What Is IOTA? All You Need to Know About MIOTA

Internet of Things Application (IOTA) is a blockchain developed to power machine-to-machine payments within the internet-of-things (IoT) economy. Essentially, with IOTA, all the computing devices embedded in machinery in homes, businesses, and factories will be able to communicate, send and receive data and make feeless transactions.

For instance, an individual can order water from their refrigerator which is connected to a decentralized fleet of water delivery drones. Another is when vehicles interact amongst themselves on highways.

These activities are meant to be facilitated by IOTA. The IOTA has a unique selling point across both the IoT sector and the cryptocurrency space. This is because, unlike other projects, they developed unique consensus methods directly from the blockchain.

This article contains an exhaustive guide to understanding the basics of IOTA, how it works, the IOTA token (MIOTA), and market trends.

The IOTA Ecosystem

In a bid to build and sustain the reputation of a leading network that enables a digital resource for users to securely live in a digitized world, the IOTA Foundation built an ecosystem with integral components while engaging in partnerships across private and public sectors, as well as academia. The following are the components that make up the IOTA ecosystem:

• The Software Node: IOTA nodes are what makes the IOTA “Tangle” work optimally, as they act as catalysts for data transfer, storage, and validation within the IOTA ecosystem. These nodes include full nodes (Hornet and Bee), permanodes (Chronicle), and smart contract nodes (wasp).
• The Tangle: This is mainly the brainbox of the IOTA network. In a Tangle system, multiple nodes connect in quick succession and authenticate transactions. Details are in the next section.
• The IOTA Frameworks: These are recent developments of the IOTA foundation to grant users further access to an extensive range of options for their distributed ledger technology (DLT) needs. These include digital Identity, tokenized assets, streams, smart contracts, access, and strongholds.
• Partnerships: IOTA has been one of the most active projects in the crypto space when it comes to industry partnerships. There are numerous partnerships and collaborations within the ecosystem. Here are some of the most interesting partnerships:
• The government of Taipei has partnered with IOTA in achieving its smart city goals.
• IOTA is creating smart car charging stopovers in collaboration with a group of Dutch investors.
• IOTA brokered a partnership with Volkswagen in 2019 concerning establishing initiatives around smart cars and improving food security.
• Other high-profile names that IOTA has partnerships with include the likes of Microsoft, Bosch, Fujitsu, and Accenture.

The IOTA Tangle System & How it Works

The IOTA Tangle is an innovation in distributed ledger technology and is different from traditional blockchain technology in the way it works. IOTA Tangle was specifically developed for IoT. Unlike blockchain-related cryptocurrencies such as Bitcoin which require a transaction fee, IOTA operates feeless transactions because the Tangle exempts miners from the network.

In a traditional blockchain, a block is preceded by another block, linked together by a cryptographic technique, to maintain the ledger history. Decentralized networks of computers that mine new blocks and verify transactions on the chain are referred to as nodes. Specialized computers that verify transactions are known as miners and they get rewards for their work of generating new coins and securing the blockchain, which is a percentage of the transaction fees.

On the flip side, in a Tangle, multiple nodes connect in quick succession and authenticate transactions. Rather than using a Proof-of-Work (PoW) algorithm where miners are required to form a consensus, Tangle requires each participant to confirm two other transactions to get their transaction confirmed. This system enables a decentralized and self-regulating network structure.

Excluding miners from the IOTA Tangle system means there is no need to pay anyone directly on the network. In simple terms, with the IOTA tangle, the more activity there is on the network, the more validation takes place.

Coordinator (IOTA Coo) and Coordicide (IOTA V2)

Coordinator (IOTA Coo)

Another central piece of the IOTA network has been the “Coordinator” or Coo. This was developed to protect the Tangle in its early stage as a distributed network. This can be seen as a centralized master node that is controlled by the IOTA foundation. The Coo regularly publishes zero-value transactions that perform a check on the IOTA Tangle and highlights the direction of various transactions as it spins.

The IOTA Coo was designed to verify transactions conducted by the Tangle. A transaction is only confirmed if the IOTA Coo verifies and renders it valid. Hence, bequeathing enormous power to the Coo and centralizing the IOTA network.

