IOTA (IOTA) was founded in 2015 by entrepreneurs David Sønstebø and Dominik Schiener, and mathematicians Sergey Ivancheglo and Serguei Popov. Instead of utilizing a blockchain, IOTA uses a Directed Acyclic Graph (DAG), or Tangle, as part of its consensus mechanism. Each transaction acts independently and non-chronologically as a single block, which then connects to other blocks. Each transaction must confirm two previous transactions. Theoretically, more transactions will improve scalability with this model.
IOTA tokens act as the value transfer medium on the Tangle. The token currently has a market cap of ~US$857 million and trades for ~US$0.36. Its value has risen by ~16% in the last week.
The Tangle is made up of sites and edges. Sites are individual transactions in the network, and edges are the connection to the previous two sites. Tips are transactions that are yet to be confirmed. When a user makes a new transaction, they or the node they are connected to has to choose two tip transactions that their transactions should approve. Instead of randomly selecting two tips there is a tip selection algorithm which selects the tips. This is done so that the tangle converges and transactions are executed quickly.
Nodes are described as the “backbone” of an IOTA. They are the only devices that have read and write access to the immutable record of transactions on the Tangle. Interconnected nodes form networks on IOTA by running the same node software, this allows them to validate transactions and attach them to the Tangle.
Currently, to make sure the network is operational, IOTA utilizes a Coordinator. The coordinator is a special node operated by the IOTA Foundation. It regularly publishes zero-value transactions that perform a checkpoint function or “milestones” on Tangle. A transaction is only valid if it is confirmed by the coordinator directly or indirectly with a “milestone.”
IOTA has announced that it will eventually remove the centralized coordinator in a process called project Coordicide. The whitepaper for Coordicide suggests that it is focused on the removal of “the Coordinator through the implementation of several network components,” and in early July launched Pollen, its first testnet for a fully decentralized network. The team behind IOTA has described it as a “momentous milestone” and the first big step to successfully committing Coordicide.
Pollen is stated to be the first phase in IOTA’s three-part release strategy that will culminate in a coordinator-less, production-ready network referred to as IOTA 2.0
The upcoming Chrysalisis upgrade described as the IOTA mainnet’s intermediate stage before Coordicide is complete. The upgrades set to implemented as part of Chrysalis or “IOTA 1.5” include:
- A white flag approach for calculating balances that will improve the speed and efficiency of tip selection, eliminate certain attacks, and significantly reduces the need for reattachments, a process that needs to occurs if a transaction is attached to a part of the Tangle that is no longer considered valid.
- New milestone selection algorithm for the coordinator, focused on allowing the network to support as many confirmed transactions per second as possible, with higher computational efficiency.
- Atomic transactions. A move away from the current bundle construct to using simpler atomic transactions instead. Atomic transactions are suggested to reduce network overhead, reduce signature verification burden, improve spam protection and congestion control, and reduce the length of Merkle proofs.
- Support for a new signature scheme that is set to reduce transaction size, and consequently allows a significant increase in transactions per second. The new signature scheme will also allow for reusable addresses, a popular request from the IOTA community.
- A switch to a UTXO model from the current balance model. This is said to allow for faster and more exact conflict handling and improves the resilience and security of the protocol.
In late July 2020, STMicroelectronics (ST) a French-Italian semiconductor manufacturer, headquartered in Switzerland, released a new function pack for the STM32Cube that demonstrates use cases from IOTA.
The STM32Cube is a combination of software tools and embedded software libraries for STM32 microcontrollers and microprocessors. Any electronic device that incorporates the IOTA-enabled STM microcontroller can communicate with the Tangle via a built-in interface.
The use cases collect sensor data and send it to the IOTA Tangle via LTE cellular connectivity. In a tweet published by STMicroelectronics account @ST_World it is suggested that the function pack has applications with Distributed ledger technology use cases like asset tracking and supply chain.
Discussing the release on twitter IOTA co-founder Dominik Schiener said “Really amazing work that the @ST_World team is doing! Now imagine the many new possibilities for developers and companies with the upcoming Chrysalis protocol upgrades, the release of secure data Streams (August) and Access control for embedded devices (September).”