IOTA – the “small” difference

All credits to:  – Original post: https://goo.gl/QUKjpY

 

When the Bible speaks of Iota, it means something “very small” – even Goethe took up this meaning in his works. In contrast to this is the crypto currency IOTA, which wants to make it big in the “Internet of Things”.

The name “IOTA” is not chosen by chance, as it contains the abbreviation for ” I nternet O f T hings”. It is often said that IOTA stands for ” I nternet O f T hings A lliance”. No matter, the question is: What is hidden behind the “Internet of Things”? It is understood as the approach to create an infrastructure in which both real objects and virtual can communicate and work together. That sounds pretty abstract. But imagine, you drive into a parking garage and want to conveniently pay cashless, Then you use your Sparkassen-Card at the vending machine, in some parking garages you can pay even when entering and leaving directly at the barrier with your card. Think a step further. How about if you no longer had to worry about whether you can insert your savings card at the entrance or where the next cash machine is? Imagine, your car does it for you automatically. And with an electric car you would have to recharge – no matter where – just drive to a charging station, plug in the plug and worry about anything else. Your car then automatically settles the bill for the electricity.

There are already so many cryptocurrencies. What does IOTA need specifically for?

The cryptocurrency IOTA was developed from 2015 for reciprocal payment by machine-to-machine (M2M) – concrete use cases could be the examples described above. At the moment, middlemen are still needed, namely the owners of the machines and banks. Payments are made in a variety of ways, and computers ultimately “just” book. Nothing happens without a person who initiates it. It becomes complicated and complex when the “middlemen” are not compatible – think of payments that should be made in different currencies. That’s exactly what IOTA wants to change. And IOTA does a lot different to other cryptocurrencies for good reason. For example, while Bitcoin, but also other crypto currencies, theBlockchain technology is used, IOTA uses a related type of this technology, the so-called ” tangle “. In the case of a “conventional” blockchain, the size of the large number of planned payment processes would grow so rapidly that the participating machines could reach their limits. Also the transaction rate (number of executed transactions per second) would be problematic. With the Bitcoin it lies in the single-digit range – there would be the queue at the entrance to the parking garage pretty fast way too long.

Slim data streams

IOTA streamlined the data streams compared to other cryptocurrencies. Only the respective transactions are transmitted. In addition, there is not just one strand, but several that can be executed in parallel. IOTA is thus scalable to infinity. For a transacted transaction, two others must be validated. Anyone who pays with IOTA also participates in the review process at the same time. As a result, each transaction is reviewed multiple times and the “tangle” would grow indefinitely. However, in order not to overload the memory of the connected devices, the Tangle is regularly saved (like a snapshot) and then used as a new reference point.

IOTA protects the environment

The amount of currency units available is limited to 2.7 quadrillion tokens . Unlike other cryptocurrencies, there is no “mining”, so there is no need to use energy to generate the currency. That spares natural resources. Another advantage is that IOTA does not incur transaction fees. IOTA is also fast: One transaction is done in the millisecond range. At the end of 2017 IOTA was one of the 10 most valuable cryptocurrencies

The advantages of IOTA at a glance:

  • Designed for communication between machines
  • No blockchain, but “tangle”
  • Infinitely scalable
  • Fast
  • No mining, therefore environmentally friendly
  • No transaction costs

Investment in IOTA?

Like many other cryptocurrencies, IOTA has been through some wild price changes. What you should consider when investing in cryptocurrencies, read here .

Visit our blog in the future for current topics from the world of finance – analog and digital.

 




Leave a Reply

Your email address will not be published. Required fields are marked *