The IOTA ecosystem is a community of developers and programmers of the Internet of Things (IoT) applications and services. Using the IOTA Tangle, an innovative Directed Acyclic Graph (DAG) and distributed ledger technology (DLT), IOTA Foundation is responsible for developing an array of novel IoT solutions. Also, the native Data Marketplace is a hub for real-time decentralized data streams that can connect to real-world devices. Here, users can access decentralized datasets using the native MIOTA token.
In this article, we’ll explore the IOTA ecosystem and the MIOTA token. Also, we’ll look at the Internet of Things (IoT) and distributed ledger technology (DLT) that powers it. In addition, we’ll discuss the IOTA Foundation, the native cryptocurrency token (MIOTA), and the various use cases for this technology.
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What is IOTA?
IOTA is a data transfer protocol for the Internet of Things (IoT) built using distributed ledger technology (DLT). Rather than using blockchain technology, the project uses a Directed Acyclic Graph (DAG) model, which provides many of the benefits of blockchain while removing several of the inefficiencies. This type of DLT enables the secure exchange of value and data without the need for transaction fees.
Instead of relying on miners to validate blocks or append them to a blockchain, the sender validates two other transactions when sending a transaction. This process drastically reduces costs and removes many of the obstacles present in the blockchain space that hinder scalability and adoption.
Furthermore, IOTA is a network for “exchanging value and data between humans and machines” to be implemented into several industries. In turn, this creates the opportunity for enterprise-scale, trustless digital economies. To learn more about Directed Acyclic Graph (DAG) and how it compares to blockchain, save our Blockchain vs Tangle article for later!
As a non-profit organization, IOTA Foundation is helping the IOTA ecosystem build a new data economy. The aim of IOTA Foundation is to design and develop innovative next-generation protocols to establish a trustless data network free from unnecessary friction. Also, IOTA Foundation is responsible for building and developing the foundational protocols underpinning the IOTA ecosystem.
Some of the critical roles of the IOTA Foundation include research and education, the development of scalable open-source software, funding and grants for research and community initiatives, and community donations. Plus, IOTA Foundation promotes the use cases for IOTA technologies.
Another critical role of the IOTA Foundation is protocol governance. The governance structure consists of three central bodies. Firstly, the Governing Board oversees protocol operations and sets long-term goals. Secondly, the Supervisory Board informs and monitors the performance of the Governing Board. Thirdly, the Advisory Board is on hand to provide independent advice and perspective for the direction of the ecosystem.
In addition, IOTA Foundation collaborates with a diverse community with the shared goal of creating sustainable protocols that have a real-world impact. Moreover, IOTA Foundation aims to standardize the protocol to help the IOTA ecosystem achieve mass adoption.
The IOTA Tangle
IOTA aims to solve the issues regarding data security, scalability, energy consumption, and fees that can be problematic with blockchains. The platform uses a Directed Acyclic Graph (DAG) called “The Tangle” to achieve this. The IOTA Tangle is a type of distributed ledger technology (DLT) that is designed specifically for the Internet of Things (IoT). This technology works in conjunction with IoT devices such as weather trackers and smartwatches. Also, the IOTA Tangle allows users to monetize data derived from these devices.
The IOTA Tangle uses a Proof of Work (PoW) consensus algorithm that is powerful enough to process IoT transactions without excessive energy consumption. Plus, the Tangle is the architecture at the foundation of the native IOTA cryptocurrency, MIOTA. This system uses a PoW model similar to that of Bitcoin. However, it uses much less energy and is much quicker to process transactions.
The Tangle aims to succeed blockchain by offering features to establish a system of machine-to-machine micropayments. Furthermore, the Tangle ledger does not require complete verification to process transactions. Instead, all network participants verify transactions simultaneously. This reduces the energy needed to process transactions while enabling much faster transaction finality.
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Currently, Tangle’s verification process is not robust enough to prevent a 51% attack alone. If a malicious actor was to control the majority of hash power across the network, they could control the overall direction of consensus. The role of the “Coordinator” is to prevent this from happening and oversee protocol consensus as a temporary component of the underlying Tangle data structure.
The IOTA Foundation oversees the Coordinator program. However, as of May 2019, the role of Coordinator is being reduced under a system upgrade called Coordicide. The Coordicide upgrade aims to facilitate higher levels of decentralization throughout the ecosystem.
Coordicide is the process of removing the role of Coordinator to achieve complete decentralization of the network. By eliminating this role, the network can become permissionless and highly scalable.
IOTA has been operational since 2016. However, the long-term engineering strategy has shifted over time. This shift takes into account the changes in industry demand and feedback from the community.
During research for the Coordicide milestone, the community has established and identified several innovative concepts that can be directly implemented onto the IOTA mainnet in its current form before the Coordicide update is complete.
This series of protocol upgrades is known as Chrysalis. Chrysalis is a formalized engineering strategy aimed at building production-ready tools and applications before the completion of Coordicide. Also, the Chrysalis update seeks to make the transition to Coordicide faster and more straightforward while improving the user experience of IOTA technologies.