Coordicide (IOTA V2)

However, the IOTA network has introduced a replacement for the Coo and it is called the Coordicide and it is their solution to a Coo-free Tangle. In essence, the Coo was met with criticism within the crypto space because so much power was given to it which could result in invalidating certain transactions. Also, the Coo was susceptible to cyber-attacks which could cripple the Tangle, hence, the need for the Coordicide to put an end to the centralization of the IOTA network and convert it into a decentralized network.

In essence, Coordicide provides a method of resolving conflicting transactions through a voting system. Nodes will vote and consult with one another to determine which of the competing transactions are deemed valid. Each node has the opportunity to make a request or register opinions on conflicting transactions. A round occurs each time a node requests the opinion of another random node. The nodes then select the legitimate transaction after a predetermined number of rounds and consensus reaches its conclusion.

How Does IOTA Work? Fast Probabilistic Consensus Mechanism

IOTA is not quite similar to the other blockchains. IOTA uses a heavily modified proof-of-work consensus mechanism called Fast Probabilistic Consensus. This means, instead of bouncing off one node, it splits a transaction across every single node that is on the network. Thus, the workload gets split among all users on the network.

To stay active, users have to confirm two transactions for every transaction that is sent out. Thus, IOTA does not use blockchain technology, instead, uses the Tangle system. IOTA wants to overlay all internet-connected devices, but to scale even further, what IOTA intends to do is to make these devices more efficient without affecting the cost of manufacturing them.

This means anything that is connected to the internet can use IOTA, including traffic lights, water heaters, farming equipment, medical devices, and everything in between, not to mention things involved with ISO 20022 such as banks and ATMs.

IOTA aims to make collaboration between algorithms and machines not only possible but seamless. The more our world turns to internet-connected devices, the bigger this is going to become. It is going to create a massive improvement for manufacturing while driving the prices of goods down, and because the network is feeless, it is absolutely scalable. To make this work, every internet-connected device needs to have an ID and that is something IOTA is working on.

What Is the IOTA Token (MIOTA)?

IOTA has its native token known as MIOTA. This serves as the utility token within the IOTA ecosystem. The MIOTA is used to power micro-transactions between IoT devices.

The IOTA Network has a total supply of over 2 billion MIOTA. This is a fixed supply and there might not be any more MIOTA generated or mined. In this case, the miners are not needed or required to secure the network or verify transactions.

IOTA held a public sale that is its initial coin offering (ICO) in 2015 and was able to raise 1,337 Bitcoin worth roughly $500,000 at the time.

Although it may seem like a small amount, public sales and ICOs were not very common in 2015. The total supply of the IOTA token was issued during the public sale and none were reserved for the founders, they rather purchased the MIOTA with their private assets. Like most other cryptocurrencies, MIOTA witnessed an increased price during the bull market in 2017 and reached an all-time high of over $5 per MIOTA. However, when the bull market collapsed so too did the price of MIOTA.

The MIOTA Market

MIOTA is listed on Gate.io and other major exchanges. Trading volumes appear to spread across various exchanges which means that liquidity is not dependent on a particular exchange.

MIOTA executes smart contracts and performs transactions within the IOTA network. It provides varying products and services through diverse sectors such as Firefly Wallet, IOTA Tech, and IOTA Streams. As a distributed ledger, it provides E-Health solutions, supply chain solutions, mobile and automotive solutions, etc.

Tokenomics

One major way in which the value of IOTA tokens (MIOTA) is different from other cryptocurrencies is that individuals who own MIOTA have undeniable access to fragments of the resources within the ecosystem, notwithstanding the value of such resources in any currency.

One key feature that retains the value of the MIOTA is the existence of Mana within the IOTA network. Mana is one scarce resource in the IOTA network that executes various tasks which include providing defense against Sybil attacks. Basically, MIOTA token owners get Mana which ranks the active nodes over new nodes and possibly grants the nodes processing preference. Also, MIOTA holders are allowed to rent out their Mana in exchange for IOTA tokens or cash.

