IOTA the new crypo Currency without blockchain

 IOTA, the crypto currency for equipment: a block chain without blocks

IOTA tokens that cryptocurrency for machines, currently considered one of the most exciting Altcoins. We asked Co-Founder Dominik Schienerberg how the allegedly fully scalable cryptocurrency works.

Autonomous  machines which pay each other: this is the vision that is considered  for Dominik Schierer just over a week to Berlin. The 20-year-old when he made his Matura, the tranquil South Tyrol 800  souls mountain village where he grew up, left to realize his block chain  project in the start-up capital.

Unlike  many fortune hunters who move to Berlin, Dominik has a team and a  project that is well received by investors and industry. Together  with the Norwegian David Sønstebø and developers Serguei Popov and  come-from-Beyond Dominik has developed the cryptocurrency IOTA. IOTA is to be "the backbone of an autonomous economy of equipment," says the website.
Dominik is IOTA at a conference

Dominik is IOTA at a conference

To  perfect - quick, unlimited scalability - to develop cryptocurrency for  the machine industry, Dominik and the team for IOTA have the block chain  is replaced by a "Tangle Ledger". End last year the IOTA tokens were pre-sold, so the team has taken around 500,000 dollars. Today,  more than half a year later, has the value of the token, which is so  far only acted unofficially, multiplied to more than 15 million dollars.  The idea and technology of IOTA seems good to arrive.

"We  have been the most innovative Ethereum Altcoin project", explains  Dominik confidently, "there are already many large companies are  interested in our product." In order to understand what this is all  about, we need to go back a piece. Namely the Internet of things and the reason for it not Bitcoin is the perfect currency.
Autonomous machines pay autonomous machines

So: M2M - Machine-to-Machine - Payment. Why do we need this? First, we have the Internet-of-Things, this huge innovation stream that is hyped for a few years. All machines are talking to each other: The coffee with the alarm  clock, the solar system with the clouds sensor, the car with the car  park and all the machines in the industrial production chains anyway,  from Steinbrecher for packaging machines.
Who knows - maybe the morning coffee plays a major role in Vermassenmarktung the Internet of Things? Image: Get Ready For Blogging, Ricardo Bernardo via flickr.com. License: Creative Commons

Who knows - maybe the morning coffee plays a major role in Vermassenmarktung the Internet of Things? Image: Get Ready For Blogging, Ricardo Bernardo via flickr.com. License: Creative Commons

Now the money comes into play: How about when machines pay other machines that they do something? When the car a parking sensor paid to tell him how many parking spaces are available? A solar system data from a weather sensor buy? ordered A refrigerator milk? Get paid for the machine along a production chain itself? The advantages are apparent.

To make such payments, we have two models. One  is that as in the past to pay the owners of the machines by credit card  or direct debit, presumably accumulated and at the end of the month and  run the machine only book. The  model has the advantage that it is possible today, but it has several  drawbacks: You need middlemen, which are expensive and might not be  compatible, so that fragmented the landscape of the M2M-Payments, and do  not pay your car in my parking garage can. In  addition - and worse, there is a risk that a an error or bug plunges  into debt, because, for example, the refrigerator means he must order  100 kilograms of finest Serano ham, or ordered the washing machine in  the solar system as much electricity that fuse blows and abfackelt the whole house.

It would be better, therefore, the second model that machines themselves keep money and pay it. This will disappear not only the problems mentioned - it also opens up  a dizzying possibility: that machines that have absolutely no owner,  make with other machinery or business with people.
Self-propelled, even paying, self-administered - the Auo the future? Image: Le car a guida autonoma: the Driverless Cars from Automobile Italia via flickr.com. License: Creative Commons

Self-propelled, even paying, self-administered - the Auo the future? Image: Le car a guida autonoma: the Driverless Cars from Automobile Italia via flickr.com. License: Creative Commons

You have to breath deeply in order to imagine. Machines that belong to anyone, but can pay. sent a car that pays itself for its parking, a drone that freelancing  packages (or protection money one rubs), a street lamp, the only light  up when they pay someone a drill that rents itself ...

