The Beginner’s Guide to IOTA

The Beginner’s Guide to IOTA

IOTA is a distributed-ledger protocol powered by the Tangle, a DAG-based data structure. With its feeless transactions and tremendous scalability IOTA seeks to be useful in the age of the Internet of Things

What is IOTA?

IOTA is a public and permissionless protocol that aims to be the backbone of the emerging machine-to-machine economy and enables seamless interoperability of devices in the age of the Internet of Things. It can also be used by people as a conventional cryptocurrency. IOTA is powered by the Tangle technology.

The Tangle

Instead of a blockchain, IOTA uses the Tangle, a special architecture based on a Directed Acyclic Graph (DAG). This may sound rather complex but in reality a DAG is simply a way of representing data, much like blockchain. However, whereas a blockchain is a chain of blocks each referencing (validating) the one before it, the Tangle is a web where each transaction references two earlier transactions.

Low load (top) and high load (bottom) Tangle

There is no mining in IOTA as each participant in the network has to validate two past transactions to send a new one. It follows that the more the network grows, the more scalable it becomes.

Transactions

Making a transaction includes four steps:

  • Signing: a node creates a transaction and signs it with the private key.
  • Tip selection: the node randomly selects two tips (unconfirmed transactions, grey squares in the picture above) using the Random Walk Monte Carlo algorithm.
  • Proof-of-Work: the node checks if the two transactions are valid and then attaches a small proof-of-work. This process is necessary to prevent spam attacks.
  • Broadcast: the node broadcasts the transaction to neighboring nodes and it is further propagated through the network using a standard P2P gossip protocol.

The transaction is considered 100% confirmed when 100 randomly selected tips all have a path to the transaction (confidence) or when a milestone references the transaction. Milestones are empty transactions issued every two minutes by the coordinator, an entity controlled by the IOTA Foundation. The coordinator is a temporary solution used to protect the network from attacks in its infancy stage.

A transaction has four properties:

  • Height: the length of the longest path from the transaction to the genesis;
  • Depth: the length of the longest path from a tip to the transaction;
  • Weight: the amount of proof-of-work done by the author node (usually 1);
  • Cumulative weight: the sum of its own weight and the weights of transactions that directly or indirectly validate it.

MIOTA

The smallest unit of IOTA the cryptocurrency is Iota but most operations are done in mega Iotas (MIOTA, or Mi). One mega Iota equals one million Iotas. The total supply of 2,779,530,283,277,761 Iotas has already been distributed and no more coins can be mined. The number of tokens is not arbitrary. IOTA uses ternary-based logic (as opposed to binary) and this is the largest 33-digit ternary number.

111,111,111,111,111,111,111,111,111,111,111 (base-3) = 2,779,530,283,277,761 (base-10)

There are no transaction fees in IOTA which makes the cryptocurrency a good choice for micro- and nanopayments. The same feature coupled with IOTA’s infinite scaling potential allows a great multitude of interconnected devices to constantly exchange information in the Internet of Things economy.

IOTA Foundation

IOTA was created by David Sønstebø, Dominik Schiener, Sergey Ivancheglo, and Serguei Popov.

The IOTA Foundation is a non-profit organization behind the IOTA technologies. The Foundation houses researchers, industry experts, developers and engineers who work on the development and adoption of the IOTA protocol.

The IOTA Foundation is headquartered in Berlin, Germany.

Additional Info

  • IOTA raised 1337 BTC (approx. $0.5 million) in ICO in December 2015.
  • The IOTA network becomes stronger when the number of transactions increases. A stress test conducted in April 2017 showed a throughput of 112 confirmed transactions per second in a network of only 250 nodes.
  • IOTA uses Winternitz signatures which make the Tangle impossible to compromise even by a quantum computer, anticipated to arrive within the next two or three decades.
  • To keep the ledger at a reasonable size, the IOTA Foundation creates a Snapshot every two months. A Snapshot is a pruned version of the ledger, it removes all events and addresses which do not have a positive balance. Full nodes can keep the unpruned version if they choose so.
  • IOTA used its own ternary based hash function called Curl, which was found to have critical vulnerabilities by MIT. Curl produced the same output to different inputs. IOTA later replaced it with Kerl.

Links

Official website

Official blog

Whitepaper

Roadmap

Documentation

FAQ

Github

Twitter

Wallets

Trinity wallet

Full node + light node

Latest IRI

Community

Subreddit

Stack exchange

Discord

Help

Illustrated introduction

Education Youtube channel

IOTA Simply Explained

Reddit IOTA FAQ

All-in-one IOTA thread

Tangle visualizer

Another visualizer

Related news

Crypto Market Continues Recovery As IOTA and ICON Surge

The altcoin action continues today as the majority of the market is in the green. Meanwhile, Bitcoin has stabilized over $10,000 while continuing to lose some of its dominance.   Cryptocurrency Market Situation. Source: Coin360   Nevertheless, good news keeps coming for Bitcoin – this time from Albion. In a landmark decision, the British law firm Stewarts managed to obtain an Asset Preservation Order (APO) for its client, the CEO of Alphabit Fund. While the matter is still far from being completely settled, this is the first time that Bitcoin has been treated as property in British court, which previously struggled with its classification: the law allows for only two types of property, chose in possession and chose in action. The first refers to possession of strictly physical things, while the second pertains to property rights that can be enforced through legal action i.e. money in a bank account. Bitcoin doesn’t fit any of the two rigid definitions, which caused a great deal of uncertainty in court. Good day for the letter I The altcoin market is seeing a stable recovery, though most leading coins only have modest gains comparable to BTC. The exception is provided by two I tokens: IOTA and ICON. IOTA has already retraced some of its gains, but remains at +4.86% on the day, a solid increase in the context of the market. The rise can be attributed to a tweet by Alexander Renz, subsequently retweeted by IOTA’s twitter account, which announced the upcoming presentation of EDAG Engineering’s CityBot, an IOTA-powered autonomous vehicle concept.   #EDAG to present #CityBot at #IAA – a multi-functional robotic vehicles with @iotatoken based feeless machine-to -machine micro-payments. Machines as their own economic agents in the next gen web! #IOTA #DLT #Blockchain https://t.co/f1uzXt17qp — Alexander Renz (@AlexanderRenz) August 22, 2019   The tweet coincided with a 6% spike in IOTA / USD which added to an already good performance that day.   IOTA H1 Chart by TradingView   The biggest winner today in the (almost) top-50 is definitely ICON, with a 10% increase over the last 24 hours. The explanation is however very simple. ICX used to trade at a more than 100% premium on Huobi, whose price was then excluded from CMC calculations. Yesterday, the floodgates were opened, and arbitrage traders on Binance rushed to buy the coin to then sell it on Huobi. In the process, the price reached a new, higher equilibrium.       What rises must also fall. Source: TradingView The post Crypto Market Continues Recovery As IOTA and ICON Surge appeared first on Crypto Briefing.
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