Derived from “Internet of Things Application'' being a crypto technology which expedites the transactions between devices on IoT by disposing the block and chain, IOTA managed to tackle the scalability and transaction fee issues commonly faced in blockchain technologies. It introduced a verification step which requires the users to verify two other previous transactions before submitting a transaction to the IOTA ledger. This additional step of verification is included to eliminate the needs of miners to power the network. Consensus was established as the devices on the IOTA network verify each other’s transaction in a random manner through the web of connections between transactions, particularly known as DAG ( Directed Acyclic Graph ) or as the creators of IOTA called the Tangle. The computational power in the Tangle has a positive relationship with the network size, the presence of IOTA promises free and fast transactions. Besides, it is also able to handle micro-payments and transactions between machines, growing a new era of machine to machine based micro economy.
The team behind IOTA believe that the potential use cases don’t end here. They believe their distributed ledger could deliver digital identities to all, result in car insurance policies that are based on actual usage, pave the way for cutting-edge smart cities, deliver seamless global trade and prove the authenticity of products.
Originally known as Jinn, a crowdsale for the project was held in September 2014, and the network officially launched in 2016.