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What is IOTA? | The Ultimate Beginner’s Guide

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What is IOTA

IOTA is a peer to peer, decentralized payment and exchange platform for the global network of Internet-connected devices, otherwise known as the Internet of Things (IoT).

To understand what IOTA is trying to accomplish, you first have to understand the potential of the IoT, which is about much more than just devices connecting. Rather, it’s about how they interact, share data, value services offered to the network, and make payments between themselves — potentially without the need for manual human intervention. Examples of the IoT at work include automatic exchanges of computer power, bandwidth, and storage; sharing of storm or tsunami threats between remote weather sensors and communities; a machine that can automatically pay for its own maintenance, parts, insurance, energy, or even its own manufacturing; a fleet of self-driving cars that fuel/charge themselves and automatically pay for the service; or even entire smart cities with traffic sensors capable of coordinating traffic in real time. The potential is enormous.

While the IoT is more science fiction than modern reality, that is expected to change in the near future. In just the last year, the number of Internet-capable devices increased 31 percent to a total of around 8.4 billion devices. It’s predicted that this number will skyrocket to 30 billion devices by 2020 and that the total market value of such devices will reach $7.1 trillion.

IOTA has made some big promises about how they intend to be an early mover in this space, but the truth is that the technology is still relatively new and unproven. As such, IOTA has gotten a lot of criticism from technology and security experts as well as the blockchain community in general.

In this article, we’ll take a closer look at why that is, how IOTA works, and some of the challenges IOTA faces going forward by looking at the following topics:

IOTA was launched in June 2016 by a German non-profit organization called the IOTA Foundation, with the goal of being a pioneer in the IoT space. The ultimate vision behind IOTA is to create a semi-automated marketplace for machine to machine transactions.

But IOTA is not alone in this vision. In fact, numerous major companies are also entering the IoT space. Many such companies have formed direct partnerships with IOTA, while others are working with the IOTA Foundation peripherally (e.g. Microsoft) or as co-founders of the Trusted IoT Alliance, an association of companies working in the field.

The IoT vision isn’t necessarily possible with regular blockchain technology. Most blockchains require massive amounts of resources and power just to perform a few dozen transactions per second, while the IoT ecosystem would need to perform potentially millions of transactions per second. What’s IOTA’s proposed solution to this scalability problem? A new piece of tech called the “tangle”.

IOTA’s “tangle” is a network structure which doesn’t rely on dedicated computer nodes (called miners) to validate transactions as blockchains do. Instead, the tangle uses a technology called Directed Acyclic Graph (DAG) to require that each device on the network confirm two transactions for every transaction it performs.

As devices on the network verify each other’s transactions, the network builds a consensus-based ledger that is theoretically immutable and highly secure. In this way, IOTA avoids the high fees and slow transaction speeds of traditional blockchains that would make it impossible for IoT devices to quickly trade resources in real time while logging vast amounts of data.

Suggested Reading Learn how IOTA compares to Ethereum.

Although IOTA doesn’t require mining, transactions are still securely stored by computer “nodes” using a cryptographic algorithm called SHA-3 Proof of Work (PoW). This operates similar to Bitcoin’s SHA-256 PoW algorithm to create a chain of transaction records that are stored on full network nodes. How these nodes will be rewarded for their services is not yet clear, since they don’t actually receive any of IOTA’s tokens (called MIOTA) for their work. This has resulted in some debate about how IOTA will solve this lack of incentive to run a node.

Early in IOTA’s development it actually used a hashing algorithm called Curl which was custom-built by the IOTA development team. Curl was replaced, however, after an MIT team found a potential vulnerability in the algorithm. 

This sparked a huge controversy in which the IOTA development team was widely criticized for handling the situation poorly, and for over-reaching when they tried to create their own algorithm. Many argued that a cryptographic algorithm must be widely available and tested for years prior to being released to verify the algorithm’s security. 

Around February 24, 2018, however, leaked emails between the MIT team and IOTA were published on an IOTA enthusiast’s blog called The Tangler that seemed to at least partially exonerate the IOTA developers. The leaked correspondences reveal that the MIT team failed to provide evidence of their claims — which were not confirmed by peers — and ceased communications with the IOTA Foundation developers before useful conclusions were reached. The emails also suggest that the MIT team did not fully understand how IOTA works (as they themselves admitted).

