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The number of altcoins in the cryptocurrency market has steadily increased in recent years.  One of the most innovative coins in this field is IOTA. It is a unique coin that has introduced new technology to the crypto world. This article will provide you with details regarding what IOTA is, its workings and why it is different from other cryptocurrencies.

What is IOTA?

IOTA has a distributed ledger technology. This is different from other cryptocurrencies that use the traditional blockchain. Moreover, IOTA uses the Directed Acyclic Graph.  It was created in 2015 by David Sønstebø, Sergey Ivancheglo, Dominik Schiener, and Dr. Serguei Popov. The main aim of IOTA is to give a platform to the internet of things devices. This platform helps to carry out transactions with each other free of cost.

How Does IOTA Work?

IOTA uses a new consensus algorithm called the Tangle, which is a DAG-based system. In the Tangle, every new transaction confirms two previous transactions. This system eliminates the need for miners, and every user becomes a validator. That means as the number of transactions increases the security of the network will increase in a simultaneous manner as well.

Advantages of IOTA

• Scalability

Scalability is the most important advantage of IOTA. Unlike other cryptocurrencies, IOTA's transaction speed increases as more users join the network. It can process as much as 1000 transactions in a second. This makes it the most fast and scalable cryptocurrency in the crypto market.

• No Transaction Fees

The second important advantage of IOTA is that there are no transaction fees. This benefit makes it a best option for micropayments where transaction fees can minimize the value of payment.

• Security

IOTA's Tangle system provides an added layer of security to the network. Since each transaction confirms two previous transactions, it is nearly impossible to alter a previous transaction, making the network more secure than traditional blockchain systems.

• Decentralized

IOTA uses the decentralized network. Thus the need of central authority who controls the network is eliminated. Every user becomes a validator, and no one can manipulate the network to their advantage.

Use Cases for IOTA

• IoT Devices

The primary use case for IOTA is the IoT devices. Since IoT devices are becoming more common, they require a platform to transact with each other without any fees. IOTA's Tangle provides a secure and scalable platform for these devices to transact with each other.

• Supply Chain Management

IOTA's Tangle can also be used for supply chain management. The Tangle allows for secure and transparent transactions between manufacturers, suppliers, and customers, reducing the risk of fraud and errors.

• Machine-to-Machine Payments

IOTA's zero-fee transactions make it an ideal cryptocurrency for machine-to-machine payments. On the top of it,  the devices can make transactions without the need of any fees. This makes it the most economical way of payment.

Challenges Faced by IOTA

• Adoption

One of the significant challenges that IOTA faces is adoption. It is still very new and has not gained a considerable amount of traction from the people. People are still in the process to know about its technology. However, as many IoT devices have come online there are chances that the want for platforms like IOTA will increase. Therefore , the chance that it will be widely adoptable is very high.

• Security

Even though the tangle of IOTA gives a double layer of protection to the network , still there are chances of attacks. Hackers could potentially manipulate the network by performing a 33% attack, where they control a third of the network's computing power.

• Centralization

Although IOTA is a decentralized network, it is still relatively centralized, with a few large nodes controlling a significant portion.