of the solution, which is aimed at developing a revolutionary idea - the Internet of Things. The latter is a new branch of human technology, whose concept is to create a global network of devices with sensors and cameras. The development of the solution is carried out by leading technology companies, including Microsoft, Samsung, Google, IBM, and others.

According to analysts, the number of devices will rise to 13 billion and will reach 29 billion units by 2022. This will create even more opportunities for project development. If to believe the forecasts of all the same analysts, more than half of all devices will use the platform of the Internet of Things. Accordingly, the major part of payments will be conducted through the network. As planned by the IOTA project, it is their MIOTA coin that will become the main settlement tool for IoT. All these factors will positively affect the growth of the cost of the MIOTA price.

Mining IOTA

Due to the working principle of IOTA, it is impossible to mine this cryptocurrency. If we consider the possibility of mining another cryptocurrency, for example, Bitcoin, then there are users in Bitcoin who send currency to each other as well as miners who earn money from transactions being processed. The commission in this system is obligatory since miners are directly involved in each transaction processing. With the growing popularity of currency and the number of transactions, the commission of the system increases, which becomes less attractive to users.

As for the IOTA, it is platform users who do the function of “miners.” To complete one operation, you need to confirm the previous two. As a result, the commission for transferring funds is not charged for this action, which allows the network both to scale to gigantic sizes and transfer small amounts.

The result of these conditions is that the network regulates and confirms transactions itself. There is no need for miners who would have to confirm the operations. With IOTA, each user becomes a miner, but the mines only when committing another transaction.

IOTA Online Wallets

The process of creating an online wallet for IOTA is quite simple. You just need to follow the below steps:

  1. Go to the official website iota.org and click the “GET STARTED” link (located at the bottom of the screen). You will be automatically transferred to the application download page.
  2. Once you are done with the download, run the application and select the “Light Node” mode and select the host you prefer to work within the drop-down list. Click the “Start” button to get it started.
  3. You will see a window where you will have to enter your unique SEED. It should be a set of random capital letters and numbers “9” consisting of 81 characters. For its generation, you can use special services or set it up yourself. Be sure to remember the data you enter since it will not be possible to recover them.
  4. Click the “Login” button to get access to use the wallet.

It is worth noting that operations can be carried out both in a desktop or mobile applications intended for Android and iOS. The web version of the platform also works in test mode, but the developers strictly insist on using the PC program, which we assume has something to do with the security aspect.

Advantages and Disadvantages of IOTA

There are many advantages of IOTA, which make the cryptocurrency a valuable player on the market. The main features are the absence of commissions, the ability of users to perform microtransactions, as well as the high speed of operations. However, it is still difficult to assess the IOTA platform. It's like with Ethereum in 2015 or 2016 - everyone understood its enormous potential, but there was not yet a tangible example to showcase all its great features.

The fact that the project is actively developing and cooperating with the world's largest consortia suggests that it has bright future prospects. The idea to become a driving force in such an innovative direction as the Internet of Things is an obvious advantage of IOTA.

But the unique IOTA platform and the unusual POW model without mining as such potentially create a case in which a powerful transaction violates the security of the network. If it comes from a node that has collected 51% of the total power, then a so-called 51% attack is expected to occur. The node will gain control of the network, allowing it to double out. This one is like mining Bitcoin with 51% of computing power.

Security is another point that needs some improvement. At the forum of the IOTA project and other cryptocurrency platforms, there were some complaints about the loss of Coins from the wallet. So far, the issue hasn’t been fixed, and this is one of the main goals of the project for 2019.

IOTA Advantages

  • High level of scalability - the bigger number of transactions are carried out, the better it is for the network;
  • Zero transaction fees;
  • No mining, so IOTA is not threatened by forks and speculative fluctuations of the course;
  • Trillionaire that large companies are related to;
  • Availability of IOTA Foundation - a fund that develops the project and attracts solid investments;
  • The uniqueness of the platform in comparison with other projects, which makes IOTA an attractive investment asset.

IOTA Disadvantages

  • Weak support on the stock exchanges and a limited function of the coin;
  • Lack of a reliable wallet for storing IOTA;
  • A risk of the attack of 51% in the network.

IOTA Cryptocurrency Forecast 2019

It is difficult to say when the Internet of things will be in the active phase of development. Given the fact that the world has only realized the benefits of such a technology as a blockchain and began to slowly integrate it into various business niches, the time for IoT has not yet come.

The popularization of the Internet of Things will most likely come when the use of blockchain technology becomes commonplace. According to financial experts, this will happen in 2019-2020. In parallel with the development of the blockchain and the processes automation, the world will become increasingly computerized. This means that the field for the development of the Internet of Things and the cryptocurrency IOTA will gradually expand. The maximum IOTA price of $5.37 was on December 20, 2017. And we will most likely see the same currency rate in the coming months.

Is It Worth Investing in IOTA?

Based on the state of the financial market and extreme processes digitalization, IOTA cryptocurrency is one of the most attractive tools for investing for a long period. This project has a high chance to take a leading position in the capitalization of digital projects in the world. The mark of $100 per coin is quite real, but this will happen after the development of the Internet of Things project.

Expert Verdict

The technology of the Internet of Things is very progressive. There is no infrastructure in the world that would be able to ensure its normal functioning at the moment. In addition, it should be understood that the world community is not yet ready to use the Internet of Things in all areas of business.

At least another 5 years are necessary for the world to integrate blockchains into the most important areas of activity. And only after that, the IoT technology will develop at the highest speed. Based on this, we can make a forecast that the main stage of development and use of IOTA will be in between 2022-2025.

According to CoinMarketCap, the IOTA cryptographic currency today holds the 6th place in cryptocurrency ranking with a capitalization of $14.5 billion. Its current rate is around $5 per coin. However, there is more to come, and there are many reasons to believe that. IOTA is a cryptocurrency with huge potential and a great asset for long-term investment, which should definitely be kept in mind.

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