Understanding IOTA (MIOTA) And Its Potential
The IOTA (MIOTA) coins are one of the fastest-gaining cryptocurrencies at the moment. A month ago, the crypto-coin was trading at $0.82 and has increased by around 350% over that period, currently trading at $3.48 according to XBT.net.
What then is the IOTA coin?
The crypto space gained widespread attention during the last few months of 2017. More investors and tech developers are coming into the crypto and blockchain industry, leading to further growth and popularity of the cryptocurrencies.
Bitcoin has grabbed all the attention during this period of cryptocurrency run. Not many people are asking what the IOTA coin is and what its benefits are.
That is understandable because bitcoin happens to be the first decentralized digital currency, with its explosive bullish run in 2017 giving it a very strong market cap of $275.0-billion, making it the largest and most valuable cryptocurrency in the world and even more valuable than some major companies across the world.
What escaped the attention of most people is while bitcoin was grabbing the attention through its bullish rub, other cryptos have been working to solve the problems that have affected bitcoin since it was established. It is for this reason that IOTA and its token MIOTA have the potential to be more successful than its major competitors.
What does the MIOTA represent?
The MIOTA shouldn’t confuse you as the M stands for Mega, or one million IOTA, which is the currency’s base unit used in trading them.
Even though IOTA is still low regarding popularity, the crypto has been able to reach a market cap of $9.66 billion, enough to reserve a space in the top 10 cryptos by value. With its price currently below $4.00, the crypto has become very approachable to investors, both old and new.
Aside from its price, IOTA incorporates new technology that gives real value to its traders and investors. Blockchain powers bitcoin and most other cryptocurrencies, IOTA has successfully moved away from this norm by building on a blockless “Tangle” formed from an open-source, distributed ledger protocol.
What does Tangle represent in IOTA’s growth?
It has been a decade now since bitcoin was first launched. During that period, developers have responded to numerous complaints about their cryptos. It is expected to happen since the blockchain is still an experimental technology for most developers and many blockchain issues are existing ones blocking the path to broader use.
Something new though has been developed to tackle all that. What exactly is a Tangle? Tangle is a further variation and development on the blockchain. Within the tech industry, it is also referred to as a directed acyclic graph (DAG). Tangle can work using a collection of nodes (or vertices) that connect with each other without any circular edgings.
According to the whitepaper presented by the IOTA team, the edge set of the tangle is obtained in a particular way: each new transaction must approve two previous transactions. It could occur either directly or indirectly,
This design is fundamentally different from that of the blockchain. The blockchain on which bitcoin is built relies on miners who have to verify every transaction. They do this using a huge amount of computing power and electricity.
Miners that mine bitcoins from blockchains and confirm the transactions are rewarded based on the number of blocks they can verify. As the bitcoin network becomes more congested and more investors come in, the fees paid to miners keeps increasing. This has led to the current problem of higher transaction fees and slower transaction times.
The tangle doesn’t work with that model. It relies on each transaction to confirm two other transactions on the same network. This implies that the Tangle is free of miners, blocks and higher transaction fees.
What led to the creation of IOTA?
As the price of bitcoin grew alongside its investors, developers in the tech space took notice of what is going on with bitcoin. Developers like Serguei Popov noticed the excitement surrounding bitcoin.
The success of the world’s leading cryptocurrency revealed to him that what the real-world value of the blockchain technology is and what shortcomings it had. These issues he noticed over time shaped the IOTA he created as he set to correct the lapses of the blockchain.
The first complaint Serguei Popov had was that of high transaction fees. Every bitcoin comes at a cost, even when the purchase is small. This implies that transactions of smaller values weren’t financially possible under the current terms.
A suggestion to remove transaction fees from the bitcoin system isn’t viable considering it is the primary incentive for the verification infrastructure.
To solve this problem, Dr. Popov, a Ph.D. in mathematics, joined with David Sønstebø, Sergey Ivancheglo, and Dominik Schiener came together to work on it. Dr. Popov took care of the math, while Ivancheglo and Schiener wrote the code. The whole project was managed by Sønstebø.
The four scientists worked together and finally launched the new token two years ago. In their whitepaper, the team explained that “At the beginning of the tangle, there was an address with a balance that contained all of the tokens.”
The team further added that while using a “Genesis” transaction, the tokens were transferred into the founder addresses.
