An introduction to IOTA



IOTA is a promising solution to infrastructure challenges faced by the IoT (Internet of Things)

Created in 2014, IOTA is a platform for applications, as well as a financial settlement and data-transfer layer. IOTA is special because it has taken the first big step beyond 'Blockchain'. IOTA champions a new technological innovation called the 'Tangle' (or DAG). This light-weight, versatile and effective solution makes IOTA perfect for IoT micro-transactions. IOTA is scalable and completely fee-free!

For the first time ever you can create effective machine-to-machine, micro and even nano-transactions.

So, how does it work? In a traditional 'Blockchain', each block, containing several transactions, gets created by a miner who in return receives a bounty (usually the amount of fees paid for the transactions in that particular block). In a 'Tangle', however, every transaction confirms two previous transactions (after checking for double-spending etc.), which allows the network to operate at an unprecedented scale and without miners, and therefore, without the need for any transaction fees.

Here is an example to help you visualise the difference between IOTA's 'Tangle' and the traditional 'Blockchain':


All IOTA tokens have been created in the Genesis-Transaction; IOTA is non-inflationary and cannot be mined. The total supply is (3^33-1) / 2 or 2,779,530,283,277,761.

To simplify things, IOTA uses the SI system to name quantities: