IOTA — from the smallest Greek letter and a reference to IoT (Internet-of-Things) — is a next-generation crypto-asset designed for fast micropayment transactions and communications between machines on the IoT.
Berlin-based, IOTA is the first regulated non-profit foundation in Germany funded exclusively by ‘crypto-currencies’, by now having established partnerships with some big players with vested interest in the technology along the lines of Bosch, Volkswagen, Satoshipay (which ditched Bitcoin for IOTA), etc. with the potential to eventually quickly expand into diverse industries.
IOTA has lately come under much attention and scrutiny, in more than one ways (constant and continous attacks on the network, phishing campaigns, media spotlight, etc.), both positive and negative, with some valid (or partially valid) concerns and criticisms raised along with entirely false and made-up accusations and spreading of FUD.
In brief, IOTA does away with conventional blockchains in favor of a more light-weight and open architecture of DAGs (directed acyclic graphs) called the tangle. The principles are still the same: decentralization within a peer-to-peer network of connected devices and an append-only database making data immutable through consensus among network participants.
There’s a heavy — and for many difficult to grasp — mathematical-theoretical aspect of IOTA where a family of Markov Chain Monte Carlo algorithms (a branch of Bayesian statistics) is used to select attachment sites on the tangle for arriving transactions (a node must validate 2 previous transactions).
While I have some grasp on the theoretical part, I must admit that it does give me a splitting headache trying to understand how they translate into their real-life implementation and computer science.
Vitalik Buterin has raised his concerns here, some of which have been adequately addressed, others less satisfyingly so.
There are a lot of clever design decisions and implemented quantum-attack resistance with the future in mind, but still the technology as a whole is under heavy development and need of staff.
In any case, IOTA has seen a slow but steady growth since its beginning in 2015 (and 11th by market cap), although we won’t see any miracles until the network gets populated by enough trusted nodes of honest actors that would stabilize and make it self-sustaining, not necessitating the need of a central coordinator.
It’s a rather complex and quite ambitious project, although the fact that it has the backing of its (fittingly, German) government is a good sign (as well as all the problems which they are under pressure to solve).
Here is their roadmap for 2018 in preview, so please, no “moons”. If anything, at this point use IOTA as a piggy bank for your spare change.
I will further focus on the components of the network in another article, along with instructions on how to safely navigate within it at this point in time.