We live in a crypto boom era as many like to call it. With each passing day, more and more people are interested in cryptocurrencies, mining and decentralized finance. Bitcoin has never been more expensive, Ethereum too and even coins like Dogecoin is growing in popularity and rising prices, even though many saw it as a joke just a few months ago. Now, what all of these have in common is that they operate using blockchain technology, which many consider to be somewhat flawed, for a variety of reasons.
However, for those looking for an alternative, there is a new cryptocurrency in town – IOTA. If you’ve never heard of this particular one, don’t worry, many haven’t. It’s a relatively new cryptocurrency that hasn’t gained much popularity in the mainstream media, so not everyone knows a lot about it and that’s why we’re here today. We will try to explain to you what IOTA is and how it compares to other cryptocurrencies such as Bitcoin or Ethereum. If this sounds like something you might be interested in, stick around for a few more minutes and find out.
What is IOTA?
We have a confession to make – what we said at the beginning is not necessarily true. IOTA is not a coin, but we’ll get to that in a minute. For now, let’s just remember this to avoid confusion.
IOTA is what’s called a distributed ledger, which is basically a cryptocurrency project designed to record and execute a transaction on the Internet of Things (IoT). The project was created at the end of 2015 by a team of four people, with the aim of creating a simple payment system, which could work more efficiently and safely than those that already exist and that is exactly what they did. . This payment system is faster, (arguably) more secure, much cheaper and infinitely scalable.
It all seems like a bunch of random words and statements, but we’ll get to the bottom of this very soon. Now, this project is not only designed for financial transactions, it can also be used to enable data transfer from one device to another via IoT. Now, as IOTA is used for financial transactions, it also has its own cryptocurrency. This currency is called MIOTA. So IOTA is the system and MIOTA is the coin.
Now, let’s go into a little more detail and explain how this one is different from all the others.
Blockchain vs. Tangle
The main difference between IOTA and the others is that this system does not use blockchain technology like Bitcoin and Ethereum do. Instead of a blockchain, IOTA uses what’s called a DAG, or Directed Acyclic Graph, or as they’ve dubbed Tangle. Now again, all of these words mean nothing unless you understand the processes, so let’s get started on that.
Let’s start with Bitcoin and blockchain. What you need to understand about Bitcoin is that you can’t just make a transaction. Instead, these transactions need to be confirmed by other people. The way you confirm these transactions is done through mining. People who mine coins lend their computing power so that transactions that take place on the blockchain can be confirmed and completed. One does not work without the other. This process is called Proof-Of-Work or PoW. As you can clearly see, this is an oversimplification of the whole process, but we wouldn’t want to bore you with technical details. However, if you want to get more details on this particular topic or any other topic regarding cryptocurrency, you can visit iota-news.com and find out more about it all.
Now this technology is somewhat flawed, as it becomes more and more difficult to confirm a transaction over time. Mining requires more resources, which means more electricity and computing power, which ultimately leads to very slow and rather expensive transactions.
On the other hand, with IOTA and Tangle, things work differently. If you want to make a single financial transaction, you must also contribute to the network by confirming two other transactions. These two will then repeat the same process as those following them and so on. This is how we get the “infinitely scalable” network.
As you can see, this model is way superior to PoW, although in a way this is also PoW – only much more efficient, because you are not relying on the computing power of a third party. , but yours. The general idea behind it is that the more people use the system, the easier it is to finalize transactions and the more stable the network becomes.
Since there is no MIOTA mining, another difference between this system and the others is that with IOTA there are hardly any transaction fees. Since everyone contributes to the grid equally, the only cost is the electricity you spend on the transaction and it’s no more than a few cents. On the other hand, Bitcoin transaction fees at the moment are between $ 20 and $ 30. That being said, the IOTA protocol can be very useful for micropayments, which is not the case with the rest of the major cryptocurrencies.
Since IOTA is still fairly new to the crypto world, the official transaction speed is not known at this time. What we do know, however, is that it’s pretty quick, compared to the rest. For example, in general, a Bitcoin transaction typically takes around 10 minutes. However, if the traffic is unusually high, the network is flooded, and in some cases it can take days or even weeks for the money to reach your wallet.
On the other hand, with IOTA, transactions are completed within minutes in most cases. However, since there are not a lot of users at the moment, it might take a bit longer. However, it is expected that once the network reaches enough users, transactions will be done instantly, which would be nothing short of amazing.
Arguably the most important factor for many crypto investors today is the price of a single coin. As you probably already know, the price of a single Bitcoin is just under $ 50,000 at the moment and the price of an Ethereum coin is around $ 1,500. On the other hand, a single MIOTA coin is just above $ 1 as of this point. Does that mean IOTA is the next thing to invest in? We do not know. Can it skyrocket in Bitcoin? We don’t know either.
What we do know, however, is that if the project reaches its final form, it will be the ideal global payment and data transfer system. The ability to complete a financial transaction instantly and completely for free is unimaginable right now, but that’s exactly what IOTA strives to someday allow us to do. Will it succeed? It’s up to us to wait and see.