May 22, 2024

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Business & Finance Blog

IOTA 101: A BEGINNER’S GUIDE

2 min read

Released in June 2017, IOTA (MIOTA) is a revolutionary cryptocurrency that is not based on the traditional blockchain technology, used by other cryptocurrencies. Referred to as “Digital money for the Internet of Things,” IOTA is based on the Tangle technology, which is a directed acyclic graph (DAG) used for storing transactions.

Driven by the growing network of connected devices on the Internet or the Internet of Things (IoT), IOTA promises to deliver a global infrastructure that enables machine-to-machine transactions to occur seamlessly and at negligible transaction costs.

How IOTA differs from other cryptocurrencies

Most cryptocurrency transactions including that of Bitcoin are processed into sequential blocks by a process called mining. With a limit on the number of transactions that can be processed within a block, scalability always remains an issue with blockchain technology.

On the other hand, the IOTA-based Tangle technology eliminates the need to have transaction blocks, thus allowing for improved scaling. Instead of having miners to verify each transaction, each IOTA transaction creator is required to verify and approve two previous IOTA transactions on the network. This also eliminates the need to pay transaction fees, thus enabling IOTA to execute small transactions, also called as nanopayments. A primary case for nanopayments is the use of Internet of Things or IoT-connected devices to conduct these small transactions.

Optimizing IoT for IOTA transactions

A vast majority of devices connected to the Internet are not fully utilised for their computing power. IOTA’s plan is to allow device owners to earn money by sharing their unused computing power with other users. This computing power of smart and connected IoT devices can be shared in real time using the Economy of Things. IOTA offers the real-world potential for this machine-to-machine economy that goes beyond personal computers and can be used for a variety of connected devices. Using IOTA, smart contracts can also be efficiently managed and utilised.

Benefits of IOTA technology

Apart from enabling microtransactions and negligible transaction fees, IOTA provides multiple benefits through features such as Masked Messaging, a secure and encrypted mode of transferring sensitive data among smart devices. Additionally, any connected device with a chip inside can be leased as a service, along with other digital assets such as computing power, computer storage, and Wi-Fi bandwidth.

Investing into IOTA cryptocurrency

Like any other cryptocurrency, investors can buy IOTA with USD on supported cryptocurrency exchanges including the Bitfinex exchange. With a current market cap of around $1.3 billion, IOTA is ranked 11 in the list of top 100 cryptocurrencies with a trading price of $0.483. While in 1-year the current IOTA Price is estimated to be around $1, the 5-year prediction for this cryptocurrency is $38, making it among the best cryptocurrency to invest in at the current price levels.

Conclusion

Developed as a free transaction network, IOTA offers a lot of promise as it is the first cryptocurrency to utilise the enormous market potential of the IoT technology. Based on the hugely-scalable Tangle technology, investors can hope to reap decent returns by investing in this cryptocoin.