What does the IOTA represent? The IOTA is a token system that was designed to be free from all the stumbling blocks and limitations of the blockchain. The IOTA coin is a solution that several investors and traders in the crypto space don’t know exist.
A system that is built with no miners and monetary incentives means there is no reason to conceive of future token creation. Every IOTA token that will exist has already been created in that first singular moment, with the total tokens being 2,779,530,277,761.
The entire coins have already been distributed to those who partook in the crowdsale, with a total of 1,337 Bitcoins raised for its development.
Without the incentive system popular with bitcoin, the IOTA instead relies on the goodwill of the participating community.
How does the IOTA differ from other cryptocurrencies?
From the time it was launched, the IOTA presented a different approach to bitcoin, it has no fees. The bitcoin network which can complete a total of four transactions within a second witnessed its price explode earlier this month.
Benefits of the IOTA
It is cheaper
In November, the average transaction fee on the bitcoin network is $6.00. This price is high and has made bitcoin not an option for the purchase of small items.
As the price of bitcoin attained new highs over $15,000, the average transaction fees also went up, attaining an all-time high of 26.00 at one point, before sinking back down to $20.00.
The transaction fees matter a lot. IOTA developers Popov, Sønstebø, and others were able to identify the huge potential that lay in the number of microtransactions occurring each day between computers.
This is why they created the IOTA, also called the Internet of Things. The development team soon realized that transaction fees would be a huge problem for their network. However, with the development of Tangle, the fees were non-existent in that system.
A first look might give you the impression that it wasn’t important. However, the Internet of Things at the moment has the enormous potential for growth. Tech giants Google’s Alphabet Inc. recently bought a sizable share worth $3.0 billion.
The IOTA market is expected to reach over $100.0 billion by 2020. As a non-profit crypto built on the Tangle system, IOTA has several benefits that are missing in other blockchain-based currencies.
The absence of transaction fees is a very important factor as it can bring in more regular users, a move that could ultimately push IOTA into the mainstream financial market, eclipsing what Bitcoin, Litecoin, and other blockchain-dependent cryptos have achieved.
Transaction speed is faster
The IOTA system is designed to act very quickly on commands. It is a secure, lightweight mechanism of machine-to-machine microtransactions. Since the internet now is obsessed with speed, the IOTA is perfectly placed to become the go-to currency for the entire Internet of Things.
Without stumbling blocks to slow it down, the DAG Tangle isn’t only cheaper for users; it also becomes much faster and easier to run. A quick comparison of IOTA with Bitcoin or Ethereum will reveal the slow speed with which the latter two confirm transactions.
The peer-to-peer based Tangle adopted by IOTA means that the more users the network has, the faster transactions are confirmed.
Isn’t IOTA more scalable?
The enormous potential currently on the table for Tangle system over the blockchain has brought the IOTA widespread attention and key allies in the tech industry. The IOTA team recently announced a partnership with 20 different organizations as they aim to launch a public a public data marketplace for the Internet of Things.
The objective is to make it easy for more sharing and to also aid monetize data in such a way that it would be safe and secure. Amongst its partners include Accenture Plc., Microsoft Corporation, and Bosch.
After the news of the partnership broke, the price of IOTA was up by 30% within a few minutes. The main question regarding how IOTA is different turned out to be something valuable to crypto investors.
Other Benefits of IOTA
Another negative impact that isn’t considered is the environmental impact of Bitcoin mining. Recent data has revealed that over 29 terawatt hours (TWh) of electricity has been used to mine bitcoin this year (from January to November). This figure represents what entire Ireland consumes over the same period.
The use of such resources is very expensive and to some extent very wasteful. Especially in a world where countries are working hard to battle climatic change. The IOTA’s Tangle doesn’t have that issues and is more environmentally conscious that blockchain.
Tangle comes with other features that give it a competitive edge over the others. Tangle makes it possible for its users to conduct transactions even while they are offline. This implies that IOTA can be used in remote locations of the world that are battling with weak internet connections. This is also useful for transactions that aren’t time sensitive.
With IOTA having features such as no transaction fees, superior tech, and infinite scalability, the currency has become very significant. The IOTA cryptocurrency has the potential to become the very backbone of the Internet of Things, with e-commerce likely to be revolutionized with that.