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What is IOTA? | The Ultimate Beginner’s Guide

What is IOTA

IOTA is a peer to peer, decentralized payment and exchange platform for the global network of Internet-connected devices, otherwise known as the Internet of Things (IoT). To understand what IOTA is trying to accomplish, you first have to understand the potential of the IoT, which is about much more than just devices connecting. Rather, it’s…

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IOTA is a peer to peer, decentralized payment and exchange platform for the global network of Internet-connected devices, otherwise known as the Internet of Things (IoT).

To understand what IOTA is trying to accomplish, you first have to understand the potential of the IoT, which is about much more than just devices connecting. Rather, it’s about how they interact, share data, value services offered to the network, and make payments between themselves — potentially without the need for manual human intervention. Examples of the IoT at work include automatic exchanges of computer power, bandwidth, and storage; sharing of storm or tsunami threats between remote weather sensors and communities; a machine that can automatically pay for its own maintenance, parts, insurance, energy, or even its own manufacturing; a fleet of self-driving cars that fuel/charge themselves and automatically pay for the service; or even entire smart cities with traffic sensors capable of coordinating traffic in real time. The potential is enormous.

While the IoT is more science fiction than modern reality, that is expected to change in the near future. In just the last year, the number of Internet-capable devices increased 31 percent to a total of around 8.4 billion devices. It’s predicted that this number will skyrocket to 30 billion devices by 2020 and that the total market value of such devices will reach $7.1 trillion.

IOTA has made some big promises about how they intend to be an early mover in this space, but the truth is that the technology is still relatively new and unproven. As such, IOTA has gotten a lot of criticism from technology and security experts as well as the blockchain community in general.

In this article, we’ll take a closer look at why that is, how IOTA works, and some of the challenges IOTA faces going forward by looking at the following topics:

IOTA was launched in June 2016 by a German non-profit organization called the IOTA Foundation, with the goal of being a pioneer in the IoT space. The ultimate vision behind IOTA is to create a semi-automated marketplace for machine to machine transactions.

But IOTA is not alone in this vision. In fact, numerous major companies are also entering the IoT space. Many such companies have formed direct partnerships with IOTA, while others are working with the IOTA Foundation peripherally (e.g. Microsoft) or as co-founders of the Trusted IoT Alliance, an association of companies working in the field.

The IoT vision isn’t necessarily possible with regular blockchain technology. Most blockchains require massive amounts of resources and power just to perform a few dozen transactions per second, while the IoT ecosystem would need to perform potentially millions of transactions per second. What’s IOTA’s proposed solution to this scalability problem? A new piece of tech called the “tangle”.

IOTA’s “tangle” is a network structure which doesn’t rely on dedicated computer nodes (called miners) to validate transactions as blockchains do. Instead, the tangle uses a technology called Directed Acyclic Graph (DAG) to require that each device on the network confirm two transactions for every transaction it performs.

As devices on the network verify each other’s transactions, the network builds a consensus-based ledger that is theoretically immutable and highly secure. In this way, IOTA avoids the high fees and slow transaction speeds of traditional blockchains that would make it impossible for IoT devices to quickly trade resources in real time while logging vast amounts of data.

Suggested Reading Learn how IOTA compares to Ethereum.

Although IOTA doesn’t require mining, transactions are still securely stored by computer “nodes” using a cryptographic algorithm called SHA-3 Proof of Work (PoW). This operates similar to Bitcoin’s SHA-256 PoW algorithm to create a chain of transaction records that are stored on full network nodes. How these nodes will be rewarded for their services is not yet clear, since they don’t actually receive any of IOTA’s tokens (called MIOTA) for their work. This has resulted in some debate about how IOTA will solve this lack of incentive to run a node.

Early in IOTA’s development it actually used a hashing algorithm called Curl which was custom-built by the IOTA development team. Curl was replaced, however, after an MIT team found a potential vulnerability in the algorithm. 

This sparked a huge controversy in which the IOTA development team was widely criticized for handling the situation poorly, and for over-reaching when they tried to create their own algorithm. Many argued that a cryptographic algorithm must be widely available and tested for years prior to being released to verify the algorithm’s security. 

