Do you already have a lamp in your house that you can control with your phone? Or can you already raise the temperature in your house when you are on the road from work? More and more we see that devices can be controlled via the internet or bluetooth. We call this the Internet of Things (IoT).
If you have experience with this, you may have noticed that there is a disadvantage to these devices. Because they are made by different manufacturers, not all of them can work together. As a result, you need different bridges and protocols so that you can still let them work together.
IOTA is a project that aims to provide a solution for this. Linking all kinds of IoT devices together creates a network of devices that can process transactions at lightning speed. In this article we explain more about the technical functioning of IOTA.
- 1 What is IOTA?
- 2 Who invented IOTA?
- 3 What is Internet of Things (IOT)?
- 4 How does IOTA work?
- 5 Where can I buy the MIOTA token?
- 6 How can I save the MIOTA token?
- 7 What is the price of MIOTA?
- 8 Conclusion
What is IOTA?
Imagine your fridge doing its own shopping by being directly connected to your favorite store. Or that your smartphone unlocks the front door of an apartment on AirBnB the moment you have paid.
This could soon become a reality thanks to the IOTA project, also known as the future of the Internet of Things (IoT).
This technology is not based on blockchain , but on an acyclic oriented graph called Tangle. The network aims to offer free transactions, secure transfers and an unlimited number of transactions.
If the user wants to make a transaction, he must first make the power of his device (computer, smartphone, refrigerator, etc. ) available to the network to confirm other transactions carried out by other users of the Tangle network. These transactions are confirmed with a Proof of Work (PoW) consensus algorithm .
In other words, the user’s device will solve a series of math problems to validate pending transactions on the network. The IOTA validation algorithm is very simple and aims to execute as many transactions in parallel as possible to limit the risk of attacks. It is not comparable to the PoW used by blockchains like Bitcoin .
In order for a transaction to be validated, each user must validate two other transactions. So the more transactions there are on the network, the greater the number of confirmed transactions. Thus, the scalability of IOTA is theoretically infinite, meaning the system can easily adapt to an increase in load, while maintaining performance and functionality at a high level of service. The same principle applies to transaction time: the more transactions that are made, the faster they will be confirmed.
IOTA is also quite innovative in that it is designed with a trinary computer system. It thus stands out from all other existing cryptocurrencies that are based on classical binary systems. This trinary mechanism has as many advantages as disadvantages, and some security flaws have already been pointed out in this regard.
And this is not the only drawback of the IOTA system. Most importantly, to this day, the network remains somewhat centralized, due to the presence of an entity called the coordinator; this is in fact a central server that has to ensure that there is no hacking by setting “benchmarks” at regular intervals that are considered safe.
This system is in place to protect the network before it matures enough to be fully decentralized. Fortunately, it appears that the IOTA Foundation is approaching a solution that will enable true decentralization.
Who invented IOTA?
IOTA was conceived and is being developed by the IOTA Foundation. The IOTA Foundation was founded in early 2015 by David Sønstebø, Dominik Schiener, Serguei Popov and Sergey Ivancheglo.
These financially savvy Germans were one of the crypto pioneers and the first to emphasize the need for a new type of transaction network to better support the growing IoT industry.
In 2017, IOTA announced several partnerships with Internet of Things mega-players, such as Cisco, Microsoft, Samsung and Volkswagen. The surge in trading volume that catapulted this announcement was historic; In less than 24 hours, exchanges processed more than $800 million in transactions, most of them on Bitfinex.
What is Internet of Things (IOT)?
While Ethereum was designed for DeFi, IOTA was created to support the Internet of Things. But what exactly is the Internet of Things? Let’s take a closer look at that.
Internet of Things (IOT) is a kind of web 3.0 that allows machines to communicate with each other. In concrete terms, it concerns the interaction between objects that are connected to each other via Bluetooth or WiFi. For example, when your personal assistant activates your heating system when you arrive at home, this action is part of the Internet of Things. The same applies to a connected watch that transmits information to the scale, or the lamps that you can control with your phone.
Internet of Things is in full development. More and more devices are appearing that are connected to each other and make our daily lives easier, improve processes, etc. Currently, the Internet of Things is used in various fields such as gaming, transport, industry, health, the environment, home automation, and much more.
The more the Internet of Things develops, the more key players in the field will turn to IOTA. In addition, the IOTA technology has been adapted to handle a large number of transactions. It does not suffer from scalability issues as is the case with Bitcoin or Ethereum (at least before the release of version 2.0). In addition, signing partnerships with big names would inevitably positively impact IOTA’s notoriety and thus its price.
How does IOTA work?
IOTA’s solution is to remove various key concepts and topographical constraints from a blockchain. MIOTA, IOTA’s cryptocurrency, is pre-established and the consensus on transactions is different than on a blockchain. The developers of IOTA have proposed a new data structure called Tangle.
