IOTA is an open-source distributed ledger designed specifically for the Internet of things (IoT). It stores transactions in a directed acyclic graph structure, called the "Tangle". The Tangle is a scalable network that offers feeless data and value transfer between system actors. IOTA development centers on facilitating applications that require high-speed communication between endpoints seeking to transfer data and value, particularly Machine to Machine (M2M) ecosystems that deal with real-time micro-transactions[r]. The network uses the IOTA token to enable value transfer between network participants, a feature that aligns IOTA with cryptocurrencies[r].
Network participants are jointly responsible for transaction validations, and must confirm two outstanding transactions for every transaction they issue. This is a deviation from traditional blockchain networks that rely on mining pools to confirm transactions through proof-of-work algorithms. Leveraging this validation method enables feeless transactions on the IOTA network, as opposed to paying a mining fee.
The present network relies on a coordinator node called Compass, which validates all network transactions made to secure the network against 34% attacks[r]. A consequence of using Compass is that it creates a bottleneck for transaction confirmations, lowering the Tangle's current capacity for processing transactions per second (TPS)[r]. Compass will remain a security authority until the network is large enough to operate securely on its own as a completely decentralized system[r].
IOTA is governed by the German non-profit “IOTA Foundation” (IF) [r]. The IF is a group of developers, professional researchers, and business people, who have authority to direct IOTA's development.History
The project was founded in 2015 by David Sønstebø, Dominik Schiener, Sergey Ivancheglo, and Serguei Popov, who set up the IOTA Foundation to govern it. The foundation, ...