What is IOTA?

What​ ​is​ ​IOTA?

IOTA is a cryptocurrency that is designed for the industry of the Internet of Things (IoT). The main technical contribution that IOTA brings to the cryptocurrency community is the tangle, which is a directed acyclic graph (DAG) that stores transactions. The tangle is fundamentally different from the blockchain, and the developers of IOTA claim that the tangle will surpass the blockchain as the next step in cryptocurrency. This is because the developers of IOTA believe there are several issues with the blockchain.

The most notable problem with the blockchain is that there exists a transaction fee for transactions of any value. IOTA believes that the importance of micropayments will increase in the future as the IoT industry begins to flourish. Therefore, paying a fee larger than the amount of value being transferred is not logical, which can occur with Bitcoin for example. Furthermore, it is not easy to get rid of fees in the blockchain infrastructure since they serve as an incentive for the creators of blocks. IOTA attempts to solve these issues with the tangle.

The​ ​Cryptocurrency

Here is how a cryptocurrency that uses the tangle works. Instead of the global blockchain, there is a DAG that referred to as the tangle. The main idea of the tangle is that to issue a transaction, users must approve other transactions through work. Users that issue a transaction are contributing to the security of the network. If a node finds a transaction in conflict with the tangle history, the conflicting transaction will not be approved by the node.

A node does the following in order to issue a transaction :

  • The node will choose two other transactions to approve using an algorithm.
  • The node checks to make sure that the two transactions are not conflicting. It also ensures that it does not approve conflicting transactions.
  • In order to issue a valid transaction, the node must solve a cryptographic puzzle.


  • July 11, 2016: IOTA begins open testing
  • June 12, 2017: IOTA is listed on its first exchange, Bitfinex
  • June 2017: Outlier Ventures, a venture capital firm, invests an unreported amount in the seven figures into IOTA