IOTA does not use the traditional blockchain design used by most cryptocurrencies. Instead, it has developed a new platform called Tangle. It uses a mathematical concept known as Directed Acyclic Graphs (DAG).
To understand Tangle, we need to learn about what computer scientists call a Directed Graph. A directed graph is a collection of vertices (circles), which are connected by edges (arrows). The illustration below shows what such a focused graph looks like.
Thus, Tangle is the name used to describe the transaction arrangement and data integrity layer of IOTA’s Directed Acyclic Graph (DAG ). It is structured as a chain of individual transactions linked together and stored by a network of participating nodes.
The network participants are jointly responsible for validating the transactions and must confirm two transactions previously submitted to the network for each transaction they issue.
In the illustration below you can see what this Tangle can look like, so that you may better understand how it works.
Transactions can thus be spent on the network at no cost, facilitating micropayments. To avoid spam, every transaction requires computational resources based on Proof of Work algorithms, to find the answer to a simple cryptographic puzzle.
Trust between nodes
The IOTA system uses a trust-based algorithm to approve the transaction. Suppose a transaction has been approved 96 times in the past. There is then 96% confidence that a nodes will approve it in the future.
The weight of a transaction is related to the concept of trust. If it goes through the tangle, a transaction takes on more weight. The weight of a transaction increases with the number of approvals. Once a transaction is confirmed, it will be broadcast to the entire network. Then another unconfirmed transaction can choose the just confirmed transaction as one of the tips to confirm itself.
This method of confirming a transaction results in no costs and low energy consumption. This allows IOTA to be used on a wide variety of devices and machines with different power requirements.
In the illustration below you can see how increasing the transactions would look like. This provides extra security for the network.
Transfer of value and data
IOTA supports both value and data transfer. A second-layer protocol encrypts and authenticates messages, or data streams, that are sent and stored on the Tangle as zero-value transactions. Each message contains a reference to the address of a follow-up message. This links the messages into a data stream and ensures the secrecy of the transmission.
Thus, authorized parties with the correct decryption key can only follow a data stream from the point where they enter. If the data stream owner wishes to revoke access, he can change the decryption key when publishing a new message. This allows the owner to exercise granular control over how data is exchanged with authorized parties.
On a large scale, IOTA promises impressive features: fast transaction checks, zero costs, increased security, etc. But the network is not yet operational on a large scale.
In order to maintain a certain balance in its development, IOTA calls on a so-called coordinator. The coordinator is intended to protect the network as long as the volume of transactions is low. The intention is to deactivate this system when the network reaches a large enough transaction volume to be self-sufficient.
This leads to one of the main criticisms of IOTA. It has been argued that because IOTA transactions are submitted to this coordinator, and specific details about the coordinator’s operation are not publicly available, IOTA in its current form is effectively “centralized”.
In the illustration below you can see what the structure between the coordinator node and the normal nodes looks like.
We can’t access the coordinator’s source code, so we’re not sure what he’s doing. However, without this system, the network appears to be exposed to a number of vulnerabilities. This indicates that the coordinator still has some influence on the factors associated with these vulnerabilities.
According to Sergej Ivancheglo, co-founder of Iota, the coordinator is currently being used to protect against a 34% attack. The 34% attack refers to a scenario where an attacker could consume more than a third of the network’s total processing power, producing conflicting transactions.
Any IOTA user can independently operate an entire node. By doing so, you contribute to the computing power to keep the blockchain valid. Without rewards for performing this task, there is no economic incentive to keep a node running.
However, a node can benefit a user if they already process a large number of transactions, if they are running an application or system that would benefit from a reliable connection to the tangle or shorter transaction times, or if they simply want to support the IOTA community .
It should be noted that the 34% referred to here do not refer to just 34% of the network. Iota’s Tangle-related devices are only exposed to a subset of the entire network. So even if you were able to generate enough computing power to take control of 34% of the network very quickly, you would also need to find the entire network.
In the illustration below you can see the difference between a network with normal transactions and a network on which such an attack is carried out.
IOTA’s original Proof of Work algorithm is called Curl. Curl uses ternary logic, which means that information is stored in three states, as opposed to the traditional two of binary logic. Ternar logic is a feature of ancient Russian computer science. It may offer certain performance advantages over traditional logic, but it is currently not very practical to find or create processors that use this logic.
That’s where JINN comes in. JINN Labs is still in stealth mode, but they appear to be working on an asynchronous ternary processor for use in IoT applications. Several key members of the IOTA team appear to have been involved in its development.
The assumption is then that the JINN processor will be able to process IOTA’s ternary algorithm more efficiently than traditional processors. The goal is that the JINN ternary processor will one day be integrated into the majority of IoT devices, giving these devices the ability to exchange value, and secure IOTA as a means of doing so.
But the use of Curl’s algorithm and ternary logic is the basis of another criticism of IOTA. This algorithm was developed by members of the IOTA team. Since cryptographic algorithms are loaded with sensitive information, they usually undergo a thorough evaluation before being used in real-world applications.
