IOTA — Crypto News
IOTA is an open-source distributed ledger ( cryptocurrency) focused on providing secure communications and payments between machines on the Internet of Things. Using directed acyclic graph (DAG) technology instead of the traditional blockchain, IOTA’s transactions are free regardless of the size of the transaction, confirmations times are fast, the number of transactions the system can handle simultaneously is unlimited, and the system can easily scale. IOTA was founded in 2015 by David Sonstebo, Sergey Ivancheglo, Dominik Schiener, and Dr. Serguei Popov.
IOTA is overseen by the IOTA Foundation, a non-profit dedicated to developing the technology and maintaining it license-free for all developers to work with. The Foundation has established a collaboration with Volkswagen and Innogy to develop CarPass, an IOTA based technology that enables secure audit trails, digital identities, and charging networks for cars. With Deutsche Telekom, Microsoft, Fujitsu,and Samsung,the Foundation opened up a data marketplace using IOTA technology. The IOTA Foundation is also a founding member of the Trusted IOT Alliance, which includes the companies Bosch, ConsenSys, USbank, and Cisco.
As of December 2017, the market capitalization of IOTA was $13 billion, making it the 4th largest cryptocurrency in circulation.
What is IOTA?
IOTA Coin is an open-source cryptocurrency focused on providing secure communications and payments between machines on the Internet of Things.
IOTA founded by David Sonstebo, Sergey Ivancheglo, Dominik Schiener, and Dr. Serguei Popov. The fixed supply of 2,779,530,283,277,761 IOTA cryptocurrency coins were created. As there is no mining, no more IOTA coins will be created. A few months later, IOTA began open beta testing.
While beta testing continued, trading began over-the-counter between users for the next 11 months or so.
In May, IOTA announced a $10 million ecosystem fund to promote larger corporate collaborations, community projects, and developer acquisition initiatives. By June, IOTA cryptocurrency was listed by its first exchange: Bitfinex Outlier Ventures, a venture capital firm, invested 7 figures into IOTA, their first direct investment into a distributed ledger technology. SatoshiPay announced a transition from the use of bitcoin to the use of IOTA as the transaction cost of bitcoins increase.
By August, the IOTA Foundation forged a partnership with REFUNITE, the world’s largest missing persons database, in order to use IOTA technology to help reunite families during and after conflicts. Additionally, IOTA’s Flash Network (supporting extreme high speed, instantaneous nano payments) became active, ahead of Bitcoin and Ethereum’s versions. Monster Cleaning Services, a London UK based company, announced that they are accepting IOTA as a payment. Sopra Steria announced a partnership with IOTA to create a framework to optimize security between devices on the Internet of Things.
In November, the IOTA Foundation was officially announced as a registered not-for-profit entity under German law. LATTICE80, a Singapore based Fintech hub and largest of its kind, cemented an agreement to open an IOTA innovation lab for the Internet of Things. Additionally, IOTA hired Cybercrypt ApS to develop IOTA’s hash technology (Curl), to its next maturation phase.
The Technological Characteristics
Tangle — is a new data structure based on the Direct Acyclic Graph and which does not need miners and data blocks.
Each network member who wants to execute a transaction must actively participate in the network consensus by approving two past transactions. This attestation of the validity of the two past transactions ensures that the entire network will reach a consensus on the current status of the approved transactions and will allow using a number of unique functions that only IOTA has: high transaction capacity due to concurrent checking without limits on their number, no commissions for transactions, greater decentralization in comparison with the blockchain and higher security.
Thus, the new IOTA coin can not be mined: the entire volume of coins was released immediately at the time of their creation. Therefore, it should be borne in mind that if you are doing some work in IOTA, you do not create new Iota tokens, but simply confirm other transactions.
Each square box in this diagram represents a transaction being sent.
For each new transaction, two random, unconfirmed transactions are validated in the tangle. Each validation ( n) of a transaction increases the likelihood of a transaction being genuine, up to a threshold of ©. In this figure, red boxes indicate transactions where n > 0, but below a certain confirmation threshold, n < c.
The grey boxes represent transactions where n = 0. The green boxes represent transactions that have been validated a sufficient number of times, in order to be accepted as confirmed by the recipient address, n >= c.
