If you look at Coinmarketcap’s chart you will see there are 1326 cryptocurrencies in total. You can compare this situation to the Gold Rush of 1848. This is the 21st century’s digital gold rush.
But most of these cryptocurrencies are just scams and Ponzi schemes. Though, this is not true for a handful of cryptocurrencies.
In my opinion, these alternate digital currencies should provide some critical features and contribute to our life to be counted as an alternate currency. They should have some sort of usefulness and purpose. While most other cryptocurrencies fail in this sector, there are a few exceptions.
Last updated on 16th February 2018
For example, consider Bitcoin – it is the first implementation of a cryptocurrency, a truly decentralized cryptocurrency. Where one CPU is one vote and there is no centralized authority to look over our shoulder. Although the situation of Bitcoin has changed dramatically, it still had a legitimate goal.
The IOTA altcoin is currently trending because of its recent price surges. So let’s learn more about IOTA and know the cause of recent price surge.
Introduction to IOTA Digital Cryptocurrency
IOTA is an open source distributed ledger based digital currency that is focused on changing Internet of Things as we know it. A team of computer scientists, David Sønstebø, Dominik Schiener, Dr. Serguei Popov and Sergey Ivancheglo, created IOTA in 2015.
So by no means, it is a new altcoin in the market. But people realized its potentials a little bit late.
IOTA is a non-mineable cryptocurrency like Ripple so all the IOTA there will ever exist, are already there. To be specific the number is 2,779,530,283,277,761 IOTA or almost 2,779,530,238 MIOTA in short.
1 MIOTA equals 1,000,000 IOTA and MIOTA stands for MegaIOTA.
Features Of IOTA
The features and purpose of a cryptocurrency are what set it apart from other cryptocurrencies in the market. So let’s talk about the features of IOTA.
Doesn’t Use The Same OL’ Blockchain Technology
All of the active cryptocurrencies in the market use some form of the blockchain technology to maintain a public ledger. But not IOTA.
IOTA uses a new type of distributed ledger system. A one which is faster than the rest technically has zero fees, more secure, highly scalable and environmentally friendly.
And this next generation ledger system is called the “Tangle”.
The tangle can be best described as a Directed Acyclic Graph or DAG. So unlike the blockchain, it is partition friendly and supports branching off and back into the network.
Doesn’t Require Miners To Verify Transactions
Everyone in the field of cryptocurrencies knows that cryptocurrency mining is a waste of valuable resources. Blockchain scientists tried to solve this issue by introducing a Proof of Stake system. The PoS system is still in works and a handful of cryptocurrencies currently support it.
But IOTA is different. It doesn’t have a traditional blockchain, instead, it has the tangle. So the network needs to verify the transactions in a new way.
IOTA does this by forcing each node to verify two other transactions. So whenever a node carries out a transaction, that node needs to grab two other random transactions. Then the node verifies details like keys and balances of the transactions.
After verifying the transactions the node then adds its transaction to the block and performs a Proof of Work to create a hash. This node then sends the hash to the network, which will get verified by the next generation of transactions.
Zero Transaction Fees
As there are no special nodes or miners in IOTA, there is no concept of fees either. Although even PoS based cryptocurrencies like Ripple also charge a small fee to protect the network against spam. But IOTA’s approach is completely different.
It uses the tangle blockchain and forces each node to perform verification. That’s how IOTA eliminates the whole concept of fees.
The main reason behind creating IOTA is allowing smart machines to communicate with each other. So humans, as well as smart appliances, can use IOTA to perform different tasks.
For example, your Tesla can find the nearest charge station using IOTA and start a contract to charge itself.
That is why the developers claim that IOTA is a 3rd generation cryptocurrency. And to be honest, I believe it is!
Quantum Computing Safe
As expected, IOTA is also quantum computing safe. I believe it is because IOTA’s PoW algorithm CURL uses ternary logic instead of traditional binary logic. Ternary logic has three states. NEO is another cryptocurrency that claims to be quantum computing safe.
