IOTA is an open-source distributed ledger on BNB Chain and Energi for the Internet of Things. Its innovative new quantum-proof protocol, known as the Tangle, gives rise to unique new features like zero fees, infinite scalability, fast transactions, secure data transfer and many others. With the right approach, DLTs let us control our own private data, run programs that nobody can meddle with, and trade and own assets without intermediaries.
IOTA runs on the Tangle, a structure where newer transactions verify the older ones, and pretty much any other DLT runs on a blockchain instead. To secure its state and history, a blockchain must collect transactions in blocks and chain the blocks one after another. The main purpose of IOTA is to solve some of the major problems with Blockchain technology, the main one being that the bigger the Blockchain (such as Bitcoin), the slower, more expensive, and also more restricting it is to actually transfer funds. Another issue with the Blockchain is size, as more and more Blocks are added, the longer the Blockchain gets, and therefore the less amount of computers are able to mine it. IOTA is a cryptocurrency that has no transaction fees and requires no miners in order to process transactions. It does, however, require some computational power to submit a transaction, making it perfect for machines to use as a currency and distributed communication protocol for the Internet of Things.
$MIOTA is the official token of the IOTA platform aimed at securing instant processing of machine-to-machine transactions between the Internet of Things (IoT) devices, all with improved scalability and nonexistent fees.
The Tangle is a data structure that is replicated across a network of computers (also called 'nodes') that contains all the information necessary to track token ownership. It forms a directed acyclic graph of blocks (a block-DAG), where each newer block is attached to multiple older ones.
IOTA nodes currently reach consensus on the ledger state with the help of milestone blocks (also called 'milestones'). Milestones are issued by a central node called the Coordinator. The Coordinator represents a temporary solution and will be eliminated as part of IOTA's decentralization efforts.
The Tangle versus blockchains
While the Tangle and blockchains have the same function of maintaining their ledger state, the Tangle overcomes the difficulties blockchains face. The Tangle naturally succeeds the blockchain as its next evolutionary step as it offers features suited to establish more efficient and scalable distributed ledger solutions.
The Tangle describes a novel leaderless, probabilistic consensus protocol that enables parallel validation of transactions without requiring total ordering. It also enables the elimination of intermediary miners and validators. The parallelization, the absence of intermediaries, the capability to work in an asynchronous setting and the leaderless approach offers a highly performant consensus and ledger solution.
The IOTA Foundation is primarily responsible for funding and leading development of IOTA. Furthermore, the IOTA foundation controls the coordinator, which is essential to the functioning of the IOTA network and unilaterally capable of shutting down the entire IOTA network. The core funding team members are David Sønstebø, Dominik Schiener, and Sergey Ivancheglo, etc.
IOTA traces its roots back to the Jinn project, a project revealed to the world in September 2014 on an NXT forum. The project aimed to develop a new efficient micro processor for IoT devices based on trinary (rather than binary) calculation methods. In order to finance R&D of the hardware project, the Jinn team held a crowd sale for in September 2014, selling ~100,000 JINN tokens (10% of the total) for 8,5000,000 NXT worth $250,000 at the time. The JINN tokens were launched on the NXT platform and represented a share in the profits of the Jinn company.
However, fearing regulatory issues surrounding their JINN, which represented a claim on the Jinn's profits, the Jinn team pivoted. On a BitcoinTalk forum in 2015, the Jinn founders announced a new project called IOTA. IOTA aimed to be "a brand new and novel micro-transaction cryptotoken optimized for the Internet-of-Things (IoT)."
The team similarly did a crowdsale for their IOTA token, which instead of being a profit sharing token like JINN, was a utility token used for payment on the IOTA network. IOTA sold 999,999,999 tokens in its 2015 crowdsale raising a total of 1,337 Bitcoin, equivalent to $434,000 at the time. Jinn token holders were also allowed to participate in the IOTA crowdsale by converting their JINN tokens for IOTA at a fixed exchange rate of 0.0063BTC per JINN. The supply was later changed to 2.78 billion IOTA. According to IOTA documentation the token supply was increased because “high supply makes IOTA optimal for tiny nano transactions while still keeping efficiency in mind.“ 5% of the funds from the IOTA's token offering were later donated to the IOTA Foundation, which was formally announced in October 2017.
In July 2016, IOTA launched on Mainnet. The project aimed to provide distributed ledger technology for the internet-of-things (IoT) space where small connected devices regularly share data. Because these devices are generally specialized to be low power and application specific IOTA does not use a traditional consensus mechanism like proof-of-work or proof-of-stake nor does it use a blockchain structure. The goal of the project is to allow these devices to conduct micropayment transactions between themselves and potentially to securely transfer data.
IOTA is currently developed and supported by the IOTA foundation, a German non-profit. In July 2019, Iota co-founder Sergey Ivancheglo stepped down from the IOTA Foundation.