For an IOTA user to send out a transaction, the user must validate two other, randomly selected transactions. A sent transaction must accumulate a sufficient level of verification (i.e. must be validated a sufficient number of times by other users) in order to be accepted as “confirmed” by its recipient. IOTA works with a single administrator called the Coordinator which confirms all transactions in a set of released milestones. Without the Coordinator, the IOTA DAG is not considered sufficiently secured in its early stages. The Coordinator is meant to be removed when network is sufficiently large. Not only are hash-based signatures much faster than ECC, Grover’s algorithm dictates that a quantum computer would be very efficient at conducting brute force attacks. The process of finding a cryptographic nonce in order to generate a Bitcoin block is particularly vulnerable to such brute-force attacks. As of today, an average of around 2 68nonces must be checked to find a suitable hash, and this trends up over time. In this regard, IOTA is less susceptible to brute force attacks following implementation of quantum computing.
They made use of a self-designed hash function named Curl. In July 2017 researchers found a critical vulnerability allowing them to forge signatures. Generally, the researchers criticize the use of self-developed cryptography. On 7 August the developers replaced the hash function with a version of SHA-3 named Kerl, which works with ternary (instead of binary) operations, effectively fixing the vulnerability.
The IOTA Foundation was incorporated in Germany as a non-profit corporation that coordinates and funds development in the IOTA ecosystem. The Foundation is dedicated to building sustainable ecosystems around IOTA to accelerate its development and commercial adoption as an open-source technology. As of November 2017, the Foundation has a $100 million fund to promote IOTA use. The funds are distributed as IOTA tokens to companies building technology with IOTA. The development fund does not fund start ups.
The Foundation is the first regulated, non-profit in Germany (“gemeinnützige Stiftung”) funded exclusively by cryptocurrencies. It’s divided into a Board of Directors, Supervisory Board, and Advisory Board. Beneath them, the Foundation will organized into working groups focused on promoting and enabling IOTA’s use in: Identity and MyDate; Social Causes; Supply Chain; Mobility; E-Health; Fintech; Smart Cities and Infrastructure; R&D; Interoperability; Energy; Industry 4.0; and Others.
IOTA launched a public marketplace (https://data.iota.org/) for data generated by 3rd party sensors. The objective is to monetize the exploding market for 2.5 quintillion bytes of data being generated daily and growing exponentially. The project gathered participation of over twenty global organizations, including Deutsche Telekom, Bosch, Microsoft, PricewaterhouseCoopers, Airbus, Cisco, Samsung, Orange S.A., Fujitsu, and China’s Huawei Group. Ordinary netizens will also be able to sell their data on the marketplace.
In September 2017, a distributed machine learning service was announced using IOTA as the payment system. CognIOTA goal is to allow users to rent their idle CPU’s for others to use in real time. David Sonstebo commented, “The goal is indeed to get mining pools to switch over to providing a useful service (Machine Learning) while paid in iotas. A lot of mining farms are struggling these days, so this is a very win-win situation”
Masked Authenticated Messaging
Masked Authenticated Messaging (MAM) is a second layer data communication protocol which enables encrypted data streams, like RSS, to be sent securely over IOTA’s distributed ledger. To transmit, a user needs to conduct a small amount of proof of work to prevent spamming of the network. Nodes listening for the channel ID (= address), will receive the message. MAM messages contribute to the security of the network by increasing total hashing power and benefit from the data integrity properties of the network. The Bosch XDK IoT developer kit and the RuuviTag, an open source sensor beacon from Ruuvi Labs, already use IOTA’s MAM. Example uses for XDK and RuuviTags are portable weather stations, Eddystone proximity beacons, vehicle locators and similar applications which securely report telemetry or receive commands. Another use case are the announced EV charging station from the Dutch energy giant Elaad.
IOTA allows instantaneous, high throughput payment channels that are bi-directional and off-Tangle. This allows parties to transact at high speed without waiting for normal confirmation times. When a channel is created, each party deposits an equal amount of IOTA into a multi-signature address controlled by all parties. Once initial deposits are confirmed, the channel does not need to interact with the network until the channel is closed. When the parties finish transacting, final balances are published to the network. This approach can reduce thousands of transactions down to two.
A sample use is paying for wirelessly charging a phone at a cafe. If the phone and cafe open an IOTA Flash Channel, payments are made by the second from the phone to the cafe. Once the charge is terminated, the channel is closed and one payment is recorded on the Tangle as being conducted between your phone and the cafe.
The official IOTA wallet is version 2.5.4, downloadable from GitHub: IOTA wallet. The current wallet requires independently generating your own seed (private key). Instructions how to do that are located here: IOTA wallet. IOTA-help.com is to be avoided as it is a scam site used to steal seeds and IOTA.
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Originally published at https://cryptonomad.info on June 10, 2019.