Around February 24, 2018, however, leaked emails between the MIT team and IOTA were published on an IOTA enthusiast’s blog called The Tangler that seemed to at least partially exonerate the IOTA developers. The leaked correspondences reveal that the MIT team failed to provide evidence of their claims — which were not confirmed by peers — and ceased communications with the IOTA Foundation developers before useful conclusions were reached. The emails also suggest that the MIT team did not fully understand how IOTA works (as they themselves admitted).

In an official release about the incident from the IOTA Foundation on February 26, the foundation stated:

“To date, the IOTA team has not received any answers to questions posed, code demonstrating the attack, or other documentation elaborating on the vulnerability beyond what was seen in these emails.
We would very much appreciate help finding actual vulnerabilities in the IOTA protocol, and as of November, 2017 we have been working with a team of cryptographers to obtain an accurate and objective assessment of this situation.”

Another point of contention about IOTA in the blockchain community is the technology’s reliance on a central coordinating entity to begin with. Before IOTA’s network is truly decentralized, it must first gain enough users to validate transactions and secure the network, which is theoretically possible to control with only 34% of the computing power of the network as a whole. For now, IOTA has been forced to implement a temporary central entity called the Coordinator to secure the network. There is very little information about the Coordinator in the white paper or elsewhere, but the basic rundown is that the entity (likely one or more powerful computers) validates all transactions by throwing its own transactions into the mix every minute.

These transactions are referred to as milestones and are used as a sort of snapshot that can be verified against all other transactions in the network to validate that a given transaction is untampered with. Even if the Coordinator acts maliciously, every other node in the network would be able to recognize this, because it would start issuing bad milestones.

According to the IOTA Foundation, the Coordinator will be turned off when the network has enough full nodes to ensure a self-validating network.

Since there’s no mining in the network, MIOTA coins — all 2,779,530,283,277,761 of them — were issued all at once at the launch of the DAG chain. IOTA’s currency units are named using metric system prefixes before the word “Iota”. As the official name of the cryptocurrency, MIOTA is also the unit of account used on exchanges. These are the units, in order of size:

Iota = 1 iota = 1i = 1i
KiloIota = 1 kiota = 1Ki = 1,000 i
MegaIota = 1 MIOTA = 1Mi = 1,000,000 i
GigaIota = 1 giota = 1Gi = 1,000,000,000 i
TeraIota = 1 tiota = 1Ti = 1,000,000,000,000 i
PetaIota = 1 Piota = 1Pi = 1,000,000,000,000,000 i

There are a number of advantages that IOTA has over other cryptocurrencies, mostly because of its DAG chain technology.

Fast and Free Transactions: As mentioned, IOTA dispenses with mining, which means no transaction fees. Since the network is entirely user validated in real-time, transactions are also very fast.

Energy and Resource Efficiency: Bitcoin and many other popular cryptocurrencies that use miners consume enormous amounts of energy. Mining computers (called rigs) are also regularly replaced with more powerful computers as mining becomes more difficult, wasting further resources. The tangle eliminates these inefficiencies.

Ternary Computing: IOTA uses ternary logic in its network as opposed to traditional binary logic. Ternary computing is potentially more efficient than binary computing, and is also more effective in artificial neural networks, artificial neurons, artificial intelligence logic, graphical processing, and cryptography. However, some argue that the ternary computing revolution may never come, or if it does, it will be far in the future.

Quantum Proof: Quantum computing is an emerging field of computing that promises unprecedented processing power that could potentially compromise regular cryptography systems, including regular blockchain technologies. IOTA claims to be “quantum proof” by using an “unforgeable” scheme that makes it impossible to hack, even by quantum computers.

Zero Inflation: Since no more IOTA coins will be created, there will be no inflation. This means that the value of the currency will not decrease because of an increase in coins (though it could, of course, decrease for other reasons).

Many Competitors: There are many competitors in the IoT space, including large multinational corporations with virtually unlimited resources. Other cryptocurrency competitors include Waltonchain and IoT Chain. Other DAG based cryptocurrencies like Byteball or Nano could also theoretically be used as a means of scalable, fast transactions for the IoT, while other scalable decentralized application (dapp) platforms like EOS could potentially use dapps to provide use cases for the IoT beyond simple transactions.

Unproven Technology: As mentioned, several cryptography experts have shown concerns over IOTA’s stability and security as a platform. Using so many unproven technologies at once certainly opens up the possibility of unforeseen security vulnerabilities or other problems.

