Could IOTA challenge BITCOIN?

What is IOTA?

IOTA and their coin named MIOTA emerged in 2015, they launched to the cryptocurrency market in May. Their potential assimilation with the Internet of Things (IoT) is both a stroke of genius and quite intriguing. IOTA is even more innovative than most cryptocurrency, it’s the only coin to use the Tangle, a revolutionary blockless distributed ledger. The Tangle enables the transfer of value of this cryptocurrency, without any fees, and with far less of the processing power required to manage the block chain.

Why is IOTA so innovative?

IOTA and the Tangle have been designed to integrate with everything, from every programming language, to complete amalgamation with the Internet of Things (IoT). They seamlessly intertwine with system after system, unlike blockchain which requires a particular setup and software. IOTA requires no additional development to integrate, it will work with just about everything, today. IOTA is created to be an intrinsic part of the machine economy, predicting a future where the IoT and every element of the web can use IOTA to process micro and nano transactions of not just currency, but data, every second of every day.

The unique IOTA Tangle architecture could provide developers with a whole new set of tools, and opportunity for many.

IOTA has no transaction fees?

Here’s our major comparison with Bitcoin. Bitcoin uses the block chain ledger. Miners validate every transaction using both high level processing power on their computer systems, and a good deal of electricity. While doing so they mine, and are rewarded, in coin. Thus, releasing new coin to the market, enabling transactions, and managing the security and decentralisation of a cryptocurrency.

Credit cards can process hundreds of thousands of transactions per second, even using the most specialised computer systems in circulation, Bitcoin can only process tens of thousands of transactions due the sheer science behind the process.

With IOTA there is no blockchain, and no miners. If you make a transaction with IOTA, the Tangle uses your processing power and verifies your transaction and two more besides. You have no transaction charge, and you contribute to the network by using your processing power and electricity. IOTA is infinitely scalable and has the potential to process transactions at a rate that could exceed standard currencies and payment methods.

Most other cryptocurrencies also use blockchain, and a network of miners, to deliver their transactions and generate new coin.

IOTA is faster too?

Yes, IOTA, by using the Tangle is faster. Every transaction and user, increases the power and speed of the network. Unlike blockchain cryptocurrencies which get slower with more users as each transaction is separately validated, i.e. more work for the miners.

IOTA and the Tangle remove the need for miners, and any other third party, making it truly decentralised.

So how does the Tangle work?

Blockchain technology works by bundling transactions in each block, which is then verified by miners.

The Tangle is a Directed Acyclic Graph or DAG chain, a collection of notes or vertices. In the Tangle every transaction forms a new block, is verified by itself, and verifies two others behind it. Users and validators are one and the same. IOTA creates self-sustainable economy based on demand. The IOTA or Tangle network is completely scalable, it can grow transaction by transaction with no foreseeable limit and no additional cost.

How could the IoT utilise IOTA?

The Internet of Things is set to develop into the Internet of Everything (IoE). In just a few short decades every machine, device and gadget will be smart and internet connected. It’s expected that not only will we communicate with our machines, they will communicate with each other, seamlessly. IOTA’s fluid integration with just about everything means in can connect and enable transactions of data, not just currency, operating as a secure transport layer. IOTA is even prepared for that fateful event of complete internet failure, they have a protocol where connected machines can communicate via other channels too such as Bluetooth, Z-wave, Zigbee, or LoRa.

Does IOTA have any drawbacks?

Right now, IOTA doesn’t have many flaws, the suspicions are it could be more susceptible to security breaches than blockchain due to the entire number of both transactions and validators. The Tangle will be huge web of transactions accessed openly by every system, giving hackers many avenues to attack. Secondly, it may not be as fee less as it appears. The validation of the transaction, plus two behind it, will take power and processing so there have to be costs attached to this. However, IOTA certainly doesn’t need the miners and their systems, which add the transaction fees to blockchain cryptocurrency like Bitcoin.

So, what are those advantages again compared to Bitcoin?

In comparison to Bitcoin, or any other blockchain cryptocurrency IOTA is:

  • Free to transact
  • Complete scalable and modular
  • Decentralised with no third parties

IOTA also opens up a whole new realm of possibilities for transacting data, not just currency, for future technology and for the IoT. Unlike Bitcoin and other blockchain cryptocurrencies IOTA can integrate with just about everything, without any additional development or software, today. IOTA describe themselves as the backbone for the IoT, they wish to enable the entire machine economy, and only time will tell if they are successful with that goal.

IOTA vs Bitcoin right now

IOTA broke records by exceeding 1.5 billion USD in market capitalisation on its first day of trading (13th June 2017) on Bitfinex’s cryptocurrency exchange. IOTA currently hold the 8th position in the Top 10 cryptocurrencies. An IOTA (or MIOTA) today is valued at $0.55 with a circulating supply of 2.78 billion coins. Bitcoins right now are worth $4,293.17 with a circulating supply of 16.6 million.

References and articles of interest:

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