In an official release about the incident from the IOTA Foundation on February 26, the foundation stated:

“To date, the IOTA team has not received any answers to questions posed, code demonstrating the attack, or other documentation elaborating on the vulnerability beyond what was seen in these emails.
We would very much appreciate help finding actual vulnerabilities in the IOTA protocol, and as of November, 2017 we have been working with a team of cryptographers to obtain an accurate and objective assessment of this situation.”

Another point of contention about IOTA in the blockchain community is the technology’s reliance on a central coordinating entity to begin with. Before IOTA’s network is truly decentralized, it must first gain enough users to validate transactions and secure the network, which is theoretically possible to control with only 34% of the computing power of the network as a whole. For now, IOTA has been forced to implement a temporary central entity called the Coordinator to secure the network. There is very little information about the Coordinator in the white paper or elsewhere, but the basic rundown is that the entity (likely one or more powerful computers) validates all transactions by throwing its own transactions into the mix every minute.

These transactions are referred to as milestones and are used as a sort of snapshot that can be verified against all other transactions in the network to validate that a given transaction is untampered with. Even if the Coordinator acts maliciously, every other node in the network would be able to recognize this, because it would start issuing bad milestones.

According to the IOTA Foundation, the Coordinator will be turned off when the network has enough full nodes to ensure a self-validating network.

Since there’s no mining in the network, MIOTA coins — all 2,779,530,283,277,761 of them — were issued all at once at the launch of the DAG chain. IOTA’s currency units are named using metric system prefixes before the word “Iota”. As the official name of the cryptocurrency, MIOTA is also the unit of account used on exchanges. These are the units, in order of size:

Iota = 1 iota = 1i = 1i
KiloIota = 1 kiota = 1Ki = 1,000 i
MegaIota = 1 MIOTA = 1Mi = 1,000,000 i
GigaIota = 1 giota = 1Gi = 1,000,000,000 i
TeraIota = 1 tiota = 1Ti = 1,000,000,000,000 i
PetaIota = 1 Piota = 1Pi = 1,000,000,000,000,000 i

There are a number of advantages that IOTA has over other cryptocurrencies, mostly because of its DAG chain technology.

Fast and Free Transactions: As mentioned, IOTA dispenses with mining, which means no transaction fees. Since the network is entirely user validated in real-time, transactions are also very fast.

Energy and Resource Efficiency: Bitcoin and many other popular cryptocurrencies that use miners consume enormous amounts of energy. Mining computers (called rigs) are also regularly replaced with more powerful computers as mining becomes more difficult, wasting further resources. The tangle eliminates these inefficiencies.

Ternary Computing: IOTA uses ternary logic in its network as opposed to traditional binary logic. Ternary computing is potentially more efficient than binary computing, and is also more effective in artificial neural networks, artificial neurons, artificial intelligence logic, graphical processing, and cryptography. However, some argue that the ternary computing revolution may never come, or if it does, it will be far in the future.

Quantum Proof: Quantum computing is an emerging field of computing that promises unprecedented processing power that could potentially compromise regular cryptography systems, including regular blockchain technologies. IOTA claims to be “quantum proof” by using an “unforgeable” scheme that makes it impossible to hack, even by quantum computers.

Zero Inflation: Since no more IOTA coins will be created, there will be no inflation. This means that the value of the currency will not decrease because of an increase in coins (though it could, of course, decrease for other reasons).

Many Competitors: There are many competitors in the IoT space, including large multinational corporations with virtually unlimited resources. Other cryptocurrency competitors include Waltonchain and IoT Chain. Other DAG based cryptocurrencies like Byteball or Nano could also theoretically be used as a means of scalable, fast transactions for the IoT, while other scalable decentralized application (dapp) platforms like EOS could potentially use dapps to provide use cases for the IoT beyond simple transactions.

Unproven Technology: As mentioned, several cryptography experts have shown concerns over IOTA’s stability and security as a platform. Using so many unproven technologies at once certainly opens up the possibility of unforeseen security vulnerabilities or other problems.

More Centralized at First: Regular blockchain networks become vulnerable if one party has 51% of the computing power on the network. If this happens, it may be possible for the controlling entity to verify false transactions and falsify data in their favor. IOTA, by contrast, is vulnerable if only 34% of the network is controlled by a single entity. This vulnerability would theoretically be very difficult to take advantage of once the network scales into an IoT made up of millions or billions of devices, but until then, the Coordinator is required. Some argue that this is a form of centralization and potentially an unfortunate single point of failure. As mentioned, IOTA plans to eliminate the Coordinator after the network scales enough.

