IOTA demystified

IOTA is an open-source distributed ledger that aims to facilitate secure payments and communication across devices that are a part of the IOT.

iota explained

Ironically, the project is sometimes referred to as ‘a blockchain without blocks and chain’. In fact, instead of using the blockchain technology as all the other projects including Bitcoin, TRON, NEO, and Stellar, IOTA uses a new and innovative protocol under the name ‘Tangle’.

How it really works?

The short answer is Tangle!

Tangle is the main key under IOTA work and its considered as its main innovation. Actually, it’s a newly distributed ledger architecture base on Directed Acyclic Graph (DAG).

Tangle vs Blockchain

The protocol is not really a blockchain. However, it has the same key principles as a blockchain: distributed database, Peer to Peer Network, and a consensus and a validation mechanism. The major differences between the protocol and the blockchain are the structure of DAG and the way to achieve a consensus.

In fact, IOTA does not have blocks as the classical sense. As an alternative, a single transaction references the two previous transactions as an attestation. In other terms, with a single transaction, you authenticate directly two transactions. In addition, you indirectly attest that a part of the Tangle are valid and are conformed to the protocol’s rules. Consequently, the entire network is involved in the transactions’ approval and clearly considered as active participants. In contrast, all the blockchain projects have a smaller subset responsible for the overall consensus which includes miners or even stakers.

As a result, this enables the scaling of IOTA without any transaction fees. Interestingly, with an increasing number of transaction, the network security increases and the confirmation time decreases.

Transaction Process

In IOTA platform, transactions’ process is considered easy and simple. It’s mainly composed of 3 steps:

  1. Signing:

Transaction inputs are signed using your private keys.

  1. Tip Selection:

Using the MCMC (Markov chain Monte Carlo), two tips (i.e. unconfirmed transactions) are selected randomly and will be referenced by your transaction.

  1. Proof of Work:

In order to have an accepted transaction by the network, sort of Proof of Work must be done.

Once done, the transaction will be broadcast to the network. If someone else comes along, he eventually has to pass by the same process to confirm his transaction.

IOTA team:

The team behind IOTA have been working on the distributed ledger technology since 2011. The creation of the IOTA Foundation and the company was in 2016. Since then, the team has been focusing on growing and attract exceptional talent.

David Sønstebø, IOTA’s CEO, has been known for his conservative marketing approach. He believes that establishing a sustainable growth and a strong strategic network is better than working on the PR circus like many other blockchain projects. The CEO has been handling IOTA’s blogging and Public Relations activities himself, both in line with this perceived strategy.

IOTA pros & cons:


Transaction fees:

In IOTA, transaction fees are none. In fact, there is no cost of writing to the Tangle, since its performing proof of work on only the two past transactions. In addition, no ‘gas’ nor ‘tip’ are needed to get a transaction faster.

Extreme small transaction:

Since no transaction fees of any kind are required, users are able to send a little amount as one IOTA, which currently worth $0.00000035 to somebody( a MIOTA is one million IOTA, worth $0.35). Obviously, this is not the case for other platforms.


Unlike other blockchains, such us Bitcoin and Ethereum, the number of transactions is infinite with a growing network.


Devices with very low computing power, like a microwave, can write data to the tangle.

Data marketplace:

IOTA provides users with the ability to sell their data. It’s considered as a solution for machine learning and AI applications since it gives them valuable quality data.

Quantum security:

One of the most common criticisms of blockchains is the future presence of quantum computers which are more capable of performing hashing algorithms than classical computers. In other words, this leads to making a 51% attack more likely to happen. On the other hand, IOTA state that it’s quantum resistant since it uses balanced ternary computations (three possible values), instead of the standard binary (two possible values) computations performed by classical computers.

Data transfer

The Tangle protocol enables the transmission of information through the network, which helps users in communicating channels between devices. As a consequence, the data sent are fully authenticated and tamper proof.


Smart contracts:

Until today, no smart contracts are supported on IOTA/Tangle. This lack considers a barrier for developers since no DApp can be created. However, IOTA foundation is working on building a smart contracts layer on the top of its core.


Despite no documented massive attacks, a common criticism is that the platform can be manipulated through parasite chains. Eventually, those attacks do not stop the platform but make it slower.


Khalil Liouane

Computer Engineering student, interested in blockchain tech startups creating innovative solutions that can shape a better future.If you are one of those startups email me:

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