IOTA Beginner Guide. What is IOTA?

Learn about IOTA (MIOTA) in this Beginner’s Guide

IOTA is a next generation public ledger, with a cryptocurrency called MIOTA (Millions of IOTA or Mega IOTA). The currency is specially designed for the Internet of Things and currently it holds in the top ten spot by market capitalization with around 10 billion in market cap as of writing this tutorial. The ICO was in 2015, but the token started trading in 2017. The interest for the coin was so massive that the enormous trading volume at the start crashed Bitfinex’s servers for few hours.

IOTA aims to support and be part of the next industrial revolution, machine economy and the next big thing-the Internet of Things (IoT). They aim to be the backbone of this newly forming industry that has far bigger potential than a lot of people think. The project was publicly supported by the big exchanges and some big names in the corporate world. There were some controversies, but this guide is not going to focus on that. For more technical information on IOTA’s currency, project, team and future plans you can read our in-depth guide.



How does IOTA work?

One of the main innovations is the “Tangle”. It is an advanced version of a ledger based on directed acyclic graph (DAG) which means there are no blocks. Unlike Bitcoin’s blockchain architecture, used to maintain its ledger, the “Tangle” combines the sending and the validation parts of transactions. This means that instead of being verified by miners or stakers, transactions are confirmed by the following transactions of the whole network. This allows for everyone to have equal say in the transaction process. The DAG technology is fairly new, but in time it will reveal its full potential, with advanced versions being invented.

That is why, if you want to make a transaction in the IOTA network, you need to verify two other transactions. This is some kind of Proof of Work. The architecture of the network and the nodes (peers) are represented by a direct graph of connected transactions, which makes the network lighter, more scalable and allows a no-fee structure. These are all problems most cryptocurrencies face. All of this leads to a decentralized and self-regulating peer-to-peer network that is not controlled by big groups of miners, thus limiting the usage of electricity and hardware. The network looks like this:


Transaction making process

Verifying a transaction is split in three stages. It starts with signing it with the private key, them the MCMC algorithm selects two unconfirmed transactions and checks if they conflict each other. Finally the node must solve a cryptographic puzzle. The third step must be completed in order for the transaction to be valid and to become part of the network.

IOTA maintains some features from the blockchain like some form of Proof of Work, improved DAG technology and the peer-to-peer validation mechanism. This makes the network Tangle more efficient and with faster transaction time. The network will scale with the increasing transactions made and the adoption of the network.


One of the benefits is the fast transaction time. This is a big problem for Bitcoin right now with transactions being verified with days and with extremely high transaction fees. IOTA will make micro and nano-transactions possible and part of everyday life because of the no-fee structure, due to the lack of miners and no centralization, bringing more business opportunities. Because of this less hardware power and electricity is needed.

Another benefit is scalability. In Proof of Stake and Proof of Work blockchain cryptocurrencies, the incentives for the miners, to keep the network running, are the fees they get/mine. The scaling issues come when making large amounts of transactions and micro payments. Currently IOTA can do up to 1500 transactions per second. But because of the incredible way the system is build the more transactions are made, the more the network can handle. That’s why IOTA’s potential is so big.

Another benefit is the unlimited data growth and security. With the transaction number increasing, the network will become increasingly more secure with it. The threat of quantum computers to solve and break encryption protocols is also eliminated, due to the tangle being a DAG network. Quantum computers don’t exist for now, but technology is evolving fast.


Machine economy and the Internet of Things

Machine economy means that machines will trade resources and services between them, without third party involvement. In the future, more and more devices will be connected to the internet. Almost all physical devises like cars, fridges, ovens and more will be connected to the internet and will emit data. This internet network between devices is called Internet of Things.

It is expected that the following years millions of devices will be interconnected. The Internet of Things is fairly new and has flaws that need to be addressed like security and scalability, but it is expected that it will be a multi-billion dollar industry. IOTA is optimized to fix some of these problems.

How to buy IOTA

At this time buying IOTA with real money is not available. But buying Ethereum or Bitcoin first and then buying MIOTA at an exchange is pretty easy. The most secure and easy way to buy them is Coinbase. Click this guide if you want to learn about Coinbase, how to make an account and buying cryptocurerncies. After you buy yourself some crypto, you can exchange them for IOTA on most big exchanges. Some of the big names are Binance and Bitfinex.


Final thoughts

The IOTA project is pretty ambitious. It is one of the most innovative projects in the crypto world and it is focused towards another innovative future industry the Internet of Things. It sure looks like IOTA is thinking ahead of its time and wants to revolutionize a lot of industries in the future. The network is running smoothly and is making progress. The team is also growing with experienced new people and the whole team is pretty ambitious towards achieving their goal of creating a futuristic technology. If this what is IOTA guide was interesting to you, click here to read our in-depth guide of IOTA.

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