IOTA is pioneering a scalable distributed ledger with zero-fee transaction settlement and an innovative digital currency. We tell you where and
The IOTA buying process is best illustrated by above graphic — showing which strategy carries the lowest price tag right now. Buying IOTA involves two exchanges: one for USD (fiat) deposits and another for the IOTA purchase. The buttons will take you to the exchanges involved. They're updated in realtime to reflect the most affordable buying strategy as indicated by the price bars.
Crypto currencies are bought and sold at an exchange. However, you can't deposit USD to an IOTA exchange yet.
So we first buy a traditional currency (Bitcoin or Ethereum) at an exchange that takes USD or EUR. They're called fiat exchanges.
For more info — and to find out which exchanges are available to you, refer to our
Trustless transaction settlement has the potential to revolutionize our economies. IOTA is more than a digital currency. Its ledger tech is leaps and bounds ahead of Bitcoin, Ethereum — in fact, anything else out there.
Imagine a secure network for storage and transfer of data and value. A free, decentralized micropayment and automated contracting system. A global backbone for the Internet of Things and a catalyst for emerging technologies such as AI.
The project includes a new data market which will enable a true machine-to-machine (M2M) economy — combining the processing power and resources of billions of devices. IOTA's possibilities are endless. Head on over to our
IOTA is in ongoing development by the IOTA foundation, a non-profit bringing leading developers, industries & governments together for true innovation. The network's been live with its currency traded since June 2017.
Adoption will remain an important topic on IOTA's roadmap for some time. It's interesting to observe how news-hungry people are. The following chart shows the number of news-related google searches relative to Bitcoin's over the past 90 days.
Bitcoin was, of course, the very first cryptocurrency and to most people it remains almost synonymous to cryptocurrency as a whole. The same rings true for the terms blockchain and distributed ledger.
Crypto currencies are bought and sold at an exchange. These IOTA exchanges aren't currently accepting USD or EUR deposits though, which means you have to buy IOTA using Bitcoin (BTC) or Ethereum (ETH).
BTC & ETH are traditional cryptocurrencies. They're more readily available at exchanges that'll take your dollars. So you buy BTC or ETH at a fiat exchange and transfer them over to your preferred IOTA exchange. Note that you may need to signup at these exchanges and they may or may not serve your country. For a detailed breakdown of all the exchanges available to you, check out our
By fiat exchange, we mean any sizeable and reputed currency exchange accepting (at least) USD deposits and offering ETH trades. In order to buy IOTA, you'll first have to register an account at both a fiat exchange and an IOTA exchange. We recommend you pick the exchanges currently facilitating the best buying strategy as shown in the graphic on the
The signup process at these exchanges is usually pretty straight-forward. For some more info on which exchanges are available, head on over to our
Exchanges such as
So you'll probably deposit your money and wait for its arrival first. The exchange will notify you when they've credited your account (usually takes a couple of days). You then use those funds to buy Bitcoin or Ethereum at the exchange.
While some exchanges let you trade (and deposit) cryptocurrency without ID verification, a lot of them will ask proof of identity for fiat deposits (USD or EUR). Make sure the name on your bank account matches the name they have.
As soon as your funds have arrived at the exchange, you'll want to place an order at the exchange to buy BTC or ETH. If you went with Coinbase earlier and chose to use your credit card, you can skip this step since you used your card to buy crypto directly.
Most exchanges offer (at least) three types of order: limit, market & margin. Go with a market order, as it's quick and easy.
A market order means you'll accept the best offer in the books at the time of order placement. These orders always get filled without too much hassle at the best possible price. Market orders are always takers (see below).
A limit order implies you're offering to buy a certain amount at a certain price. As soon as someone else decides to take you up on your offer, he becomes a taker and turns you into a market maker.
Limit orders can be frustrating because oftentimes price volatility sees market prices fall or rise before you're able to place your order (leaving your order unfilled and yourself frustrated at not getting the price you wanted).
These are a different beast altogether and I would discourage beginners from being tempted. With a margin buy, you're actually financing a loan from your broker (i.e. the exchange). It allows you to leverage your funds almost threefold. You need to be aware though: there's a liquidation price involved at which your position will be settled automatically. Read Bitfinex' intro to
Maker & taker are terms used in finance to distinguish between people who add to an exchange's order book — stimulating market activity — and others who simply accept outstanding orders, depleting the order book.
Exchanges often charge different trading fees to both. That's because they appreciate their order books getting filled instead of emptied. It adds dynamism to a market and increases their settlement rates.
