According to IOTA’s (which stands for Internet of Things Applications) website, “as the Internet-of-Things keep expanding, the need for interoperability and sharing of resources become a necessity. IOTA enables companies to explore new business-2-business models by making every technological resource a potential service to be traded on an open market in real time, with no fees.”
IOTA is an innovative project. It addresses the main problems of the blockchain technology, which are scalability and transaction fees. It eliminates of these problems by getting rid of the blockchain and introducing a new technology which cryptographers call Directed Acyclic Graph (DAG). IOTA’s creators named the technology “Tangle” network.
In order for nodes to submit transactions to the IOTA platform, they must verify two previous transactions of the network. This means there is no need for miners to validate the transactions. Any device that transacts on the platform becomes a node on the network, which builds consensus with the web of transactions and verification on the ledger.
The network is designed to create a complete machine-to-machine economy by facilitating the payments between two machines. IOTA is assuring that as more devices connect to the ecosystem and more computational becomes available, transactions will be lightning fast and fee-less.
Previously, all key generation and Proof-of-Work applications on the IOTA platform were done using their own cryptography called Curl. After criticism from the cryptocurrency community and security concerns raised by MIT and Boston University, they decided to change the consensus algorithm to a variation of the traditional SHA-3 algorithm.
Since it launched on June 11th 2016, IOTA has made its place as one of the top 10 cryptocurrencies in market cap size. IOTA has a couple of competitors in the market, but as of now, it is the clear leader for Internet-of-Things related cryptocurrency.