In general IOTA transactions are very fast in nature. But to make it even faster, the development team has introduced Flash Channels.
Flash channels allow two nodes to communicate with each other, completely bypassing the tangle. This can only happen when two nodes trust each other. I picture it like the Direct Memory Access or DMA, where an attached device can communicate with the main system memory without using the CPU.
Cause Of Recent Spike In Price Of IOTA
Even on 23rd October, the price of 1 MIOTA was as low as 36 cents and the market cap was around $1 billion. Compare that to the current price.
The price of 1 MIOTA currently stands at $4.34 with a market cap of $12 billion. So IOTA has displaced a long time 4th spot holder Ripple in terms of market cap.
The price surge can be directly linked to the recent IOTA’s partnerships with corporate giants like Microsoft, Volkswagen, Samsung, Cisco etc. This comes after IOTA launched its plans to introduce a Data Marketplace.
Update 1: A lot has changed since this article was published. IOTA no longer holds the 4th spot. Instead, it was pushed down to the 7th place. Currently, it has a market cap of $9.6 billion and costs about $3.47 per MIOTA.
Update 2: IOTA is now on 10th place according to market cap. It now has a market capitalization of $5.7 billion and each MIOTA costs $2.
IOTA Cryptocurrency Wallet
I believe now you know a lot of important things about IOTA. So let’s look at how you can store IOTA now. Currently, there is only one wallet available for IOTA. This is a desktop wallet. There are no web wallet and hardware wallet for IOTA.
I have seen a few Android and iOS wallets for IOTA but I don’t know how trustable they really are.
So I only recommend storing IOTA in the official desktop wallet or the web wallet of your exchange for now. In this article, I am only going to talk about the desktop wallet.
- First of all download the wallet from this link: https://github.com/iotaledger/wallet/releases/
Windows users download the .exe file, Mac users download the .dmg file and Linux users download the .rpm or .deb file depending on your Linux distro.
- After downloading, install the wallet. The installation process is straightforward and I believe you can do it yourself.
- When you launch the wallet application for the first time it will ask you whether you want to run a Light Node or Full Node. If you plan to be just a cryptocurrency enthusiast then don’t bother selecting the Full Node option. Being a Full Node requires you to run your wallet 24/7 and create at least 7 healthy neighbor connections.
- When you select your node of choice, you will be prompted to select a host. You can choose any of the hosts.
- Now here comes the tricky part! Unlike most other wallets IOTA wallet doesn’t generate a wallet address for you. You need to generate it yourself – in this case, we call it the seed. The seed is an assortment of 81 random uppercase characters from A-Z and the number 9. For example, a seed might look like this –
- You can generate the seed on your Linux or Mac system by using the terminal. People actually advise Windows users not to use the PowerShell to generate the seed, as it can be vulnerable.
But if you don’t want to generate the seed using the terminal, you can generate it in two other ways.
- You can randomly type 81 uppercase characters including the number 9 yourself to generate the seed.
- You can go to this seedgen and let the website generate it for you. You will need to provide the randomness or “noise” by moving your mouse cursor. When the website gives you the seed it’s a good practice to alter a few characters to make it even more random.
- Now that you have your seed, you need to keep it very secure. Consider it as the combination of your username and password. Anyone who lays his hands on the seed will be able to steal all of your funds.
- You need to either type or copy/paste your seed into the IOTA wallets “seed” box. Click on login and you will enter the network.
- Now you can check whether your wallet works by sending a negligible amount like 1 IOTA to your wallet address.
How To Recieve IOTA
To receive IOTA to your newly generated IOTA wallet you need to –
- First of all, navigate to the Receive tab of your IOTA wallet.
- Then click on the “Attach to Tangle” button.
- Once done, you will receive a Receive Address. Copy the address.