Neha Narula and her team at MIT argue that IOTA’s cryptography has not been properly verified. Narula claims that her team was able to generate a collision in IOTA’s hashing algorithm. In other words, with practically available computing power, they were able to identify 2 keys with the same value. This could allow attackers to generate conflicting transactions.
In Ivancheglo’s response to Narula’s report, he argues that the vulnerabilities were intentionally added to the code as a form of copy protection (which also led to other objections) and that the coordinator makes it impossible to exploit these vulnerabilities.
He also argues that the uniqueness of the system justifies the risk of developing specialized cryptography. The team has apparently released some tweaks to the cryptography used for certain tasks, negating any security vulnerabilities.
The MIOTA token is a unit of value in the IOTA network. There are a total of 2,779,530,283,277,761 MIOTA tokens in circulation on the IOTA network. These tokens are stored in MIOTA wallets when used by a node, and protected by an 81 character seed, similar to a password.
Of course it is also possible to buy MIOTA tokens as a crypto trader. By buying these tokens for a low price, and then selling them for a higher price, you can make a nice profit with MIOTA. Of course you will first have to research when it is best to buy MIOTA, and when it is best to sell this token.
According to an analysis by Statista, the IoT market is expected to reach approximately $1.6 trillion by 2025. In 2017, IoT technology companies generated $100 billion in revenue. You can perhaps imagine what this could mean for IOTA.
IOTA has already shown that its claims are not made just because they would work in their favor. In the automotive industry, cryptocurrency is used to pay for smart billing services with no transaction fees. In addition, smart watches use IOTA technology to cut insurance costs by keeping people fit.
In the energy sector, IOTA helps to decentralize the electricity grids and thus avoid a total grid failure. In the supply chain sector, companies use IOTA to enable optimal value creation by ensuring transparency.
From this point of view, IOTA could become a big project in the future, which means that the MIOTA cryptocurrency could also be a great investment. Yet MIOTA remains volatile, and it may take more than just the statements of others to actually decide whether you want to invest in it.
Where can I buy the MIOTA token?
At the moment it is not possible to buy MIOTA directly in euros. It is therefore best to go to a crypto exchange that offers MIOTA on their website. Fortunately, there are many different exchanges that offer this coin, as it is a popular cryptocurrency. That also means that liquidity is high enough on most platforms to buy and sell these coins at the best price.
We recommend using Binance or Bitvavo as these exchanges are safe and can offer these coins for the best price. This is because there is high liquidity on these platforms. In addition, there has not been a major hack in the past, so you can assume that it is safe to buy your coins here.
Of course, there are plenty of other exchanges that offer MIOTA, such as decentralized exchanges like Uniswap and Sushiswap . However, the chance that the purchase of these coins goes wrong here is many times greater. This is because you have to go through more steps to get the coins in your possession.
How can I save the MIOTA token?
There are several ways to store your cryptocurrency, including the paper wallet. However, this is not a safe way to store your crypto coins. Fortunately, you can store your MIOTA in a physical crypto wallet, also called a hardware or cold wallet .
This storage method is very secure as it protects you from hacks. Of the physical wallets that can hold the MIOTA token, there are the Nano S or X ledger and the Trezor.
Finally, it is also possible to store your MIOTA token in the hot wallet of the crypto exchange you use. Think, for example, of the wallet of Binance or Bitvavo. However, this way is less secure than a cold wallet. That is why most experts also recommend using a hardware wallet instead of a hot wallet. This way you can be sure that your crypto coins are not stolen by hackers. And that is a very nice feeling to know.
What is the price of MIOTA?
Before you buy MIOTA tokens, you naturally want to know the price. This way you can determine whether the tokens are offered for a cheap or too high price. After all, you want to make as much profit as possible on your investment, which is why it is best to buy MIOTA for the cheapest possible price.
Often you can also see the price of MIOTA on the crypto exchange that you use to buy the tokens. To make it even easier, here’s a link to MIOTA’s current price:
We all want to connect as many devices as possible to the internet. It is of course very useful if you can remotely control certain devices in your home. For example, you can set your lights to turn on when you get closer to your house after sunset.
However, there are also a number of drawbacks to this rapid development. For example, many devices are not yet designed to work together with each other. IOTA is a project that will change this.
The IOTA network consists of all kinds of IoT devices that are connected to each other. When a device performs a transaction on the network, the device must first validate two other transactions. For this, the device will therefore have to make power available to the network, but in return it receives almost infinite scalability.
IOTA is a very special crypto project with a lot of potential. Therefore, an investment in the MIOTA token can be profitable, although we always recommend that you do good research yourself before making an investment. This can of course be done by means of a technical or fundamental analysis.
Thanh Lanh Tran(1989) is Chief Editor from BitcoinUSD.com