Iota is a Cryptocurrency designed to facilitate transactions easily in the world of the Internet of Things. Unlike other cryptos, Iota does not use a blockchain but rather a Tangle to confirm transactions.
The Iota white paper was written by Serguei Popov and published December 28, 2017.
While blockchain tech has real-world value, it doesn’t come without its drawbacks. One such drawback is the transaction fee. According to the IOTA whitepaper :
The importance of micropayments will increase in the rapidly developing IoT industry, and paying a fee that is larger than the amount of value being transferred is not logical.
This is where IOTA comes into play. It was designed from the ground up to have absolutely no transaction fees. This solution was made possible with Tangle technology.
The network is able to achieve consensus with no transaction fees with the use of Tangle technology. The Tangle is the coined term for IOTA’s DAG (Directed Acyclic Graph) on which the network is based. Instead of being packaged into blocks and chained one after another, IOTA’s transactions are connected in a big tangled web.
Rather than having mining farms mine whole blocks, each user verifies the past two transactions with a tiny amount of work before he or she can send their own transaction. In this way, the cost of each transaction is the cost of electricity it took your node to verify the past transactions rather than a fee set by a network of miners.
Furthermore, since Tangle technology doesn’t have blocks, one doesn’t need to wait for verifications. Transactions are mined in parallel, and as a result happen instantly. This is precisely why Tangle-based cryptocurrencies are able to achieve the highest TPS (transactions per second) rates among all blockchain-based currencies.
IOTA’S NETWORK RESILIENCE
Another advantage of using Tangle technology is that the network becomes more resilient to quantum computing and also to the infamous 51% attacks you may have heard about (which is actually a 34% attack).
It was believed that if an attacker had access to 51% of Bitcoin’s network power, he or she could take over the cryptocurrency. However, it was later found out that 34% was enough. Essentially what is required to take over a blockchain-based network is a certain percentage of the total hashing power. Because of IOTA’s network topology, there are three things that are required in order to perform such an attack:
- A percentage of the network hash rate
- Having a full view of the network
- Being paired with a certain percentage of nodes
The first variable is self-explanatory. A full view of the network is required in order to propagate the rogue hashing power effectively throughout the network. Finally, that hashing power must be paired with a sufficiently high percentage of nodes in order to actually propagate the attack successfully. If the attack isn’t performed fast enough, the network will easily see the anomaly and ignore the threat.
While there is a slim chance that an attacker may gain enough hash power and be paired with a large enough amount of nodes, the network topology is kept private because connections between nodes are private. Thus, it would be extremely unlikely that such an attack would successfully take place.
Another advantage to IOTA’s network is its quantum resilience. Because of its use of Winternitz hash-based signatures instead of elliptic curve cryptography, it’s able to resist quantum-based computing which will inevitably come in the future. Current research suggests that hash-based functions are secure against quantum computing, which was one of the reasons IOTA decided to go that route.