IOTA is a public ledger with no chains, no blocks, and no fees. Its name stands for Internet of Things Application, and instead of a blockchain, it utilizes a new technology called the Tangle. Its underlying currency is called MIOTA, and without any transaction fees, this network is designed extremely well to handle a large amount of micropayments to power the Internet of Things.
IOTA, however, has no mining, no blocks, no transaction fees. The security and consensus of the network is not divided among miners, validators, and users.
Users of the network validate two old transactions (via proof of work) in order to be able to conduct one of their own. No one receives a reward and no one has to pay transaction fees. A miner-centralization like in Bitcoins or in Ethereums network is, therefore, not possible.
Its field of application is set in the IoT, as the technology for data integrity and industrial appliances. Furthermore pay on demand, micro-payments, and machine to machine communication like sensor technology, smart cities, adaptive systems etc.
As a settlement layer, it aims for interoperability between many existing systems.
Common blockchains cannot be adjusted to a no-fee settlement layer because the fees are integrated by design: as a monetary incentive for miners and thus: as protection for the network.
It is quite evident, that Bitcoin and nearly all other cryptocurrencies weren’t made to function as such. Considering hundreds of thousands of nano-payments each day in the near future, these Blockchains would generate an enormous amount of fees, just for conducting transactions, while costs of these nano-payments oftentimes undermatch the fees.
Therefore, it is indispensable to use a secure, fee-free system for new use-cases that are created within the fourth industrial revolution, which we are facing right now.
IOTA as the first technology that enables true nano payments, is, therefore, a novelty.
The underlying technology, the Tangle, is a third-generation distributed Ledger (DLT), based on a directed acyclic graph, made for the problems of tomorrow.
Beyond that, the Winternitz one-time signature scheme enables quantum resistance, which makes it perfectly equipped for the future.
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