In order to transfer your BTC or ETH over to the IOTA exchange, you need to know which address to send it to. An address in crypto is like a bank account number. Each exchange will give you a bunch of unique addresses that are just for you.
So when you're trying to send BTC over, you look for your BTC address at the exchange you're sending it to. They're usually found under a deposit section since we're about to instruct our fiat exchange to deposit a crypto currency to the IOTA exchange.
Once your transfer has gone through, you can now proceed to place a buy order for IOTA. This is the fun part. Note how you just paid the other exchange a transfer fee when confirmed the transfer? None of that monkey business will befall you as a proud IOTA owner.
A local wallet is an application that allows you to log in to the IOTA network (tangle) using your password (called a seed) so you can manage your balance and your addresses. It lets you view the tangle remotely and request transactions to be broadcasted for approval. It does not store anything on your computer. So if your laptop should get stolen or otherwise spontaneously combust, no problemo. Your iotas are safe as long as you keep your seed in a safe place (e.g. offline). With your seed, you'll always be able to manage your balance.
It's your main password with which you log in to the IOTA network (tangle). Why no username, you ask? What else is a username/password combo than just one large password? Now consider an 81-character password made up of capitalized letters and the number 9. Now that's an IOTA password (or seed).
IOTA and the tangle are both conceived to be decentralized and as such there is no-one to "give out" seeds or anything like that.
So whenever you require a new seed you just make one up and use it to log in to the tangle. Once you use it, it's yours - simply because it's nigh impossible for someone else to pick or guess the same one. It really is as straight-forward as that.
Do make sure you seed contains a truly random combination of A-Z and 9. Rattling the keyboard or combining some words won't do. Wallets will soon start offering built-in seed generation.
A simple laptop can try millions of passwords in a short time span. Your seed won't just have to look random — it has to be cryptographically random in order to withstand the brute force of quantum computing in just a few years…
So I would implore you to use a seed generation method that was explicitly approved by the IOTA development team itself.
We'll include a guide on how to generate a seed with Keepass below. Don't use anything else. Sure, there are other secure methods —Linux' /dev/urandom for example— but this step is so crucial to the security of your funds that it merits a repeat: heed our advice. Shun any alternative to Keepass (or /dev/urandom).
All this random talk may lead you to doubt the strength of your seed's security. Nothing could be further from the truth. Don't forget though: nobody controls your funds but you — which includes your access to them.
Usually, your bank generates your key. They trust its strength because they know it was generated randomly. With IOTA, you conceive of your own seed and you too can trust its strength.
Still, you'd think some lucky guy or even a supercomputer could get lucky, right? I don't blame you. It's difficult to appreciate how truly vast the seed pool actually is. So watch the following video and forever hold your peace.
We'll now explain how to generate a safe seed with Keepass and will then proceed to show you how to get them transfered to an address under your own seed using IOTA's official local wallet.
So a seed is the password you use to manage your balance on the IOTA network. This network is like a database of password-protected balances called the tangle. The homebanking app used to consult the tangle & place transactions is called a local wallet.
Your IOTA tokens always reside on the tangle, on addresses generated under your seed (think bank accounts). You should always keep your seed to yourself and never share it with anyone or paste it anywhere but a trusted local wallet.
Refer to the IOTA Wallet card to install the latest version and get yourself logged in under your very own seed. Note that it sometimes takes a while for the wallet to login. This is because you're using the default full node to log on to. You can change the default node through the menu on top. These teething problems will soon be resolved and have nothing to do with the network itself, but rather the entry point everyone is using.
When you're logged in, click on the receive section to reveal your first (auto-generated) receive address. Clicking on the address it will copy it to your clipboard. This is the address you paste into the recipient's field when withdrawing your IOTA from the exchange.
You may opt to attach to tangle, but that isn't necessary. All it does is send a request to the full node to broadcast a zero-amount transaction to the tangle. Should you use multiple wallets on different devices, this action may assist these apps in detecting that you already generated this address in case you never proceed to actually use it in a transaction. Again though, re-generating an address does no harm whatsoever. I invite you to go over our
A cryptocurrency is a digital medium of exchange that uses cryptography to secure transactions and a distributed ledger to store balances.
A distributed ledger is a record of cryptographically secured and immutable data, which exists in multiple copies across a peer-to-peer network.
Current situation on the left, our ledger on the right. It's like a database of balances with a separate password for each balance. So you can pass the database around without worrying about fraud.
IOTA is both a ledger tech and a cryptocurrency. It's uniquely suited for the Internet of Things (IOT) and the emerging Machine-to-Machine Economy (M2M).