Buying MIOTA directly with fiat currency (e.g. USD) is not widely possible yet, but it’s simple enough to purchase another cryptocurrency such as Bitcoin, Ethereum or Litecoin on an exchange like Coinbase or Bitstamp and then transfer that to an exchange where you can buy MIOTA. Exchanges selling MIOTA include Binance, OKEx, Bitfinex, Exrates, and Gate.io.

You can see a step-by-step guide on How to Buy IOTA here.

Storing MIOTA on exchanges is not recommended, nor is it recommended to store a significant amount of any cryptocurrency on an exchange. The best IOTA wallets available today are the Trinity desktop wallet, the Nelium mobile wallet, and the Ledger Nano S hardware wallet. For a comprehensive guide to these wallet options, check out our guide to the best IOTA wallets.

Although many people in the cryptocurrency and digital security industries are skeptical of IOTA, it’s possible that the technology will prove itself valuable with time. If the IOTA Foundation is successful in working out any lingering bugs or unforeseen attack vectors, the tangle and its DAG technology could become increasingly popular over more resource-intensive and expensive blockchain alternatives. IOTA’s success may even help kickstart the forthcoming IoT marketplace, which would launch an exciting new chapter in humanity’s relationship with machines. The potential is unprecedented, but for now, we’ll have to wait and see if IOTA can deliver on its ambitious goals. 

The post What is IOTA? | The Ultimate Beginner’s Guide appeared first on UNHASHED.

Source: https://unhashed.com/cryptocurrency-coin-guides/what-is-iota/

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Bitcoin Price Eyes $12,000 Following US Fed Chair Powell Talks

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  • Bitcoin’s price finally made a worthwhile move after surging to $11,840 on Bitstamp following days of stagnation.
btcusdh_chart
BTC/USD. Source: TradingView
  • The price has since retraced a bit to trade at its current level of around $11,780. Nevertheless, this is a move in the right direction as concerns started crippling up that we might be in for a fill of the CME gap down at $11,100.
  • Bitcoin is trading approximately only $700 away from the $12,500 area – the 2020 highest level that was reached on August 17. The next major resistance for BTC now lies at $12,000 – $12,100.
  • The move came soon after the Chairman of the US Federal Reserve, Jerome Powell, spoke on a panel hosted by the International Monetary Fund (IMF).
  • During the event, he said that the US is “committed to carefully and thoughtfully evaluating the potential costs and benefits of a CBDC (Centra Bank Digital Currency) for the US economy and payments system.”
  • He also said that it’s better to be right than be first on CBDCs.
  • Interestingly enough, BTC’s move appears to be uncorrelated to the US stock market. At the time of this writing, the S&P 500 is down about 0.4%, while the Dow Jones Industrial Average (DJI) is down about 0.3%.
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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.


Source: https://cryptopotato.com/bitcoin-price-eyes-12000-following-us-fed-chair-powell-talks/

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33 Years Since Wall Street’s Black Monday: Have We Learnt Nothing? (Opinion)

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They say that to see the future, one should only learn history. Oftentimes, though, we tend to ignore history altogether.

Exactly 33 years ago, on this day, October 19th, 1987, Wall Street and global markets tumbled in a massive selloff that saw the S&P 500 lose about 20% and the DJIA about 22%.

One might think that this is something that we don’t want happening again and that the economic policies would be structured in a way where massive national debt doesn’t mount up. Here we are, 33 years later, and the US national debt has increased by roughly 12 times.

But it doesn’t matter, right? The Fed can always just “print more money,” as the former Chairman of the US Federal Reserve has said.

Rolling Back to 1987: What Happened and Why it Matters?

The year is 1985. The United States policymakers and economists decided that the time is ripe for a shift in the direction. As such, they moved to a slower expansion approach, unlike the state of rapid recovery from the recession in the early 1980s.

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Fast forward a few years when on October 14th, 1987, the House Committee on Ways and Means introduced a tax bill that was aimed at reducing the benefits associated with financing leveraged buyouts and mergers.

October 19th comes, and traders, analysts, and economists found themselves dismayed as markets took a beating. The S&P dropped by over 20%, while the DJIA was down 22% in a single session. Additionally, markets from across the world were also bleeding out, making this into a global downturn.

black_monday
Dow Jones during Black Monday of 1987. Source: Wikipedia

Back then, Nobel-winning economist Robert Shiller surveyed 889 investors right after the drops to find the reason, according to them. Most of them said that it was perhaps brought on by “too much indebtedness.”

