What is IOTA?

What is IOTA?

IOTA (MIOTA) aims to be a currency for the Internet of Things (IOT). The cryptocurrency is not based on basic blockchain technology, it uses a system called “Tangle“. The system offers clear advantages in terms of speed and scalability compared to classic blockchains. The non-profit foundation behind the platform has agreements with prominent German companies like Bosch or Volkswagen.




IOTA was introduced in 2016. It handles transactions between devices in the Internet of Things. Cars, fridges or TVs have or will have internet access in the future. IOTA enables such devices to do their own payments. For example, you have a fridge with internet access. How convenient would it be, if your fridge would check whether you are out of eggs or not? And when you are out of eggs, your fridge orders new eggs online by itself. The eggs will be delivered to your doorstep and you would not have to worry about being out of eggs ever again. IOTA’s purpose is to be the currency that your smart devices use. So your fridge would use MIOTA to pay for your new eggs.


How does IOTA work?

IOTA is based on a system called Tangle. Tangle is based on a structure called directed acyclic graph (DAG). The graph runs in a certain direction and can never go back to its starting point, which makes it acyclic. This graph is a generalization of the structure of a blockchain, because a blockchain also can’t go back to its starting point and also only runs in a certain direction. So a blockchain is a very basic DAG.

Screenshot: The Tangle // Source:

The Tangle // Source:

Tangle is a more advanced DAG. Every “block” on the network is connected to two other “blocks” in a certain direction. However, blocks on the system are just single transactions. Transactions are not being put into a block like with blockchains. This means users have to verify two transactions in order to do a transaction. Tagnle offers clear advantages. For example, the system gets faster with more users. You can find a more detailed explanation on Tangle here.


Advantages of IOTA

IOTA is considered a third generation cryptocurrency. It offers clear advantages in terms of speed and scalability. Tangle gets faster with more users and transactions, which means that in the future we could see very high transaction speeds. It is also completely free of transaction fees. IOTA offers faster and cheaper transactions compared to Bitcoin or Ethereum. Also, transactions don’t have to be verified via mining, which makes IOTA definitely more future-proof than for example Bitcoin.