It's set to become the first globally accepted digital currency and data exchange market. IOTA aims to achieve a paradigm shift in our data-driven economies.
So shared ledgers store sensitive information in a secure manner without the need for an authority to safeguard its contents. They can be used to create virtual currencies, enabling instant payments and true decentralization.
Understand that a crypto currency is just one example of an asset you can store, share or transact through distributed ledger technology (DLT). A transaction on a DLT can involve any digital asset or commodity. In IOTA, transactions may or may not include the transfer of value (iota tokens). Some examples are:
So a crypto coin is just a token you can trade. What makes it special is you don't need to trust anyone —like a central authority or clearing house— thanks to these powerful encryption techniques.
A blockchain is how they call Bitcoin's underlying technology and data structure. Bitcoin (BTC), as you probably know, was the first ever crypto currency and was introduced in January 2009.
If you're keen on learning more, we recommend that you watch the following video. It explains in some detail how a blockchain works.
Many more currencies have come into existence since then, the vast majority of which are blockchain-based. IOTA is not and the video will help you understand the differences.
The Internet Of Things (IOT) is defined as the growing network of connected devices that are capable of collecting and exchanging data.
This network will allow for direct integration of the physical world into the digital realm and will soon enable smart grids, virtual power plants, smart homes, intelligent transportation and smart cities.
IOT can't mature without a transactional backbone that is secure, infinitely scalable and offers fast, zero-fee transactions. It needs to be light-weight enough to be integrated into sensors and actuators. Blockchain-based ledgers are unable to fill these requirements.
A true Machine-to-Machine Economy (M2M) will emerge as devices are able to transact and communicate with one another. Gartner says IOT will comprise of over 20 billion connected devices by 2020, in a market worth 3 trillion dollars.
Connecting devices in such numbers will be among the biggest challenges engineers are facing as IOT grows. Current centralized communication protocols aren't equiped to deal with these models. Even though it's been able to manage IOT's load in its current (infancy) state, managing and authenticating billions of requests would turn these poor servers into a gigantic bottleneck. They're also prone to outage, which cripples entire systems with potentially global repercussions. Yup.
The future of IOT will depend on distributed communication or peer-to-peer models, in which devices connect to each other directly. The network will consist of interconnected meshes with no single point of failure.
Security and data integrity then become major concerns: we'll want to ensure these trustless networks can be depended upon to transact and transmit highly sensitive data ánd value. This is where distributed ledger technology comes in — and since blockchains are insufficiently scalable/secure, IOTA was conceived to specifically meet these (quite daunting) requirements. It also explains why IOTA was designed with network-bound Proof-of-Work in mind — we'll expand on that below.
Each ledger technology needs a way for the network to determine which transactions may be trusted. Blockchains are deterministic, meaning that once a number of blocks have been added to the chain, consensus is immediate and you can say your transaction is definitely valid. The tangle is probalistic (or stochastic). Consensus is only reached eventually, i.e. once (almost) all network participants have repeatedly said your transaction is more valid than this other transaction.
Blockchains use miners (validators) in order to have transactions validated and included in the next block. These miners require incentive to compute your request in the form of a transaction fee.
That's because these validations are deliberately complex. The blockchain protocol figures that an attacker can't out-compute the entire competition and so when being offered two blocks, it will trust the one that took the most work. So blockchains use this Proof of Work (PoW) as a means to reach consensus over which block is to be trusted.
The IOTA protocol differs from blockchain's in that it looks at the number of validations a transaction has received instead of combined computing power. An attacker wouldn't need to outcompute competing validators (miners) but rather outpace the transaction influx across the tangle.
Consensus is fully distributed in the tangle by requiring each network participant to confirm two past transactions in order to place their own transaction. Because you're contributing to the network through this computational effort, transactions are free. It's important to keep in mind though, that this computational effort (called hashing) only serves to fend off certain attack vectors (called Sybil protection). IOTA's PoW can be kept ultra light-weight because you're signing only your own bundle. As such, the amount of work involved in IOTA's PoW bears no resemblance to a blockchain's use of PoWs. This is a common misconception.
IOTA uses Proof-of-Work as an anti-Sybil (security) measure. Every transaction has some PoW tied to it and each transaction references other transactions its issuer (acting node) treats as valid. Think of a transaction as a vote for all the other transactions it references directly or indirectly.
Among conflicting transactions, the one with the highest number of votes is accepted as canonical (authoritative). Because none of the nodes see all of the transactions, a merchant will wait until a supermajority of transactions votes in their favor.
