If you are familiar with Bitcoin & blockchain you should skip on over to the Tangle section of this post.

IOTA is a revolutionary protocol that in our opinion blows blockchain out of the water. It is a system that makes transactions the most important factor of its distributed ledger technology. This cryptographic network is free of miners, provides zero transaction fees and is able to scale remarkably.

The Blockchain

The blockchain was coined by Satoshi Nakamoto in his whitepaper when he created the first successful cryptographic currency(AKA crypto).

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Blockchain gets a little more complicated than the graphic above denotes. Lets dive a little deeper, to be a notable authority in the blockchain you need something called hashing power and this hashing power means, how likely a computer is able to verify a block of transactions. A lot of hashing power will mean that you will most likely be earning a lot of cryptocurrency from supporting the network's verification method and also have some power over the blockchain because you are an authority figure in this system.

So lets say you want to send me some money right now. How would you go about it? Well yes, you would go through some third party such as Paypal, Square Cash, or some bank (Of course if you want to send me some money right now you could add some Steem to it!). These third parties are always making money off you, why wouldn't they charge you a fee? These fees are small when moving small amounts of money. However, the fees get hefty when you want to make a big transaction and politics get in the way at times so your money needs to travel through two other countries to bypass these politics, which means even more fees.

Well, with a blockchain application called Bitcoin this is no longer a problem. Bitcoin eliminates these third parties from meddling with your transaction and you can now transfer value to anyone in the world at a low fee price. The blockchain is at the heart of Bitcoin because it is meant for one thing, decentralization. Bitcoin is the decentralization of value verification, which is a huge impact on everything. Think about it, what doesn't require money? Why have bankers been paid so much? This concept of decentralization is a means to eliminate the third party involved in any transaction. There are several companies that their main function is to be a third party of trust. For example, a decentralized marketplace will challenge eBay and Amazon, Bitcoin challenges the whole financial industry, and brokers can be eliminated with other blockchains as well.

If you understand the Bitcoin blockchain, get ready because the rabbit hole goes much deeper. Ethereum is a blockchain in which you can create decentralized applications upon. You can recreate a Bitcoin clone on top of Ethereum or create an application that eliminates third parties. Ethereum takes decentralization to another level with the use of smart contracts. Smart contracts can be thought of contracts that can execute themselves. For instance, lets say you are selling a house and don't want to pay a broker for it. You can create a smart contract on top of Ethereum and whenever a group or an individual pay you lets say $3ook they can get the house. The contract here acts like a vending machine of sorts, contract filled with $300k, send the deed to the party that paid the contract. These smart contracts have a very bright future ahead of themselves. However, the Ethereum network allows only ~15 transactions per second which is not truly scalable. One of the cofounders, Vitalik Buterein, is working hard with other developers to increase the rate of these transactions with upgrades on the Ethereum network.

Although blockchain has successfully proven that decentralized systems work, it still has drawbacks. The speed of their transactions are slowed when several transactions congest the network (Cryptokitties proved this on the Ethereum network). There will always be a need to incentivize miners and a small group of people will own large amounts of hashing power.

This has led to the creation of mining farms in China, Venezuela, and several parts of the world where energy is cheap. The biggest mining groups are in China and in November 2017 the Bitcoin network experienced the greed of these miners by deciding to spam the Bitcoin network and mine another blockchain for profitability reasons. It makes entire sense to mine another blockchain for profitability reasons but this caused several people to have transactions be slowed down drastically. We have left a centralized fiat system to enter into another system that will lead towards centralization. As long as miners are in the picture, there will rise a group of individuals with power over the network.

Last but not least, quantum computers can break a blockchain. In the not so distant future, quantum computers will be commercialized or if the blockchains become a problem for big corporations they can hack the entire blockchain from quantum computer's immense computing power.

Enter IOTA, The Tangle

IOTA was inspired by the blockchain to have a different distributed ledger system because the founders, David Sønstebø, Sergey Ivancheglo, Dominik Schiener, and Dr. Serguei Popov, envision a future of a Machine Economy. The team has a professor of Mathematics, Sergei that developed the Tangle algorithm. Dominik(Dom) and Sergey are the programming prodigies of the team. David has strong business skills and understands the technology behind IOTA and is the project lead.

Zero Fees from Transactional Proof of Work

If you are familiar with proof of work(PoW) with blockchain this will be easier to understand. In the Blockchain when you send a transaction it has to be verified by a miner. In the Tangle, when you send a transaction your transaction needs to verify two other transactions in order for your transaction to start being verified by later transactions. In other words, your transaction itself is doing work on the network and that is why there are zero fees. A transaction is verified when it is verified by two other transactions. This means that the users are the ones fueling the network, not a third party miner!

If this is still very confusing let's go back to elementary school education to understand the benefits of this new verification system.

Blockchain	Tangle

Let's say that you have just taken a test and want to know your grade. Of course, the teacher is the authority figure in the room and they can check your grade at their own pace, similar to miners verifying transactions. Then the other way for you to receive your grade is for you to grade two other tests, similar to the transactions in the Tangle. Which system is faster? The Tangle of course. If the classroom is filled with thousands of students the teacher (miner) will be overloaded with grading (verifying transactions). If each student checked two other students grade, the classroom will be able to receive their grade much faster.

Infinite Scalability

With the example in the previous section, you can tell why the Tangle can scale much more effectively than the Blockchain. There are no miner politics, its speed increases the more users use it and the more transactions the more secure the network.

How much IOTA is there?

IOTA is a fixed supply cryptocurrency and it is already all in the market. There is no need to mine for more IOTA! What is currently being sold in exchanges like Binance & Bitfinex. Of course, iMarkett sells loaded cold storage wallets as well to help alleviate the U.S. market get some IOTA in their hands as fast and secure as possible. We have a limited supply and if you are looking to help us in our mission to increase the amount of IOTA transactions please be sure to contact us!

Quantum Proof

IOTA uses hash-based signatures instead of elliptic curve cryptography (ECC). The Tangle is programmed in ternary which is a deviation from the traditional binary code. Ternary is much more efficient than binary, and provides for some significant improvements in functionality. The Tangle can be run on binary or ternary systems. Blockchain currently runs on binary systems, the IOTA team has worked on these algorithms to make the network run on ternary and binary. The IOTA team is currently working on JINN ternary semiconducting chips to build the future infrastructure for the success of IOTA.

What about MIT finding a problem with the hash function?

We get told this very often, the MIT researchers published a problem with IOTA's hashing function. Yes, this sounds bad if the IOTA team did not fix its hashing function. Thanks to MIT, the hashing function was fixed from Webgl 2 Curl implementation to the new CCurl implementation. Also, having MIT cryptographers check the IOTA team seems like a great example of peer review. IOTA is as transparent as it comes, it is an open sourced project that you can find on Github.

Big Data

IOTA recently released it's Data Marketplace, meaning if you have an IoT device and want to monetize off the data it collects, you now can! This marketplace has the interest of several big companies such as, Fujitsu, Microsoft, and many more. The great thing about IOTA is that you can send zero value transactions, and they will verify other transactions as well! For developers, that means you don't have to pay those smart contract fees on Ethereum! You can create and test transactions on the IOTA network free of charge!

Resources

If you want to follow up on more information about IOTA you should checkout their website and keep up to date with their blog.

Please feel free to follow us on our journey in this very ambitious and exciting project!

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