In the cryptocurrency market, each coin is of a somewhat slightly innovative nature that differentiates one another. IOTA offers something beyond a blockchain architecture, nor it is focused on establishing a mode of transferring money efficiently. So what exactly does IOTA offer that makes it such a promising model?
IOTA is innovative in mainly 2 features: Firstly, it aims to fully support the potential offered by IoT devices. An approximate 1 billion objects are expected to be connected to the IoT by 2020, and the IOTA has created a cryptocurrency that can aid the IoT. Secondly, it uses a Directed Acyclic Graph (DAG) system, Tangle, instead of the blockchain architecture — the majority system implemented for cryptocurrencies.
IoT and IOTA
The Internet of Things (IoT) is basically the communication and interaction solely between machines, that is without human interference. Any object connected online can then communicate with each other, ultimately to promote convenience. IOTA is an open-sourced distributed ledger, aiming to facilitate secure payments and communications between devices that are part of the IoT
IOTA decided to opt for a DAG system instead of the blockchain model. This DAG system is known as the ‘IOTA Tangle’. Tangle is essentially a string of individual transactions interconnected to one another, and stored through a decentralised network of nodes. If we look at a transaction process in detail: the Sender is required to perform a Proof-of-Work (PoW) — to approve 2 previous transactions, before sending out a new transaction for approval.
This means that the DAG system is fully decentralised, because the role of ‘miners’ has been removed. As explained, since there are no more miners in this model, the need to pay for PoW is then eliminated. This means there isn’t a fee anymore for a transaction. The ‘fee-less’, ‘decentralised’ and ‘scalable’ features are what differentiates the DAG system from a blockchain model.
However, with a different model comes new obstacles. In order to be completely secure, the whole IOTA ledger will have to be constantly verified by the decentralised network. So with an infinite amount of possible future transactions, the DAG ledger will become infinitely large and time-consuming to verify.
On a positive note, IOTA has recently pushed its boundaries into the mainstream with bullish news. Jaguar Land Rover is aiming to implement a “smart wallet” using the IOTA system for data sharing and collection e.g. traffic conditions, with a reward model for IOTA currencies — that can then be used for tolls, parking fees or other driving expenses. In fact, IOTA has already established significant partnerships in the automobile industry in the US alone. For instance partnerships with Audi, Wolkswagen and Jaguar, which are needless to say one of the largest car manufacturers worldwide.
Another recent piece of news is the launch of the IOTA Academy by the IOTA foundation, that aims to educate the mass audience with the online program. This routine has been proved successful among others e.g. Binance Academy and Coinbase Earn, all with educational purposes.
There are way more potential in merging the IOTA to become an integral part of our daily lives, and this is only the beginning of it. However with such innovative technology comes big risks, so let’s wait and see how IOTA will progress in the future, whether bearish or bullish.
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