To think that in the future a cryptocurrency like IOTA (IOT) could replace the current payment systems for small transactions could be utopia, but what is actually true?
Iota: the future of the Internet of Things
Iota is the acronym of the Internet of Things Application and is a new cryptographic technology that facilitates transactions between devices on the Internet of Things (IoT). The company deals with transaction costs and scalability problems of blockchain technologies by eliminating blocking and the chain.
How does Iota work?
To send a transaction to the Iota registry, you need to verify two other previous transactions. This type of verification is known as Directed Acyclic Graph (DAG), but the creators call it “Tangle”.
There is no central ledger on Iota, and miners are not needed to feed the network. The power of computing in the “tangle” (ie a direct acyclic graph for storing transactions) increases as the network grows, but the company promises free and fast transactions. It is also designed to process micro-payments and payments between machines, facilitating an entire micro-economy.
M2M (VS machines)
Iota’s vision is to be the main platform for machine-to-machine (M2M) transactions. The company’s founders started the business after working in the IoT industry and argue that in order for the IoT to be more useful, the devices on the network need to share and allocate resources efficiently.
This means that devices need to be able to buy more electricity, bandwidth or data when they need it and sell those resources when their use is no longer required.