- Now you can send IOTA to your wallet by sending to the Receive Address.
Please remember not to share your seed word with anyone to receive IOTA.
How To Buy IOTA?
You can buy IOTA on a few selected exchanges like – Binance, Bitfinex, etc. In this article, I am only going to talk about the process of buying IOTA on Binance and Bitfinex only.
- First of all, you need to create an account on Binance. Please navigate to this URL: Binance.com
- After you have registered yourself on the exchange and verified your email, you are ready to start trading.
- But before you trade you need to add some funds. Please note that Binance doesn’t support any kind of fiat currencies, so you can only deposit cryptocurrencies. Some of the accepted cryptocurrencies are Bitcoin, Ethereum, Litecoin, Ripple, USD Tether etc. I recommend BTC or ETH for the sheer amount of cryptocurrencies you can buy with these two.
- To deposit, you need to login to your Binance account and click on Funds.
- The funds dropdown will reveal the “Deposits and Withdrawals” item. Click on this to navigate to the deposits page.
- Now you will see a list of cryptocurrencies that Binance supports. Choose one of them and click on the deposit button next to it.
- Upon clicking the deposit button a popup will appear and you will be prompted with a deposit address.
- Now send the amount in the current cryptocurrency to the deposit address. For deposit, Binance has zero fees.
- And you’re done!
- Once you have funds added to your Binance trading profile, you need to navigate to the exchange page. Use the basic exchange page if this is your first time.
- On the right-hand side, you will see a list of cryptocurrencies you can buy with BTC, ETH, USDT or BNB. Choose the cryptocurrency of your choice and it will reveal the list of altcoins you can trade with it.
- Now choose IOTA/BTC from that list.
- Under the candlesticks chart, you will see the option to buy IOTA.
- You can buy it in two ways –
- If you buy using the Market option, then you will only need to enter the amount of IOTA you need. You also have the option to choose whether you want to buy 25%, 50%, 75% or 100% of the amount of IOTA available at the best market price. Click on Buy after entering the amount. And if you had sufficient balance your order will go through.
- You can also buy using the Limit option as it introduces a lot of control. You can bid your own price for each unit and the amount.
- For both cases, I suggest using BNB or Binance Tokens to take care of the fees. Binance charges 0.1% per order for trading. But if you use BNB then this charge will be reduced by 50% making it 0.05%.
The process of buying IOTA on Bitfinex is fairly the same, but I will explain it in short nonetheless.
- First of all, you need to sign up on Bitfinex.
- After completing the signup and verification process, log in to your Bitfinex account.
- Now navigate to the deposit page and get the deposit address for your exchange wallet.
- Once you have funded the exchange wallet, you can start trading.
- To trade, you need to go to the trading page (https://www.bitfinex.com/trading).
- On the left side, you will see the Ticker tab, from that, choose IOTA/BTC or whatever you cryptocurrency you have deposited. You can also trade with USD.
- Now in the Order Form box, you will need to select Exchange.
- By default, it will be in the Limit option but you can change it to Market or any other option from the drop-down.
- Afer this the process is fairly similar to that of Binance.
I would like to point out that the exchanges sell IOTA in MIOTA. That means the price that you see e.g $4.34 is for 1 MegaIOTA. So if anybody offers you 1 IOTA for that price, they are simply scamming you. I have seen a lot of people fall prey to this.
IOTA Cryptocurrency Analysis For 2018 & Final Words
IOTA is still in its infancy – so the system is not optimal. The development team still uses a coordinator to mediate the transactions and to secure the “tangle” network from 34% attack. So IOTA is still somewhat centralized.
But IOTA is a pretty remarkable cryptocurrency, to say the least. It has a real use case scenario which is more than enough to drive it for at least the next five years. We can say that IOTA can be one of the best cryptocurrency to invest in long term.
If the development team continues to follow the roadmap and create hype by bringing in more supporters like Microsoft then the price will increase even further.