Key factors of IOTA in the production-ready state.
IOTA enables fast, tamper-proof and decentralized transfer of values and data across many nodes. Value and data transactions are handled fundamentally differently. Value transactions need to be validated by full nodes, data transactions are directly confirmed and are notarized.
‘Notarization’ can be used to prove that an electronic document existed in a certain form at a certain time and has not been changed since it was created. When a notarization is created, a unique hash (fingerprint) of a document is calculated and stored together with a timestamp in the IOTA ledger (Tangle) in an immutable manner. If at a later time it is to be verified that the document in question existed at the claimed time and / or has not been altered, the data is retrieved from the Tangle and compared with the available information.
The bottom line is that it is not only a matter of ensuring that no one manipulates the data during transmission, but also that the receiver does not manipulate that data. Example: A sensor (with IDoT chip) has collected some values and sends this data via the IOTA Tangle, which stores the hash of this data. If this data is to be sold later, this hash can be presented as proof and prove to the buyer by means of the Tangle that the data from the sensor has not been changed afterwards. The IOTA technology (Tangle) thus acts like a kind of fingerprint. With it all sent data can be verified. Note: To prevent misuse scenarios and to enable the machine economy in an efficient way, nodes and devices will be given a unique identifier (ID) in the future, see also Identity of Things (IDoT).
Data Transactions: So-called “messages” will enable technology use cases that go beyond the financial. The vast majority of transactions will be pure “messages” (without value), which can be data traded on marketplaces, captured by sensors, exchanged by apps, and several other use cases. In the image below, you can see how the IOTA architecture alone enables the exchange of data and value independently, a variety of use cases that are not possible or significantly more expensive on the blockchain.
Full decentralization: As a globally distributed network, IOTA is resilient and robust against attacks. Without the coordinator (Shutdown Q4 ’21), no entity will play a special role in the network. Data transactions already work today without the coordinator and are therefore already decentralized.
Permissionless: Permissionless access to the network. The permissionless nature of the Tangle allows any user access to a universally available infrastructure that is provided as a service for the deployment of new applications. This eliminates the need for new projects seeking to use this infrastructure to first define complicated governance rules and stakeholder agreements in contracts before an infrastructure can be used. In short, anyone can use IOTA infrastructure without asking for permission.
Partition Tolerant: A production-ready tangle is partition tolerant, which means that a part of the tangle can be disconnected from the main tangle for a period of time and continue to run without an Internet connection. These parts can be reconnected to the main Tangle when the Internet connection is restored.
Finality within seconds: The reconciliation process allows the network to make and finalize decisions on transactions very quickly without having to wait for multiple additional approval processes to increase security. In addition, the network can achieve “true finality” (deterministic rather than probabilistic), as an attacker with unlimited hashing power could not “reverse” the ledger state.
Reliable timestamp: The issuer (node/user) of the transaction sets a timestamp at the time of issuance. Agreeing on the credibility of timestamps makes it possible to establish a fully ordered tangle – a big step towards Smart Contracts.
Scalability: Increased network activity reduces transaction settlement times. There are no protocol-related bottlenecks. Scalability is limited only by hardware and the laws of physics. The elimination of the coordinator (IOTA 2.0) as a single entity that processes and verifies all transactions provides the basis for a dynamic sharding process that enables “true” unlimited scalability.
Increased reliability: Determining the preferred portion of the tangle through voting allows for the implementation of different tip selection strategies that will pick up most (if not all) honest transactions. This reduces the need for reattachments and promotions.
Intelligent and stable auto-peering: Eliminating manual peering reduces maintenance for node operators and makes the network more stable.
UTXO model: Each token on an address is then uniquely identifiable and each output names the exact token it wants to move. This enables faster and more accurate conflict handling and improves resilience as well as security of the protocol.
Feeless transactions: The absence of miners makes IOTA transactions completely feeless. Send 1 iota, receive 1 iota. This enables true micropayments for the machine-to-machine economy, making it a useful way to implement payment for micro-quantities or consumption-based payments.
Less documentation: Companies do not have to document transactions for the tax office or store them for years.
Local Snapshots allow nodes to store only a subset of the ledger’s history, allowing nodes with limited hardware resources to participate in the network.
Fairness: All transactions are treated equally. There is no ability to pay a premium (e.g., through increased fees) to receive a higher priority in processing by the network.
Lean System: Designed for devices, such as sensors, that participate in a low-energy network.
Modularity: A modular design allows the components of the protocol to be developed independently. The multi-layered approach allows further extension of the base protocol in the future in a similar way to the Internet Protocol itself. A protocol that cannot be updated is not a protocol.
Open source: The technology is free, open source, and anyone can build solutions on it.
Immutable: Ensures that the information is trustworthy and cannot be tampered with.
Last Updated on 15. April 2021