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Business News/ Brand Stories / IOTA: A New Generation Cryptocurrency 2024
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IOTA: A New Generation Cryptocurrency 2024

The IOTA project team is collaborating with technology giants such as Google, IBM, Microsoft, Samsung to bring the idea of an M2M global computing network to life

IOTAPremium
IOTA

Cryptocurrencies have already become part of modern realities. The indisputable fact that there is still a lot of work to be done before they are fully adopted does not in the least prevent the sale of XMR to BTC. But progress does not stand still and something new is constantly appearing in the industry. For example, the idea of the Internet of Things (IoT) is to connect the objects around us into a global network using machine-to-machine (M2M) technology. This concept implies. that all household devices, life support systems and products equipped with radio frequency labels can be combined into a single computing system.

To carry out mutual settlements in the global Internet of Things network, an internal financial instrument is required, and the IOTA cryptocurrency (MIOTA) has already become one. 

What is IOTA and why is it remarkable?

IOTA is a new generation cryptocurrency using Tangle technology. The IOTA project team is collaborating with technology giants such as Google, IBM, Microsoft, Samsung to bring the idea of an M2M global computing network to life.

The IOTA digital token was designed to serve the Internet of Things (IoT). The IoT system consists of billions of small computing devices with radio frequency modules that are increasingly embedded in various household appliances and other objects around us, allowing them to exchange data. IOTA transforms these connected devices into autonomous economic agents, ushering in a new “things economy."

Data structure

Blockchain is a sequential chain of blocks, similar to a linked list. Each block contains information about completed transactions, and they are formed at certain time intervals. Unlike blockchain, in Tangle each transaction references the previous two, forming a complex web structure known as a Directed Acyclic Graph, or DAG in mathematics. The DAG structure allows transactions to occur simultaneously, asynchronously and continuously, which is different from the linear extension of the blockchain.

Scalability

IOTA increases network throughput by processing transactions in parallel. In blockchain, confirmation of each block requires the creation of several subsequent blocks to prevent the problem of double spending.

Consensus

Unlike other systems where the “longest chain" rule is adopted, the IOTA blockchain applies the “heaviest ball" rule. To send funds, the user must verify 2 transactions on the network. The more active MIOTA holders are, the more checks there are, which speeds up transaction confirmation. In case of double spending or other types of fraud, the "invalid" branch of the IOTA blockchain becomes isolated and ignored.

Safety

IOTA does not require significant computing power to verify transactions, so there are no commission fees. Unlike other blockchain networks, where Proof-of-Work resembles a decentralized lottery, in Tangle transaction verification serves as a means of preventing spam.

Advantages and disadvantages of the IOTA crypto project

IOTA's cooperation with global technology giants is an undoubted confirmation of its importance in the context of the global IoT. The partnerships of these large companies not only expand the capabilities of IOTA, but also contribute to the development of the global economy as part of the new generation of “things economy".

In the context of the practical application of the network, it is worth noting that transactions in this payment network are free, which is certainly a significant advantage. Unlike Bitcoin and Ethereum, IOTA allows instant micropayments. The Tangle system used in the project is an innovative approach, although calling it a layer 3 blockchain may be misleading because no blocks are created. However, this feature does not prevent the possibility of exchange IOTA to ETH.

The IOTA development team has proposed a solution to a number of problems inherent in traditional blockchain networks:

Loss of decentralization. In proof-of-work (PoW) systems, miners are pooled, which can lead to a loss of decentralization. IOTA solves this problem without moving to a PoS consensus algorithm.

Difficulty performing microtransactions. IOTA provides high throughput and low transaction fees, which is important for the Internet of Things.

Impossibility of separation. Unlike most blockchains, IOTA allows transactions to be carried out offline without being fully connected to the network.

High requirements for equipment. IOTA does not use the unique data processing scenarios associated with PoW, which reduces computational complexity.

However, the IOTA project is not without its shortcomings. Historically, the use of ternary code has been controversial, and the Tangle system has been criticized for vulnerabilities in the Curl hash function. The developers responded to these comments by updating the system to the Chrysalis version, eliminating controversial decisions and admitting errors.

It is important to note that the IOTA network and Tangle technology have not yet experienced full load, and their reliability will only be proven as the Internet of Things vision progresses. Potentially, investments in IOTA can be profitable in the long term. However, the unproven reliability of the network creates additional risks for potential investors.

Disclaimer: This article is a paid publication and does not have journalistic/ editorial involvement of Hindustan Times. Hindustan Times does not endorse/ subscribe to the contents of the article/advertisement and/or views expressed herein. 

The reader is further advised that Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. 

Hindustan Times shall not in any manner, be responsible and/or liable in any manner whatsoever for all that is stated in the article and/or also with regard to the views, opinions, announcements, declarations, affirmations etc., stated/featured in same. The decision to read hereinafter is purely a matter of choice and shall be construed as an express undertaking/guarantee in favour of Hindustan Times of being absolved from any/ all potential legal action, or enforceable claims. The content may be for information and awareness purposes and does not constitute a financial advice.

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Published: 05 Mar 2024, 07:51 PM IST
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