What is IOTA?

What is IOTA?

IOTA is a revolutionary new transactional settlement and data integrity layer for the Internet of Things. It’s based on a new distributed ledger architecture, the Tangle, which overcomes the inefficiencies of current Blockchain designs and introduces a new way of reaching consensus in a decentralized peer-to-peer system.

For the first time ever, through IOTA people can transfer money without any fees. This means that even infinitesimally small nano-payments can be made through IOTA.

Find out more about IOTA and the Internet of Things!

IOTA is the missing puzzle piece for the Machine Economy to fully emerge and reach its desired potential. We envision IOTA to be the public, permissionless backbone for the Internet of Things that enables true interoperability between all devices.

  • Peer to Peer Network: Decentralized network consisting of peers (or nodes) which are connected with each other and perform some form of data sharing with each other.
  • Proof of Work: Algorithm which prevents Denial of Service and spam attacks on a network. Computationally hard puzzle, but easy to verify.
  • Trinary: Alternative to binary, which consists of three states: true, false and unknown. Read more here
  • DAG: Directed Acyclic Graph. Is a specific data structure based on a graph without any directed cycles. Instead of having a single branch with nodes having only one edge, in a DAG there can be multiple branches. Refer to Wikipedia for more information.

Is IOTA inflationary? Can I mine IOTA’s?

All IOTA’s which will ever exist have been created with the genesis transaction. This means that the total supply of IOTA’s will always stay the same and you cannot “mine” IOTA’s. Therefore keep in mind, if you do Proof of Work in IOTA you are not generating new IOTA tokens, you’re simply verifying other transactions.

What is the total supply of IOTA?

The total supply of IOTA is (3^33-1) / 2, which equals to a total number of IOTA’s of 2779530283277761. IOTA is specifically designed for machines, so this high supply makes IOTA optimal for tiny nanotransactions while still keeping efficiency in mind. It also nicely fits into the MAX_SAFE_INTEGER value in Javascript.


The Tangle

A directed acyclic graph (DAG) as a distributed ledger which stores all transaction data of the IOTA network. It is a Blockchain without the blocks and the chain (so is it really a Blockchain?). The Tangle is the first distributed ledger to achieve scalabilityno fee transactionsdata integrity and transmission as well as quantum-computing protection.

Contrary to today’s Blockchains, consensus is no-longer decoupled but instead an intrinsic part of the system, leading to a completely decentralized and self-regulating peer-to-peer network.

IOTA Tangle


String consisting only of uppercase latin letters and 9’s which is used to access an account. A seed is like a private key/password. Keep it secure and don’t share it with anyone. If someone has access to your seed they can access your account. The maximum security level for seed is 81-trytes (81 chars), but you can choose longer seeds, the security of it just won’t increase.

Tips: transactions which have no other transactions referencing them.

Confirm/Validate: In order to broadcast a new transaction in IOTA, you must first validate two previous transactions. This confirmation happens by validating the transaction trytes, the signatures and cross-checking for conflicting transactions as well as the completion of a Proof of Work puzzle.

Branch/Trunk Transactions: Two transactions which were referenced and validated by another transaction.

Bundle: Transactions which are bundled (or grouped) together during the creation of a transfer.

Thorsten Burger
Thorsten Burger
I am a digitization / Cryptocurrency / NFT enthusiast and author for crypthor.net with a long and extensive experience in the financial and digital transformation industry. I have successfully managed projects around the world, motivated employees to create a variety of beneficial strategic portfolios, digital marketing, e-commerce and platform solutions and supporting the agile transformation.Happy to connect!

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