Creepy, but fascinating.
Bitcoin is not a perfect money machine

The problem with the M2M Payment is now, has as noted Markus Weinberger Bosch that a parking sensor receives no Bankkonte. For Bosch this is the reason why crypto currencies are interesting.

Could machines so easy to pay with Bitcoins? Actually  yes - and sometimes they do that already - but if we have learned one  thing from the endless blocksize debate, then that is not going to work  in the long run. There  will be billions of machines which communicate with each other and  exchange data - estimates range from 50 billion - and really should  arise such M2M market, then we need a payment system, process the tiny  transactions in huge quantity and in real time , It must be cheap or free, fast and scalable - so exactly what Bitcoin is, according to experts.

IOTA however thinks Dominik can afford all that. For IOTA is a cryptocurrency without block chain, or, in other words, a block chain without blocks and without chain.
The Tangle

The idea for IOTA's really back to a startup of David. The  Norwegians wanted to develop microprocessors for the Internet of  things, but it realized that you need a M2M Payment system. And because the available technologies is not possible, he and his team have developed a new crypto currency.

"If one looks today at a block chain, which is a single chronological strand block sets to block. This has limitations, about 10mn InterWall in Bitcoin. What makes IOTA now, is that it is instead a strand benutzr many strands, "says Dominik.
Visualization of the Tangle.

Visualization of Tangle said transaction graph.

There are at IOTA neither Miner nor block, but only transactions. "The transactions are interconnected, and everyone who submits a transaction, takes part in the consensus. When you make a new transaction, you need to verify two previously gone transactions. You have to check if the account covered, there are no conflicting transactions and whether the signature is correct and so. "

This  Tangle - the database itself verifizierender transactions - is growing  as well as the block chain continued in principle indefinitely. "But  there is the possibility of making a snapshot from a certain date, so  you do not have to record the entire transaction history. Unlike Bitcoin there is no UTXO (unspent outputs), but accounts, whereby the snapshot is less great. "
Double Spends

Anyone who has a little while with Bitcoins busy, but knows that it is not at the point of mining to examine transactions. Rather  prevent Miner that someone pirates decentralized network with a  Sybill-Attack - about by touches thousands of nodes - and performs  double Spends or transactions makes. How IOTA defend against such attacks?

"A  double-spend is not impossible at IOTA, but probabilistically dependent  on the activity of the network," admits Dominik, "we assume you publish  two conflicting transactions. You have to be able to find your own transaction and verify, requiring a lot of computing power and happiness. "

Because  of Tangle works so that an algorithm decides randomly which two  previous transactions you have to verify, to submit a new transaction. If one's own - double-giving - want to find transactions first, one needs either very lucky or very many attempts. Since each test a small proof-of-work - the solution for a cryptographic puzzles - requires the need a lot of computing power.

The hypothesis is based on the IOTA is that the system is self-regulated. The more participants use it, the more difficult is a Double-Spent. With tens to hundreds of nodes, it is relatively easy in 50 billion participating machines impossible.
More than money - DAS protocol for machines

In principle, one could hope that what IOTA intends also to the Lightning network - and thus with Bitcoin - will work. That would be reasonably convenient, as you so already has a relatively common currency with a relatively stable value.

However,  it is firstly unclear whether this will really work with Lightning, and  the other would thus eliminate all about money beyond applications. to send all these ideas, then, to store information about a block  chain, to process and confirm how they circulate under the large heading  "block chain technology".

"Our  vision is to realize the Machine Economy," says Dominik, "the big  problem with the Internet-of-Things is that the machines often speak  other languages, because the protocols are not compatible. IOTA is to be the minutes of the Machine Economy. You can not just send money, but also data on the Tangle. Approximately by a sensor or smart Contracts as Ethereum. "

If it goes to Dominik, IOTA is to become a central, but not single protocol for machinery. "We plan that IOTA is also compatible with Ethereum and Bitcoin layers as Rootstock. By this it not been we work. "

To do there for had grown to 6 heads Team of IOTA still a lot. On Monday, 11 July, there was a first reason to celebrate: The MainNet of IOTA goes live. Thus the first, real transactions can be sent. End of the month the IOTA token for exchange trading are then released. We will see how the price reacts.