What is IOTA (MIOTA) Crypto Beginner’s Guide
As computers continue to progress in their processing capabilities so too the risks for their abilities to be abused by hackers. You might be wondering why better processing would be an issue considering all the benefits that tie in with it. One of those issues lies within blockchain technology.
As you may already know, blockchain technology is one of the most secure methods to conduct data transfers and transactions. Unfortunately, this security has been tested on multiple occasions with many unexpected failures. While some cryptocurrencies don’t offer much in the way of security others like Bitcoin and Ethereum do. But even these major cryptocurrencies are vulnerable.
This primarily because faster computers mean higher probability to solve cryptographic keys with minimal energy required. This means those once secure blockchains will now be at risk of being breached, data being altered and/or stolen, and more. So where do people go from blockchain technology?
Is there a better way to conduct transactions in the future that doesn’t rely solely on blockchain networks? While the future is never certain, it doesn’t mean there aren’t solutions currently in the works for this upcoming dilemma. One such solution lies within a ledger and name you might already be familiar with – The Internet of Things.
IOTA: The Altcoin that Can Open Doors into the Internet of Things
The Internet of Things is primarily an open-sourced system that allows you to connect all devices that have an IP address. What IOTA offers is an open-sourced database that will help power the Internet of Things platform. Users will be able to use the database to conduct transactions, transfer data, and more.
The main objective of IOTA is to give users a reliable alternative to both banking institutions and cryptocurrencies that are heavily dependent on blockchain technology. The developers intend to do this with by constructing the ledger of everything. This ledger would store all transaction data and any other bits of data that is shared on the IoT platform.
Now you might be wondering how does a cryptocurrency not use blockchain technology? Well, the secret to IOTA’s system is with the platform Tangle and a little mathematical concept called directed acrylic graphs (DAG).
How Does IOTA Work?
IOTA is basically a combination of altcoins and directed acrylic graphs (Tangle). IOTA is the only cryptocurrency that currently does not use blockchain technology. Instead, it uses its altcoins as a type of payment method and Tangle. Tangle is comparable to blockchain in the fact that both are a type of network in which data is transferred.
However, Tangle works by storing data in streams that are entangled instead of the usual blocks. This means for transactions to go through, senders will have to do their own proof of work. The kind of proof of work that is expected will result in two approved transactions, one is for validating the transaction and the other is for making the transaction.
By having the senders do their own proof of work this makes IOTA a completely decentralized system that is not heavily reliant on teams of miners. For transactions to go through faster, the network only needs more users since each user is processing two other senders’ transactions.
While this might seem like a drawback compared to mining practices of Bitcoin and Ethereum, it does give users more control and security in a way.
Taking a Look into the IOTA Wallet
Since IOTA doesn’t function on the basis of blockchain, it uses its own set of wallets. There are four main wallets that are used with IOTA.
They are as follows:
- The full node uses an IRI (IOTA reference implementation) that is ran and is accessed locally by a GUI. Requires a static IP that is connected to neighbors in order to function.
- The light wallet (GUI)A seed/account that operates using an interface. It works by accessing a full node in a different area, similar to a node in a server.
- The headless nodeA type of full node that runs within your browser via a UI called Nostalgia. It requires a static IP that is also connected to neighbors and will run inside your local console. The main benefit of this variant of the IOTA wallet is you can run multiple seeds/accounts at the exact same time.
- Which systems the IOTA wallet can be used onCurrently, the IOTA wallet only works for Windows OS and a downloadable IOTA app wallet version called NodeJS.
What are the Benefits of Using IOTA?
Since there are no miners needed to validate transactions, it allows the network to be more decentralized compared to Bitcoin, Litecoin, and Ethereum.
No transaction fees
Since there are no miners, there is no reason to pay transaction fees for transactions to be processed.
The network encourages more users to take part since this is what speeds up the processing of transactions and data transfers.
Can process other types of data beyond transactions
Transactions are the only type of data that can be transferred. The ledger is structured to handle all types of data exchanges. A major feature is the machine to machine (m2m) communications.
Since IOTA uses special signatures it makes the network more resilient to the next generation of quantum computers and other technology.
Offers pay on demand and micropayment options
All devices that are connected are not required to have perfect connectivity in order for transactions and data transfers to be processed.
What are the Drawbacks of Using IOTA?
- Transaction speed is based entirely on how fast a sender’s computer can process a proof of work action
In order for transactions to be processed quickly, the network requires a fairly decent sized user-base. The more active users on the network the more efficient it becomes. But if there aren’t enough active users, then the network can’t work as well as it could.
Final Thoughts on IOTA (MIOTA)
While IOTA may have a few security issues, it is fixing them quickly. The only real issue will be whether or not enough users will take part in the Internet of Things platform and competition from major corporations such as Amazon. The future may not be certain, but the new alternatives to blockchain technology will be the step forward as computers make their own progress.