Iota (IOTA)

Overview

Iota was designed as a cryptocurrency for the IoT (Internet of Things) era. Where billions of devices can send tiny amounts of value to one another with minimal effort. It is the first of now a handful of cryptocurrencies using a DAG (Directed Acyclic Graph) as opposed to a standard blockchain data structure. The key purported feature of this alternative structure is scalability. Iota claims that its network becomes quicker the larger the number of active nodes on the network. This is because in order to submit a transaction to the network, the node must first confirm two previous transactions selected at random. In other words, you must give something back to the network in order to transact with it. The logic is sound but in practice, the Iota network has struggled to keep up with increasing traffic. As the first of its kind, this could simply be technical teething issues and time will determine whether DAG is a better option for decentralized ledgers.

IOTA Quick Specifications

Price: $3.35 USD
Market Cap: $9,298,890,766 USD
Total Supply: 2,779,530,283 iotas (Fixed)
Current Supply: 2,779,530,283 iotas
Algorithm: Kerl (SHA-3 like)
Block Time: Not a blockchain
Transactions: 500-800 tx/s
Status: Full Release
View Full Specifications

IOTA Founders

  • Dominik Schiener - Twitter
  • David Sønstebø - Twitter
  • Sergey Ivancheglo
  • Serguei Popov

IOTA Innovations and Unique Features

DAG (Distributed Acyclic Graph)

Iota was the first DAG style cryptocurrency. Its success and mass adoption is to be seen.

Snapshotting

Iota's snapshotting functionality compiles all transactions in the network into one transaction for each address (essentially the addresses balance). This reduces the size of the ledger significantly. It is done in accordance with the needs of small IoT devices.

Good Parts

No transaction fees
Novel implmentation
Micro-transactions
Quantum-resistant
Data pruning

Bad Parts

Unproven technology
Wallet GUI is basic and can be confusing to non-technical-minded people
Having to compute to transact is contrary to the use case of small IoT devices
In-house cryptography hash function (generally considered bad practice)

Development

Iota is open source and available on GitHub. The reference implmentation and main wallet are released under the GPL v3.0 license and libraries are MIT licensed. There are official libraries for JavaScript, Python, Go, and Java. Iota offers a developer hub with references and examples on using the libraries to interact with the network. The various GitHub repositories are active with a handful of contributors commiting changes almost daily.

Coin Usage

The coin itself is used as a currency. The value comes from its utility to transfer wealth between two accounts.

Release

Iota was released onto the market as an ICO. It raised 1,191 BTC and distributed 999,999,999 miotas (units of Iota) putting it around the 20th most successful ICOs to date.

Concerns

Hardware Requirements

The marketed use case for this cryptocurrency is in small IoT devices. But small devices will require the adoption of a hardware-accelerated features for Iota's 'quantum-resistant' hash function Kerl. Without this, the device may not possess the processing power to transact with the Iota network. Iota's founder (David Sønstebø) has denied that this is a concern as "Even without the hardware IOTA can do more tx/s than any public blockchain". David went further to state that "As machine payments and data integrity become and integral part of the future technolocial landscape they either include a component that can ensure this or they become irrelevant and suffer the fate of obscurity and bankruptcy."

Locating Peer Nodes

Currently, the Iota protocol does not include a procedure for locating peer nodes. The IP addresses of neighbour nodes must be manually entered into any new node. This concern is being addressed but presently makes joining the network clunky for new users wishing to attach to the network.

Unprofessional Communication

Some have expressed concerns with the founder's (David Sønstebø) communication style being unprofessional.

The Co-Ordinator Node

Presently, the Iota network requires a special node known as the 'Coo' (short for co-ordinator). The node's purpose is to protect the network from 33% attacks during its infancy. According to Iota, once the network reaches a certain level such that 'Coo' is no longer needed, it will be shut down.

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