Looking at historical data, the US national debt in 1987 was around $2.3 trillion, representing 48% of the country’s GDP.

Learn From History, or You’re Destined to Repeat It… Right

The year is now 2020, and we just saw the third quarter closing down. In March, there was another Black Swan event that saw global markets tumble in response to the outbreak of the novel coronavirus COVID-19. Countries were literally locked down, and economies suffered as a consequence.

The US was no exception. In fact, it’s the current leader in terms of total cases of COVID-19. However, it’s worth noting that this year, unlike back in 1987, there was an obvious trigger as global economies were virtually shut down in response to the outbreak.

Their response, however, was criticized by many. Data shows that the US national debt has grown to $26.5 trillion at the end of the second quarter of 2020. This represents 136% of the country’s GDP. In fact, the debt increased by around $4 trillion this year alone. For reference, it grew with that much from 2015 to 2019 combined.

When there’s an obvious uncertainty of how the world will handle the pandemic, US stock markets are charting all-time highs. And all of this was made possible by the trillions of dollars printed to bail out huge corporations.

This Time Could Be Different… But Will It?

Of course, this time, we have Bitcoin – a scarce digital asset that comes with pre-programmed inflation that will, eventually, disperse.

However, it also challenges the very essence of what banks are created for. It’s the first real attempt to separate money from state and … well, that’s scary for some.

Bitcoin’s censorship resistance, immutability, actual transparency, and, most of all, digital scarcity are just some of its inherent qualities that could make a change. However, it’s definitely questionable if and when that will happen.

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Source: https://cryptopotato.com/33-years-since-wall-streets-black-monday-have-we-learnt-nothing-opinion/

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Bitcoin Miner Daily Revenue Slumps to $345K Amid Rising Wrapped BTC and HODLing Frenzy

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It is a well-known fact now, that the Bitcoin blockchain is considerably processing fewer transactions than it’s ‘Ethereum’ counterpart. And this decline in transaction processing has significantly reduced the revenue of miners as well. How much? Well, on-chain analysis firm Glassnode points to numbers that are at a 5-month low.

Bitcoin Miner Revenue Touches 5-Month Low

As per the latest update from Glassnode, miner earnings on the largest cryptocurrency network dropped drastically to a 5-month low figure of 30 BTC/day.

This declining trend in bitcoin miner revenue clearly portrays the disinterest amongst traders and investors to conduct transactions on the BTC network. Since they have dropped, miners don’t have much to process. And why is that? Well, for starters, ultra-low volatility levels, even after BTC remaining above $10,000 for quite a long time.

Although there were some exciting price actions at the beginning of the year. And around mid-2020 (when BTC flew above $12k), the BTCUSD realized volatility has touched 33 percent in the last 1-Month, and 27 percent in the last 10 days, according to skew’s analysis below.

Folks don’t want to trade with their bitcoin holdings. Instead, they are moving to other avenues to put their BTC to much more ‘constructive’ use.

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Wrapped BTC Soaring Like As If There’s No Tomorrow

Multiple data sources suggest that bitcoin holders are tokenizing their BTC stash en-masse, in order to leverage the DeFi boom to reap ‘instant profits’. According to Dune Analytics, the total supply of Wrapped Bitcoin (wBTC) on Ethereum surpassed 100,000.

wrapped btc supply
Wrapped Bitcoin (wBTC) Supply Now Above 100,000, Source: Dune Analytics

This has led the total USD value locked in wrappedBTC to rally way past $1 billion throughout October, and it’s still steadily increasing with the current numbers approaching the $1.25 billion number.

Wrapped bitcoin valuation
Total USD Locked in WrappedBTC Surpassed $1 billion, Source: DeFi Pulse

It is the third most popular avenue only preceded by Uniswap and Maker. IntotheBlock that uses machine learning to arrive at significant blockchain data points, notes that wrappedBTC has experienced explosive growth throughout 2020. This can actually be seen from the chart above.

More ‘100+ BTC Owners’ Have Now Entered The Ecosystem

As mentioned above, people are not trading bitcoins. Either they are tokenizing them on Ethereum or they are buying more. The latest data set from Glassnode shows that the number of BTC addresses holding 100+ coins has been on the rise, and has reached a ‘6-month high’.

This explains why bitcoin miner fees have dropped to a ‘5-month low’ and also is a pretty bullish indicator as far as future market outlook is concerned.

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Source: https://cryptopotato.com/bitcoin-miner-revenue-slumps-to-345000-amid-rising-wrapped-btc-and-hodling-frenzy/

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