# What Is IOTA (MIOTA)? Definition, How It Works, and Concerns

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## What Is IOTA?

IOTA (MIOTA) is a distributed ledger designed to record and execute transactions between machines and devices. It's an ecosystem that can include everything from product origin and authenticity to drivers selling the data their cars collect.

The ledger uses a cryptocurrency called MIOTA to account for transactions in its network. IOTA's key innovation is Tangle, a system of nodes used to confirm transactions. IOTA claims that Tangle is faster and more efficient than typical blockchains used in cryptocurrencies.

The IOTA Foundation, the nonprofit foundation responsible for the ledger, has inked agreements with prominent companies, such as Bosch and Volkswagen, to extend the platform's utility among connected devices.

### Key Takeaways

*   IOTA is a distributed ledger developed to handle transactions between connected devices in a global data-sharing ecosystem. Its cryptocurrency is MIOTA.
*   It began as a hardware project aiming to design low-cost general-purpose processors.
*   IOTA aims to solve Bitcoin's key scalability and performance issues by a direct acyclic graph, a system of nodes in which each new transaction confirms two previous transactions.

## History of IOTA

Sergey Ivancheglo, Serguei Popov, David Sønstebø, and Dominik Schiener, who joined later, co-founded IOTA. The project was announced in October 2015 through the Bitcoin Talk forum. Initially, it was called the Jinn project. That project aimed to develop low-cost and energy-efficient hardware, primarily general-purpose processors, for use in the IoT ecosystem.

Jinn held a crowd sale for its tokens in September 2014. In 2015, Jinn was rebranded as IOTA, and another token sale was held, gathering a total of $590,000 in funding. After the rebranding, Jinn token holders could exchange their tokens at equivalency in the new system. In 2021, IOTA's last funding round raised another $100 million

The total number of MIOTA planned to be in existence is 4.6 billion.

## Goals of IOTA

IOTA was initially advertised as a blockchain ecosystem for the [Internet of Things](https://www.investopedia.com/terms/i/internet-things.asp), which is generally considered to be a network of home devices communicating with centralized servers. However, IOTA has evolved into a project with much more lofty goals. According to IOTAs lightpaper, nearly any data can be monetized.

For example, cars collect weather, road, and driving conditions data that can be sold to businesses and governments. The money earned by selling data can be used by the owner to help pay for charging their electric vehicle.

In many countries, parking is a significant and costly problem. IOTA's network can be used to track, monetize, reserve, and pay for parking, streamlining the process of finding and paying for a parking spot.

IOTA's interoperability also makes it easy to gather and transmit data using oracles, which are nodes that can send and receive data to and from programs like blockchains. IOTA has been used to collect data regarding mining industry efficiency, safety, and sustainability.

## Future of IOTA

Many investors and traders focus on a cryptocurrency's price, trading volume, [technical indicators](https://www.investopedia.com/terms/t/technicalindicator.asp), and other investment considerations. However, the IOTA project is about more than issuing a cryptocurrency for speculative purposes—it has the potential to address many real-world issues.

Cryptocurrencies and the blockchain (or direct acyclic graphs) that support them are best employed as solutions. Their problem-solving abilities give them much more value over time than price speculation. If these projects can solve real problems, they are much more likely to succeed and have more value. IOTA seems to have set the stage for its success, but how industries will react remains to be seen.

## How Is IOTA Different From Bitcoin?

IOTA's solution to Bitcoin's problems is to eliminate several key concepts and topographical constraints of a blockchain. MIOTA, IOTA's cryptocurrency, is [premined](https://www.investopedia.com/terms/p/premining.asp), and consensus occurs differently compared to a blockchain. IOTA developers have proposed a new data structure (a way to organize numeric representations within a computer's storage) known as Tangle.

### IOTA Is Not a Blockchain

Tangle is a Decentralized Acyclic Graph (DAG), a system of nodes that is not sequential. Thus, each node can be connected to multiple other nodes in a Tangle. However, they are connected only in a particular direction, meaning a node cannot refer back to itself. IOTA's Tangle is a parallel system in which transactions can be processed simultaneously instead of sequentially. As more systems are attached to it, the Tangle becomes more secure and efficient at processing transactions.

IOTA's system uses a tip selection algorithm with "confidence" as a measure to approve the transaction. Suppose a transaction has been approved 97 times in the past. Then, there is 97% confidence that a node will approve it in the future.

Related to the concept of "confidence" is a transaction's weight. As it moves through Tangle, a transaction gathers weight. A transaction's weight increases with the number of approvals. Once a transaction is confirmed, it is broadcast to the entire network. Then, another unconfirmed transaction can choose the newly-confirmed transaction as one of the tips to confirm itself.

This method of confirming a transaction results in low fees and low power consumption, enabling MIOTA to be used across various devices and machines with different power requirements.

### Bitcoin Requires Miners

Bitcoin is a group of systems running full nodes that contain the entire history of transactions. It has a competitive process for proposing blocks, called mining, which is energy and computationally intensive.

Miners are not required in Tangle. Each new transaction is confirmed by referencing two previous transactions, reducing the amount of time and memory needed to verify a transaction. An easily solvable and straightforward Proof of Work ([PoW](https://www.investopedia.com/terms/p/proof-work.asp)) puzzle is added to the transaction as a final step. The two transactions that are chosen are referred to as tips.

## Is IOTA the Same As MIOTA?

IOTA is the name of the project behind Tangle and the MIOTA token used on it.

## Is IOTA MIOTA a Good Investment?

While it is possible to invest in or trade MIOTA, it was not designed for this purpose. It is best used following its original intent—as a way to pay transaction fees and earn through blockchain involvement.

## Will IOTA Reach $10?

It's difficult to predict what a cryptocurrency's price will be in the future because they are volatile and subject to speculation.

## The Bottom Line

IOTA is a project attempting to improve on blockchain's shortcomings using different data management and consensus techniques that are more popular with blockchain projects.

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