Every merchant chooses at which point they trust in eventual consensus. Is it when 90% of the tangle agrees — or rather 99.9%? The higher the threshold, the longer the merchant will wait (assuming an equal transactions influx).
Should someone build a graph (subtangle) which includes an invalid transaction, it will be discarded by nodes following protocol — either partly or in its entirety.
Bitcoin is different. The fundamental argument behind the incentivized ledger of Bitcoin, rather than a blast of tradeable tokens at the outset, is that the security and sanctity of the ledger becomes the imperative of the users to preserve, such that they can continue to be rewarded.
In IOTA though, everyone is required to contribute to the ledger's validity — and they can afford to look only at their neighborhood too, thanks to IOTA's stochastic nature. This also helps to understand IOTA's partition tolerance and offline capabilities.
A transaction is placed by using an application called a local wallet. These are used to check your balance and send/receive funds. It's through your local wallet that you'll instruct a nearby network participant (called a full node) to broadcast your transaction to the tangle.
In order to do this, your wallet will construct a transaction bundle. That's a set of related transactions. You see, even though the tangle contains only transactions, nodes work with bundles. When we think of a transaction, there are actually multiple transactions being broadcasted to the tangle to make it happen.
The Winternitz signature used by the IOTA protocol has the (huge) advantage of being quantum resistant, but at the cost of being a one-time signature technique. This means that each time you sign an outgoing transaction, you reveal a random portion of the sending address' private key. Repeat this a few times and it becomes feasible for an attentive thief to guess the entire key and gain access to the funds on the address.
Note that an address' private key is not the same thing as your seed. Wallets use your seed to generate addresses — which each consist of a public & private key. These public keys are the actual addresses. Private keys provide access to its corresponding address only. It's impossible to figure out which seed generated an address, regardless of private keys.
Only outgoing transactions require your signature. You can receive funds on the same address to your heart's content — it's only when you send from the address that you should stop using it altogether — be it for sending or receiving, e.g. as a donation address.
Of course, wallet software as well the IOTA protocol both take care to avoid mishaps. An outgoing transaction will always be bundled with another transaction which cleans out the remainder of your balance by transferring it over to a newly generated address atomically. That is to say, any full node following IOTA protocol will only consider validation once it receives all transactions making up the bundle.
This need for bundling is compounded by the fact that we have to reference branch/trunk transactions.
Suppose Alice has a balance of 100 iotas and decides to send Bob 70 iotas. This is what the bundle would look like:
|1. Withdraw Alice's entire balance||-100|
|2. Withdraw for added security (complementary)||0|
|3. Deposit to Bob's address||+70|
|4. Deposit to Alice's change address||+30|
All of these transactions will be associated with the same two past transactions you're required to validate in order to place your transaction(s).
First a raw bundle is constructed, then its bundle hash is calculated and signed. The signatures are copied into each transaction the bundle contains (with an added offset to tell which is which). These transactions are then broadcasted to the tangle for approval. All other nodes will eventually receive (see) these transactions and reconstruct the bundle for processing. At processing level, bundles become atomic because either all or none of its transactions will be approved by others.
The tangle is network bound instead of computing bound. So its main bottlenecks are routers and firewalls, rather than mining rigs and hashpower. The attacker would have to be omnipresent in the network to amass sufficient weight.
Tangle deals in probabilities. There is no global consistency in the tangle. There is eventual consistency. This is related to the CAP theorem. If your transaction is referenced directly or indirectly by every new transaction then it can be considered "confirmed" with high likelihood.
When a full node is asked to provide tips to a light node to create a transaction, the full node will walk backwards along the edges of the DAG to the genesis transaction and check if there are any conflicting transactions along the way. If there is then that tip is discarded. If there isn't then the tip is considered valid.
So full nodes are constantly being asked to provide branch and trunk tips to light nodes for bundling purposes and will only select tips free of conclict. The attacker will try and do the same with his double-spend and has to find a way to overwhelm the entire network's influx.
New snapshots are validated by other nodes. Whistleblowing prevents tampering here.
The prices in the bars reflect the cost per mega iota using different ways to acquire them. Binance ETH means you're buying IOTA at Binance using ETH transferred over from a fiat exchange.
The second group of bars show some stats related to IOTA's network, community, price and trade volume.
If one or more (or indeed all) of the bars keep showing a "waiting" state, the underlying data source may be down or faulty. It is what it is. Come back later, email me at info@ or wait until Black Francis drops some Pixie dust yo. Word.
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