What Is IOTA Coin?
IOTA is a new, groundbreaking open-source distributed ledger that does not use blockchain. IOTA’s innovative new quantum-proof protocol, known as the Tangle, has unique new features such as infinite scalability, zero fees, fast transactions, secure transfer of data, and much more. IOTA’s initial focus is on serving as the backbone of the Internet-of-Things (IoT).
The Internet of Things
We all live in an interconnected world. Our interactions with technology have become continuous and widespread, and these interactions include the process of internetworking our physical devices, such as buildings, cars, houses, software, and electronic devices. These objects are, thanks to innovative technology, allowed to collect and exchange data.
The Internet of Things, also known as IoT, is at the forefront of the fourth industrial revolution. IoT promotes the idea that even non-network devices can and should be connected to the internet.
However, despite its benefits, a global network is always vulnerable to DDoS attacks, and, without a proper system in place, this vulnerability can be catastrophic.
Wide scale machine-to-machine (M2M) communication is put on a pedestal as perfect for Bitcoin and microtransactions. No doubt, Blockchain is one of technology’s greatest inventions, but it is also stigmatised because of issues caused by human failure. Blockchain itself as never been hacked; only the human-software interface has.
M2M technology has its drawbacks that prevent the formation of one global platform for all cryptocurrencies. For example, you’re probably used to hearing about Bitcoin’s scalability problems and long confirmation times. Both problems are due to its growing user base.
Traditional Blockchains, like Bitcoin, rely on miners. Computing-power-farmers sit in China and boost transactions through a synchronised peer-to-peer network and mine parts of the currencies with this processor power. This is why we pay a small transaction fee when we send Bitcoin to someone over the network. This transaction fee is part of the miners’ rewards.
IOTA was developed to resolve the problems of transaction costs, scalability, and offline transaction. IOTA is an open source, non-profit organisation focused on building an IoT solution inspired by, but not based on, blockchain technology.
The IOTA Foundation developed IOTA as a “gemeinnützige Stiftung” (“non-profit Foundation”) based in Germany. The Foundation’s goal was to provide an IoT solution, including Blockchain’s incentive mechanisms and security without the negatives of fees and transaction scaling.
The first (and maybe most important) aspect of the Iota coin is its lack of transaction fees.
Iota has no transaction fees
Replacing the global blockchain is a DAG (Directed Acyclic Graph) called Tangle, which enables various features like zero-cost transactions, infinite scalability, and offline transactions.
As aforementioned, miners verify the traditional transactions. In Tangle, every single transaction forms a new block and essentially verifies itself.
In other words, in order for your transactions to be entered into the ultimate register, this transaction must act as a relay for at least two others. This process means that a mining conglomerate is not required to certify that a transaction has taken place.
This lack of transaction fees enables new, data-driven business models. Data is hashed and signed by an IOTA node.The immutable hash values and signatures reassure the payer that he can rely on the authenticity and integrity of the data whenever he makes a nano-payment.
To date, major public blockchains like Bitcoin and Ethereum have not successfully proven that they can deliver micropayments at volume. This lack of success is due to the way in which they reimburse the parties that process and resolve payments.
IOTA Tangle reaches far beyond blockchain’s one-dimensional concepts and instead uses completely new architecture. IOTA is not just another blockchain idea; it is a well-engineered, new technology concept that has to potential to be a key enabler of the machine economy.
Iota has scalability
Ethereum has emphasised the lack of scalability of its competitor, Bitcoin, but Bancor ICO showed that Ethereum also scales poorly. Today’s blockchain technologies have clear limitations regarding their scalability, computing resource requirements, and transaction fees.
In IOTA, scalability, and adaptation to high-throughput environments where devices make thousands of transactions are the norm. IOTA is the first distributed ledger without permission requirements to achieve scalability, making Machine-to-Machine payments for IoT possible.
Iota allows for offline transactions
Blockchain has the layout of a global state, where each network participant must be in full synchronicity to make a transaction. The IOTA Tangle’s design is less rigorous and enables the network to build clusters and make transactions in an offline environment.
IOTA nodes can easily operate without being connected to the main tangle. If these nodes later wish to connect to the network (when, for example, internet connection is available) they can do so with ease.
Buying vs. Trading Iota – What is the difference between exchanges and a broker for Iota trading?
Platforms that permit traders to purchase and sell cryptocurrencies are known as cryptocurrency exchanges and brokerages. Because cryptocurrency is a very recent – and booming – market, the majority of these platforms are quite new. One of the essential questions people ask is how to know if a particular platform is safe or at-risk.
Check if the exchange provides data on the coins located in cold storage. Furthermore, you must check whether the exchange has the reserves required to provide its activities with liquidity. You can find this information easily by checking whether an exchange is regulated.
You can extract other relevant information about the platform by reading reviews and comments from other customers, checking to see if these comments are positive or negative.
Luckily, we’ve done the research on the top online Iota brokers and simplified it for you. The platforms we suggest on this site are all fully-registered and come highly recommended.
How to Find the Best Online Broker for Iota Trading
With the high levels of market competition and large exchange/broker volume, it can be difficult for beginners to make a decision. Before deciding on the right online broker for IOTA trading, keep these things in mind:
Ensure that the Broker or Exchange you use is regulated by a body such as the Financial Conduct Authority in the UK (known as the UK’s FCA). These types of organisations develop rules and services protect the market’s integrity of the market and the safety of its traders and investors. Due to safety concerns, always open your IOTA trading account using a regulated broker.
Cryptocurrency trading happens online 24 hours a day, meaning that customer support must be available at all times. You will want to be able to speak with a live support person. Many brokerages have a local office. Make sure to ask pertinent questions to analyse whether the representative is reliable or not.
Also, the details of a trustworthy broker should be out in the open, either online or otherwise, for the public to see.
Your ideal online broker for trading IOTA should be able to offer either multiple account options or provide an element of customizability. The broker may even have a separate account for beginners. Look for a broker that offers competitive spreads and simple deposits/withdrawals.
Many people concentrate on just one asset class when selecting a broker. However, you keep in mind there are many other types of investment alternatives offered. These include stocks or shares, Forex, ETFs, cryptocurrencies, CFDs, options, or futures.
Buying and selling IOTA costs money. IOTA brokers usually charge a percentage, but you may choose, instead, to find a broker who charges a flat fee, not a percentage model.
Because IOTA is traded in a market where people are seeking to buy and sell, make sure you consider the amount of liquidity an exchange has. Liquidity is the ability to sell without wrecking the price.
For more information on Cryptocurrency trading, please see our tutorial: The Basics of CryptoCurrency