More Centralized at First: Regular blockchain networks become vulnerable if one party has 51% of the computing power on the network. If this happens, it may be possible for the controlling entity to verify false transactions and falsify data in their favor. IOTA, by contrast, is vulnerable if only 34% of the network is controlled by a single entity. This vulnerability would theoretically be very difficult to take advantage of once the network scales into an IoT made up of millions or billions of devices, but until then, the Coordinator is required. Some argue that this is a form of centralization and potentially an unfortunate single point of failure. As mentioned, IOTA plans to eliminate the Coordinator after the network scales enough.

Buying MIOTA directly with fiat currency (e.g. USD) is not widely possible yet, but it’s simple enough to purchase another cryptocurrency such as Bitcoin, Ethereum or Litecoin on an exchange like Coinbase or Bitstamp and then transfer that to an exchange where you can buy MIOTA. Exchanges selling MIOTA include Binance, OKEx, Bitfinex, Exrates, and Gate.io.

You can see a step-by-step guide on How to Buy IOTA here.

Storing MIOTA on exchanges is not recommended, nor is it recommended to store a significant amount of any cryptocurrency on an exchange. The best IOTA wallets available today are the Trinity desktop wallet, the Nelium mobile wallet, and the Ledger Nano S hardware wallet. For a comprehensive guide to these wallet options, check out our guide to the best IOTA wallets.

Although many people in the cryptocurrency and digital security industries are skeptical of IOTA, it’s possible that the technology will prove itself valuable with time. If the IOTA Foundation is successful in working out any lingering bugs or unforeseen attack vectors, the tangle and its DAG technology could become increasingly popular over more resource-intensive and expensive blockchain alternatives. IOTA’s success may even help kickstart the forthcoming IoT marketplace, which would launch an exciting new chapter in humanity’s relationship with machines. The potential is unprecedented, but for now, we’ll have to wait and see if IOTA can deliver on its ambitious goals. 

Source: https://unhashed.com/cryptocurrency-coin-guides/what-is-iota/

Blockchain

AurusGOLD returns to New to the Street

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AurusGOLD (AWG) is a gold-backed token independently minted by participants of the Aurus ecosystem. Each token represents full ownership and can be redeemed for 1 gram of 99.99% gold, sourced from LBMA-accredited refineries. Managing Director Guido van Stijn returns to New to the Street to discuss the latest developments.

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ABOUT US
Exploring the Block profiles Blockchain Technologies and Companies. Exploring the Block produces multi-part series following the goals and achievements of the companies we follow and invite our audience to track the growth and challenges these companies face. Each series provides personal look at the company through the eyes of the CEO or company executive as they discuss their goals, roots and products with our experienced team of anchors/journalists to provide our viewing audience with who, what, where, when and why about the companies you want to learn about.

New To The Street profiles public companies, advertises and markets their products and services, and provides business news. New To The Street paves the way to the latest financial issues, offering a blend of business and financial services news reporting and in-depth interviews relating to new products, economic analysis and public company profiles. New to the Street is produced by FMW Media Works Corp.

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FMW Media Corp. operates one of the longest-running U.S and International sponsored programming T.V. brands “NewToTheStreet,” and its blockchain show “Exploring The Block.” Since 2009, these brands run shows across major U.S. Television networks. These TV platforms reach over 540 million homes both in US and international markets. Developing 2-additional shows “TheBestinNY” and “The Ultimate Listing”

Source: https://exploringtheblock.com/aurusgold-returns-to-new-to-the-street/

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Should You Buy The Bitcoin Dip? Analysts Weigh In On Bear Market

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Should You Buy The Bitcoin Dip? Analysts Weigh In On Bear Market

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Bitcoin broke many crucial support levels and ended up trading close to $28,500, from where it began correcting losses. On the upside, the $30,800 and $31,000 resistance levels are significant for continuous correction. Failure to break resistance at the aforementioned levels could open room for more losses around the nearest support levels of $28,800 and $25,800.

Should You Buy The Bitcoin Dip? Analysts Weigh In On Bear Market
BTCUSD Chart By TradingView

At press time, Bitcoin bulls are facing rejection as the $31,700 price mark continues to drop, alongside daily losses which are now totaling 11% at the time of this report. Market sentiments are mixed and analysts have continued to weigh in on the bear market, which they already term necessary for an unmatched bullish takeover. 

