What Is IOTA and the Technology Behind It?
IOTA is gaining popularity across Dubai UAE and rest of the Middle East so we decided it is now time for a good review. Cryptocurrencies like Bitcoin, Ethereum and others are trying to revolutionize the world through Blockchain technology. Interestingly, there has been a leading cryptocurrency IOTA that is taking part in this revolution without the use of Blockchain and has instead used DAG (Directed Acyclic Graph) to change the world.
What Is IOTA?
IOTA stands for Internet of Things Application. The Internet of Things (IoT) is a leading technology that aims to create smart cities by connecting entire offices, homes and institutions with the Internet. It looks to by embedding devices like alarm clocks, refrigerators and ovens with computer code. However, IoT is facing a lot of problems related to scalability and security. This is where IOTA is going to be the game changer.
In IOTA’s circles, DAG is also known as Tangle. Directed in DAG means that each node in IOTA has a direction or link while acyclic means that there are no loops in the network. Moreover, there are no fees charged to users for engaging in transactional activities in IOTA’s network.
How Does IOTA Work?
IOTA has one of the strongest teams in the crypto space as well as a huge support of organizations. IOTA can be seen as storage system where objects can be linked. Instead of Blockchain, IOTA uses DAG to maintain its ledger. This means miners in IOTA do not solve computational problems to add blocks in the Blockchain. If blocks are not a part of IOTA’s network so how are the transactions validated?
Each node in IOTA has the information of a transaction including details about users who conduct the transaction as well as the quantity of the currency exchanged. In IOTA, a single transaction is validated by at least two transactions (also called edges to a node) which create a network that looks like a directed graph. If a transaction in IOTA’s Tangle has less than two incoming edges then it is considered as an unconfirmed transaction.
A new transaction is added in Tangle by attaching it with any two nodes. This means that new transactions validate older transactions by adding an incoming edge. This is important as it quickens the network and solves the scalability problem which is faced by Bitcoin and other Blockchain platforms. These platforms are unable to handle new transactions and thus their network slows consequentially with the increase of traffic.
There have been questions related to the reliability of transactions in IOTA’s network. Each node in IOTA’s network carries a certain “weight” which represents the effort of the node to work on a transaction. The higher the number, the greater the node worked on a transaction. Moreover there is also one more number associated with a node called cumulative weight that represents the work done by others nodes that validated that specific node.
Many people in the Middle East are only investing in cryptocurrencies that are based on Blockchain. While Blockchain is indeed a promising technology but one should not put all their eggs in a single basket. Thus, you should invest in a reputable cryptocurrency like IOTA that is using a different technology.