What is IOTA?
IOTA is an Internet of Things (IoT) open-source distributed ledger and cryptocurrency. It uses a guided acyclic graph to store transactions on its ledger, powered by theoretically higher scalability over distributed ledgers based on blockchain.
IOTA does not use miners to verify transactions, but users who issue a new transaction must authorize two previous transactions. IOTA uses a special version of a distributed network called The Tangle.
Because of its unconventional nature, IOTA has been criticized, in which it is uncertain if it can run in practice.
The network is currently reaching an agreement via an IOTA foundation-operated coordinator node. As the coordinator is a single point of failure, the network is currently centralized.
IOTA has been the subject of phishing, scamming, and hacking attempts as a speculative blockchain and cryptocurrency-related application, which culminated in theft of consumer tokens and lengthy downtime periods.
How does IOTA work?
The Tangle is the moniker used to characterize the transaction settlement and data integrity layer of the IOTAs directed acyclic graph (DAG). It is organized as a series of individual transactions that are interlinked to each other and stored via a node participant network.
The Tangle may not have transaction authentication miners, but network members are mutually accountable for transactions.
IOTA facilitates all value and data transfers. A protocol of the second layer offers security and authentication of messages or data streams that are exchanged and processed as zero-value transactions on the Tangle.
Each message includes a reference to the address of a follow-up message, linking messages in a data stream, and supplying the necessary decryption for security.
The IOTA Token
In the IOTA network, the IOTA token is a value unit. The IOTA network has a set stock of 2,779,530,283,277,761 iota tokens in circulation.
IOTA tokens are kept, equivalent to a password, in IOTA wallets secured by an 81-character seed. IOTA offers a cryptocurrency wallet to view and spend the tokens.
A hardware wallet may be used to hold passwords offline thus enabling transactions.
What is the History of IOTA?
David Sønstebø, Dominik Schiener, Sergey Ivancheglo, and Serguei Popov founded the IOTA ledger in 2015.
The initial production was financed by an online public crowd sale, with participants buying the IOTA value token with other digital currencies.
Early IOTA token donors contributed 5 percent of the overall token stock for continued growth in 2017 and to endow what later became the IOTA foundation.
The IOTA Foundation was chartered in Berlin as a Stiftung in 2018, with the goal of assisting in IOTA technology research and development, education, and standardization. The IOTA Foundation is a board member of the International Foundation.
Ivancheglo resigned from the Board of Directors on 23 June 2019 after a disagreement between IOTA founders David Sønstebø and Sergey Ivancheglo.
On 10 December 2020, the Board of Directors and the Supervisory Board of the IOTA Foundation confirmed that David Sønstebø had been formally separated from the Foundation.
More than 10 million USD worth of IOTA tokens were stolen from users who used a malicious online seed-creator, a password that preserves their possession of IOTA tokens, in January 2018.
The seed-generator scheme, with over 85 victims, was the biggest theft in IOTA history to date. In January 2019, a 36-year-old man from Oxford, England was detained by the UK and German law enforcement agencies.
A hacker discovered a loophole on 26 November 2019 in a third-party payment processor built into the IOTA foundation’s mobile and online wallet.
The hacker exploited about 50 IOTA seeds, culminating in the theft of IOTA tokens worth over 2 million USD. The IOTA Foundation shut down after getting information that hackers were harvesting funds from consumer wallets.
On 10 March 2020, the organization was re-launched.
How do I hold IOTA?
IOTA doesn’t use a blockchain. IOTA uses its own Distributed Ledger Technology type, called The Tangle, instead.
For newcomers, the IOTA light wallet is ideal as it is very easy to use. Users can also use the Nostalgia IOTA Light Wallet on Windows, Mac, and Linux computers, rendering it an IOTA light wallet for the desktop.
It is acknowledged that it has very nice safety features, but it is very difficult to use. So, this may not be the right IOTA wallet for you because you have a clear understanding of simple coding.