On-chain indicators like the SOPR (spent output profit ratio), a signal which accesses long-term investors’ behavior is declining as less Bitcoin is being moved for extreme profits. This signal which had previously surged by 13% in December, indicating that a complete 100% upsurge could send Bitcoin to a never-before-seen price of $328,000 may not be in its most bullish state, yet investor and CTO of Glassnode Analytics reveals his readiness to buy the dip, perhaps in hopes that a correction in price is just around the corner.

Meanwhile, speculations that the Bitcoin blockchain was disrupted and Bitcoins were stolen has been making rounds on crypto-twitter. This kind of Bitcoin theft known as “double spending’ happens when a copy of the currency transaction is sent by the Bitcoin thief to prove legitimacy or the entire transaction is cleared altogether. These were quickly debunked by analysts who noted that a double-spending did not trigger the bear market, adding that there was no double-spending at all. 

Furthermore, the historic pattern of Bitcoin losing 80% of its value after an all-time-high has been causing FOMO in the community. However, it is important to note that the 80% downward price correction usually happens after a 20x upsurge in current price.

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Should Bitcoin follow this pattern, a 77.86% price increase (over $50,000) must be recorded before the major price decline happens. Overall, analysts hint that buying the dip could potentially pay off, seeing as whales are also awaiting a correction in the near term. Alternatively, others look to altcoins for shelter. Although altcoins attained gains from last weekend, these gains were not sustained over the week.


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The views expressed in the article are wholly those of the author and do not represent those of, nor should they be attributed to, ZyCrypto. This article is not meant to give financial advice. Please carry out your own research before investing in any of the various cryptocurrencies available.

Source: https://zycrypto.com/should-you-buy-the-bitcoin-dip-analysts-weigh-in-on-bear-market/

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Why the Asian session holds the key to Bitcoin’s price drop

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Bitcoin’s price seemed to have recuperated as it bounced off the yearly open at $28,956. However, on-chain indicators are suggesting that this expansion was a fluke. In fact, buyers with no real volume or momentum are trying to push the price higher on the charts.

The first sign of resistance weakened these buyers’ already weak momentum, with the same contributing to a continuation of the downtrend. More of these sell-offs might be on their way due to two reasons,

  1. On-chain indicators
  2. The start of the Asian session

Bitcoin’s On-chain indicators

As mentioned in yesterday’s article, Bitcoin was due for a correction and retest of the yearly open. Now, on-chain indicators, more specifically, CryptoQuant’s Coinbase Premium indicator, is pointing to more drops for the market’s pioneer cryptocurrency.

“Coinbase premium” is an on-chain metric that is the ratio of Coinbase’s BTC/USD price and Binance’s BTC/USDT price. This ratio helps determine if BTC is trading at a premium or not.

Source: CryptoQuant

A high premium highlights high spot inflows and suggests that investors want to buy, thus, it is a bullish sign. At press time, despite bouncing off the yearly low, this premium hadn’t increased and was still in the negative, hinting that the sellers were still in control of the market and that the drop wasn’t done yet.

CryptoQuant CEO Ki Young Ju commented on this premium too, stating,

“Was always above +$50 when BTC was about to break 20k, 30k, and 40k, meaning there were huge spot inflows from high net-worth individuals and institutional investors in Coinbase.”

Bitcoin: Technical point of view

Source: BTCUSDT on TradingView

As mentioned above, the first sight of resistance was the middle-line of the parallel channel. A rejection here sets up the price for another tap of the yearly open at $28,956. This further supported the on-chain metric’s bearish view.

A bearish case will be the breach of the immediate support at $28,956, which would open up the price to drops to $20,000 in an extremely bearish scenario.

Other supports that can prevent the price from dropping to $20,000 include the liquidity pocket ranging from $29,800 to $27,600. Following this range is the 50% Fibonacci level at $25,850, a level that seems to be the major area of support and the next destination for Bitcoin’s drop.

The Asian session

Asian sessions ranging from 23:00 GMT to 8:00 GMT is when traders in the east start trading. Hence, high volatility is usually experienced during this time. Moreover, the Asian session is known for being extremely bearish and most drops occur during this session.

In light of the fact that yesterday’s drop came accompanied the U.S session, Bitcoin can be expected to drop more as the Asian session is in full swing, further supporting the bearish outlook on the charts.

Source: https://ambcrypto.com/why-the-asian-session-holds-the-key-to-bitcoins-price-drop

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