1. Programme Name
2. Project Introduction
The main innovation behind IOTA is the Tangle. It’s a novel new distributed ledger architecture that is based on a DAG (Directed Acyclic Graph). One might refer to it as a “Blockchain without Blocks and the Chain” (semantically, it’s not really a Blockchain).
At its core, the Tangle still has the same underlying principles as a Blockchain: it’s still a distributed database, it’s still a P2P Network and it still relies on a consensus and validation mechanism.
But, if we are to summarize the main differences between the Tangle and the Blockchain, the two most apparent ones are how the Tangle is structured (a DAG), and how we achieve consensus.
In IOTA there are no “blocks” in the classical sense. Instead, a single transaction references two past transactions. This referencing of transactions is seen as an attestation: with your transaction you attest directly that two transactions, and indirectly that a subsection of the Tangle are valid and conform to the protocols rules.
Instead of a smaller subset of the network being responsible for the overall consensus (miners / stakers), the entire network of active participants (i.e. devices making transactions), are directly involved in the approval of transactions. As such, consensus in IOTA is no longer decoupled from the transaction making process: it’s an intrinsic part of it, and it’s what enables IOTA to scale without any transaction fees.
The transaction making process in IOTA is a simple, 3 step process:
1) Signing: You sign the transaction inputs with your private keys
2) Tip Selection: MCMC (Markov chain Monte Carlo) is used to randomly select two tips (i.e. unconfirmed transactions), which will be referenced by your transaction (branchTransaction and trunkTransaction)
3) Proof of Work: In order to have your transaction accepted by the network, you need to do some Proof of Work — similar to Hashcash (spam and sybil-resistance)
Once you’ve done that, your transaction will be broadcast to the network. Someone else will come along, choose your transaction in the tip selection process and validate it. And just like that, your transaction is confirmed.
Because IOTA achieves consensus on the validity of transactions without the involvement of any miners, we also have no transaction fees to pay. IOTA is the first transactional settlement protocol that enables you to transact even sub-cent values Peer-to-Peer without any transaction fees for either the sender or the recipient. As such, we really perceive IOTA to be the backbone of all current and future micropayment and nanopayment use cases.
IOTA was designed to enable transactional settlement at scale. Since consensus is parallelized, and not done in sequential intervals of batches as in Blockchain, the network is able to grow and scale dynamically with the number of transactions. The more transactions are made, the more secure and the more efficient the Tangle gets.
The main reason why IOTA was created is to enable and to be the backbone of the Machine Economy. We envision a future where Machines trade resources (computation, electricity, storage, bandwidth, data etc.) and services with each other without the involvement of any third party —purely Machine-to-Machine. As the Internet of Things starts unleashing itself, the need for “Smart Decentralization” is apparent.
100% to Investors on genesis transaction, with zero pre-allocation to founders or developers. IOTA Foundation endowed with IOTA Token donations. IOTA is distributed, decentralized, and permissionless, thus it is freely traded.
Supply is forever fixed, there are no miners or block rewards.
Note: The project introduction comes from the materials published or provided by the official project team, which is for reference only and does not constitute investment advice. Some of the content may be out of date, error, or omission. Huobi does not take responsibility for any resulting direct or indirect losses.
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