Mana and Its Use Within the IOTA Network

The IOTA consensus model is a mechanism where node votes are used to settle disputes between transactions. As of IOTA 2.0, the IOTA network introduced a limited resource known as Mana. Mana establishes a method for nodes that influences different components of the IOTA protocol structure and it can be regarded as the core of the IOTA consensus model. Mana is best understood as a tool that is employed in the IOTA network for a variety of purposes, including:

• Rate Control: As a Sybil spam-prevention control mechanism, users’ messages or transactions will be sent or processed based on the amount of Mana they have.
• Fast Probabilistic Consensus Voting: Users’ opinions will be taken into consideration to a greater extent based on the amount of Mana they have. Each node’s Mana state, or the quantity of Mana it has, will be visible in the public ledger (Tangle). This will make it possible to take Mana into account when choosing Nodes at random for queries on conflicting transactions. As a result, in the FPC voting rounds, nodes will choose other nodes at random to receive their opinions, which will be determined by how much Mana they have.
• It avoids Eclipse Attacks with Auto-Peering.

Simply put, Mana can be considered as a comparable reputation token to the MIOTA, owned by addresses within the IOTA network, in an equal ratio to the IOTA token, and can be executed in different use cases.

Governance

The IOTA ecosystem allows for community participation which led to the creation of the IOTA Governance Forum. Community members are offered the platform to express opinions, share ideas, and propose solutions.

The Upsides to IOTA

• The use of Tangle is a major advantage that IOTA has over traditional blockchain, especially with the invention of Coordicide to deal with loopholes created by the Coo.
• The IOTA team’s commitment is unwavering towards the project over the years and its broader visions, especially with the fact that it did not retain any of the tokens during the public sale. The team is actively pushing code on the engineering side and forming formidable partnerships on the business development side. These and many more developmental strides show how they are lighting the way for distributed ledger technology in an interconnected future.
• IOTA does not need to add an upgrade like the Ethereum Merge to operate optimally.

The Downsides to IOTA

• The issue of high-profile phishing of wallet seed phrases has lingered over the years, as well as subsequent IoT theft. In 2019, an academic paper revealed that a ‘hash’ collision was found in the IOTA algorithm which renders the system porous.
• The deterioration in the price of MIOTA is also a thing of concern.

Is MIOTA a Good Investment?

MIOTA has been predicted to play a major role in the next industrial revolution, enabling and encouraging economic relationships between machines and combining human and machine economies. Considering that IOTA is the first distributed ledger technology developed for IoT makes it a highly investable asset.

In considering MIOTA as an investment option, endeavor to ‘do your own research’ (DYOR), consult a financial expert and follow these suggestions for making a worthwhile investment. The first option would be to seek a trustworthy and stable mobile wallet as they are quite convenient as a means for cryptocurrency storage. Another option with high security for investing in MIOTA in the long term would be to seek a hardware wallet for offline storage. This method protects the token from online risks and cyber-attacks.

Also, since the introduction of Firefly, the recent version of IOTA’s cryptocurrency wallet, it enables a smooth investment in the IOTA token. Considering that many crypto experts have predicted that MIOTA is expected to reach a market cap of $0.53 by 2023, MIOTA holders may want to consider hodling their tokens toward the bull market.

IOTA is not a project to just throw aside, it has been around for a long time, and it has made a lot of headway and brokered great partnerships. When we consider the longevity of IOTA and combine it with the fact that it is in the running to be ISO 20022-compliant, it shows that the project has great prospects.

The Tangle, the name of the IOTA infrastructure, has been critiqued by a lot of people over the years within the crypto industry, yet it is still up and running. This however does not exclude the potential risks available in the IOTA project such as MIOTA price fluctuation, concerns around smart contracts as well as wallet phishing.

How to Own IOTA (MIOTA)?

You can own MIOTA via a crypto centralized exchange, so you can begin by creating a Gate.io account. Once the account is verified and funded, find out the steps to buy MIOTA. In a nutshell, you can do this via flash swap, trading the spot market, or even using leverage.

News on IOTA

After what seems like a 5-year break, IOTA is back in the news and this is primarily because it is in the running to be one of the ISO 20022 coins along with XRP, XDC, Quant, and many others.

ISO 20022 is a major project that seeks to change the way transactions are done across the world, and the fact that IOTA is included in this list got many people talking about the future of IOTA.

Useful References

For the latest updates about IOTA, you can visit:

• The official website
• Twitter
• Discord
• Reddit
• GitHub

Take Action on IOTA

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• IOTA/USDT
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