IOTA- what is it, who is it?

IOTA- what is it, who is it?


IOTA is an innovative new distributed ledger technology to function as the backbone of the Internet of Things.
Born in 2014, it is the only technology of its kind that is able to function as the lightweight distributed ledger with scalability, quantum resistance and decentralization for all IoT devices.

IOTA was created as a far related derivation of the blockchain technology but is far more advanced and is already recognized in the innovation-press like Forbes, Techcrunch, International Business Times and Huffington Post.

The whitepaper can be read here: Whitepaper

The Blockchain is a great invention but it’s also stigmatized with pre-conceptions because the majority of issues occurred through human failure. Blockchain’s as such were never hacked, just the human-software interface.

Traditional Blockchains rely on miners, so to say computing-power-farmers that boost transactions through a synchronized peer to peer network and mine small parts of the currencies with processor power.

These traditional Blockchains of the first and second generation are using transactions fees to prevent peers from spamming the network.
That is because the field of application often lies in financial systems to replace currencies ($, €) -like Bitcoin. Bitcoin’s transaction fees are at approx. 50 cent per transaction (Feb-2017).

IOTA has no mining, no blocks, no difficulty, no transaction fees.

Its field of application is set in the IoT, as the technology for data integrity and industrial appliances. Furthermore pay on demand, micro-payments, and machine to machine communication like sensor technology, smart cities, adaptive systems etc.

As a settlement layer, it aims for interoperability between many existing systems.

It is quite evident, that Bitcoin and nearly all other cryptocurrencies weren’t made to function as such. Considering hundreds of thousands of nano-payments each day in the near future, these Blockchains would generate an enormous amount of fees, just for conducting transactions, while costs of these nano-payments oftentimes undermatch the fees.

Therefore, it is indispensable to use a secure, fee-free system, which IOTA is. This technology, therefore, is a novum.
The underlying technology, the Tangle, is a third-generation Blockchain-technology, based on a directed acyclic graph, made for the problems of tomorrow.

Beyond that, the Winternitz one-time signature scheme enables quantum resistance, which makes it perfectly equipped for the future.
Have a look at my articles to get an idea of the revolutionary technology of IOTA.

Easy Entry

IOTA is a new technology that isn’t easy to understand at the beginning. Even I still struggle at certain things.

We are in the realm of cryptocurrencies, but we also go way beyond that with IOTA.

Blockchains are an invention of 2008 and they have many use-cases.

The most famous and used one is Bitcoin so if you want to understand Blockchains, in general, you could start with understanding Bitcoin and its features, but also its problems.

A good start would be to look for an educational Video on Youtube, to get an overview:

Like this:

And its problems:


Now, since IOTA is not a Blockchain, we have a lot of differences here.

Here is a small list of differences before I get more into details

  • IOTA is based on a directed acyclic graph (DAG) aka the Tangle, not a Blockchain
  • IOTA has no mining, no blocks, no difficulty
  • IOTA has no transaction fees
  • IOTA scales almost infinitely, unlike Blockchains
  • IOTA is not solely made as a currency but as an interoperability protocol that solves the problems of the IoT
  • IOTA wants to enable the machine economy
  • IOTA is lead by the IOTA Foundation, an NGO registered in Germany


Born in 2014 and created in 2015 IOTA offered an Initial Coin Offering (ICO) where approximately 1337 Bitcoin were invested.

All 2779530283277761 iotas have been created in the Genesis transaction.

The iota have been distributed among the shareholders. Not only extern investors, but also the founders and developers had to invest with their private money.

All iota are distributed and part of the markets (except the unclaimed from a few ICO investors).

2016 the IOTA Foundation was announced and since then, it grew in numbers and expertise.


IOTA Foundation and Developers:

If you want to have an additional look at the details, I recommend reading this blog post and the official IOTA blog

Official announcements are found on Twitter or on my personal account.

A lot of useful and current information are aggregated in the IOTA subreddit


To understand what IOTA really means, you have to look at the use-cases that are in development and the technical limitations we already see right now and expect in the future.

The Internet of Things, the Internet of Everything are, as parts of the 4th industrial revolution, uncharted areas, that promise lots of possibilities, but due to the mentioned limitations also uncertainties.

A global network, with connections into vital infrastructures, is boon and bane. We see emerging markets, exponential growth, and progress, but also insecure terrain.

DDoS attacks are already part of our time, and without proper mechanisms, this get’s only worse.

IOTA as a data and settlement layer is able to create a system that relies on decentralization, data actuality, and temper proof algorithms. Also in the post-quantum era.

If you read the Articles and press-releases, you can get a good overview of how IOTA will be used very soon.

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