Furthermore, the intended outcomes for the Chrysalis upgrade include performance improvements, new libraries, better scalability, and reliability. Also, the Chrysalis upgrade promotes the adoption of IOTA technology on an enterprise scale by building a suite of tools and services to aid large-scale organizations.
Along with improved transaction throughput and network stability, Chrysalis will introduce new node operator software and wallet software. Plus, Chrysalis brings about reusable addresses and a switch to a UTXO model from the previous account-based model. Another feature of the Chrysalis upgrade is the Firefly wallet, which we discuss later in this article.
The MIOTA Token
The IOTA token (MIOTA) is a unit of account and value transfer used throughout the IOTA network. As the primary utility token of the IOTA ecosystem, the MIOTA token is essential for executing smart contracts and accounting for transactions within the IOTA network.
The MIOTA token is available to buy on most major crypto exchanges. Throughout the lifespan of the project, there will be a total of 27 quadrillion MIOTA tokens issued. According to CoinGecko, at the time of writing, the MIOTA token is trading at $0.84, with a market cap of $2.3 billion.
Products & Solutions
IOTA offers a range of products and services across a wide array of industries. Examples include IOTA Streams, IOTA Technologies, and the Firefly wallet. Also, the platform provides DLT solutions for sectors including digital health (eHealth), mobility and automotive, digital identity, global trade and supply chains, and much more! Below we take a look at some of the different examples of the project’s technology in more detail.
The IOTA ecosystem consists of a diverse range of products. Examples include IOTA Access, a management framework for access to resources, and the IOTA Identity protocol built on the Tangle. Another implementation of this technology is IOTA Streams, a cryptographic messaging application framework. In the future, the platform aims to introduce a new framework for creating assets on top of the protocol. Also, the Firefly wallet is a new application built using IOTA technology.
Firefly is the project’s new software wallet. As of April 2021, during the Chrysalis network migration, Firefly is to replace the Trinity wallet as the native IOTA wallet. The Firefly wallet provides token holders with a bridge to transition between the old WOTS address scheme to the new EdDSA scheme. Also, Firefly features a new library wallet written with the Rust programming language. In addition, Firefly provides a simple-to-use, secure crypto wallet with a flexible modular design. Plus, Firefly boasts several advanced features, such as a customizable modular design and state-of-the-art Stronghold security.
The IOTA Data Marketplace simulates how devices run using an IOTA script. Plus, the Data Marketplace acts as a starting point for developing new data marketplaces. In addition, the Data Marketplace enables a range of internet IoT devices and application programming interfaces (APIs) to buy and sell data using testnet tokens.
Also, the Data Marketplace enables participants to “create and capture value” using sensors and smart devices that can trade data. Examples of this include real-time data streams for traffic and weather and pay-to-use physical items.
Moreover, the Data Marketplace is at the heart of the IOTA ecosystem. It enables programmers to buy datasets from sensor developers to create and access real-time datasets for use in IoT solutions.
MAM (Masked Authenticated Messaging)
Using the IOTA Data Marketplace, IoT sensor developers can create and sell data streams known as Masked Authenticated Messaging, or MAM encrypted data. MAMs allow developers to create innovative IoT applications that use real-time data derived from IoT sensors. Also, by using the decentralized IOTA Data Marketplace, the IoT community can access MAM data via a secure, trustless peer-to-peer network.
IOTA provides a diverse catalog of client libraries that easily integrate IOTA technology into existing applications. However, all current libraries are in active development and focus on the Chrysalis testnet. Therefore, they are not compatible with the IOTA mainnet.
These libraries have several use cases. Examples include a general-purpose library, a library for embedded devices with microcontrollers, and a stateful library for value transfers. Also, IOTA is developing libraries that are accessible in a range of programming languages.
IOTA offers several different types of open-source node software available for anyone to implement. However, to fully take advantage of the services available, previous programming knowledge is beneficial. The various types of node software include “a lightweight node implementation written in Go,” named Hornet.
Also, the IOTA node software includes the original account of the “node reference implementation”, IRI (deprecated), plus a “node add-on” called Chronicle, which holds individual distributed data that contains a complete history of transactions.
Soon, IOTA node software will also offer Bee. Bee is essentially the same as the legacy node. However, it uses the Rust programming language. Moreover, IOTA is working on Chronicle.Rs, similar to the Chronicle node add-on but also written in the Rust programming language.
Exploring the IOTA Ecosystem & the MIOTA Token Summary
The IOTA ecosystem is home to a community of developers working together to build the next generation of distributed ledger technology (DLT). Also, the project’s technology offers a vast suite of developer tools, such as self-executing smart contracts and the IOTA Tangle Explorer. IOTA technology such as the Tangle is at the forefront of the Internet of Things (IoT) development. Using these innovative technologies, programmers and developers are building applications that can connect to a broad range of embedded sensors, vehicles, and smart devices.
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