IOTA is a cryptocurrency that will enable data exchange between sensor-equipped machines that populate the Internet of Things. A distributed ledger will be created for these transactions.
What IOTA does
Anyone with a bank account is familiar with the concept of a ledger, containing records of their debits and credits. However, we need to trust financial institutions and we have done so for generations to safeguard these records and to guarantee their accuracy and integrity. Unfortunately, cyber crimes and hacking are putting this trust at risk.
With the advent of distributed ledger technologies, we are now able to distribute and synchronize ledgers of data and money in secure, distributed, decentralized and permissionless environments.
The removal of the need for trusted third-parties as the gatekeepers and arbiters of truth, enormous efficiency gains, innovation opportunities and new value propositions emerge.
Blockchain technology has come a long way to solve these problems but come with inherent deficiencies. By solving the inefficiencies of the Blockchain, IOTA, based on the revolutionary distributed ledger technology, the Tangle, is the missing link for the Internet of Everything and Web 3.0. Powering a secure, scalable and feeless transaction settlement layer, IOTA will empower machines and humans to participate in flourishing new permissionless economies – the most important one being the Machine Economy which we are building.
IOTA in the News!
Finally! ??The very first qApp and decentralized IOTA game “Tangle Farm” (more info on https://t.co/W3JHRVT0vs) has been successfully tested in a 3 player session, showcasing the capabilities of the Qubic Lite protocol. ? pic.twitter.com/1peWq5D9sS
— Qubic Lite (@QubicLite) July 27, 2018
What is ‘the Tangle’?
The IOTA distributed ledger does not consist of transactions grouped into blocks and stored in sequential chains but exists as a stream of individual transactions entangled together.
In order to participate in this network, a participant simply needs to perform a small amount of computational work that verifies two previous transactions.
In order to make a transaction in the Tangle, two previous transactions must be validated with the reward for doing so being the validation of your own transaction by some subsequent transaction. With this ‘pay-it-forward’ system of validations, there is no need to offer financial rewards.
Thus transacting with IOTA is and will always be completely fee-free
Furthermore, without the need for monetary rewards, IOTA is not limited to transactional value settlements. It is possible to securely store information within Tangle transactions or even spread larger amounts of information across multiple bundled or linked transactions.
For more details on how the Tangle works, The Tangle Whitepaper
Can anyone run a Tangle?
At the time of writing, there is no way of running a private Tangle – yet. The IOTA Foundation is currently establishing a framework with a set of tools that will enable you to run your own private Tangles. Currently, you can use the Mainnet and Testnet, which should be well suited for any of your testing purposes. For testing, try out PoWbox!
The vulnerability of the Tangle
Those familiar with blockchain technology know that a blockchain is vulnerable if one party has 51% of the computing power on the network.
When that happens it is possible, in theory, for a bad actor to create and verify false transactions.
Since IOTA uses the Tangle to verify its transactions, and it only needs 2 verifications, it’s theoretically vulnerable if one party controls only 34% (greater than 1/3) of the network’s computing power.
The difficulty of implementing a 34% attack against the IOTA tangle shouldn’t be underestimated but it is there nevertheless.
Since the Tangle is a complicated web of nodes and transactions, you’d still have to discover the nest of the network before you could leverage your 34% advantage.
Early in IOTA’s implementation is when it’s most vulnerable to such an attack. Since the early network is small, with fewer nodes, it’s easier for an attacker to accumulate a 34% share of the network. To combat this threat, IOTA is using a “Coordinator” in its early implementation, to ensure the early Tangle isn’t compromised.
IOTA plans to eliminate the Coordinator once the network is strong enough, it does mean that the platform and currency are currently centralized, and you have to trust the IOTA Foundation if you decide to invest.
For more information on IOTA – Read Here
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