IOTA 101 – what is IOTA?

IOTA logo

IOTA is pretty unique in how it works, and is often referred to as the “third generation” of cryptocurrencies. Where most cryptocurrencies are based on a blockchain, IOTA works on an tangle. This might sound like a relatively boring distinction, but it results in some impressive differences and features that other cryptocurrencies struggle to provide.

The best things about IOTA are:

  • No fees. None. Nadda. Zip.
  • Super fast
  • Super scaleable
  • Can be run offline

Sounds pretty good, right? To understand how IOTA manages to do all these things, let’s start with looking at the infrastructure that IOTA is built on – the tangle.

What’s a tangle?

So if you’ve read up a bit on Bitcoin and other cryptocurrencies, you’ll know that they work on a blockchain. A blockchain is, quite simply, a chain made up of digital blocks. Each block records transactions that people make to each other. And as it’s a chain, it has to be built in a linear fashion, one block after the next. This means that there is a limit to how fast the network can process transactions.

IOTA however, is entirely different. It runs on a tangle, not a chain. And as you might imagine, this means things don’t have to be ordered and structured. Each block can link in to any other block, it doesn’t have to wait in a queue to be the next block in the chain.

IOTA Tangle

The tangle is created by IOTA’s protocol, which requires that each block verifies any two other blocks. This means that blocks can be added to the tangle in any order and as long another block verifies them, then they’re good to stay. It also means that parts of the tangle can go offline for a period and link back in to the main tangle later.

How can IOTA have no fees?

Typical cryptocurrencies have blockchain network fees, which are the fees you must pay to get your transaction included in the blockchain. Fees can change from day to day, but can get quite expensy, for example Bitcoin fees can get up to $80 per transaction when there’s lots of traffic on the network.

For IOTA , the tangle innovation removes the need for fees. Instead of having to pay someone (eg a miner) to verify your transaction and include it in the chain, each block in the IOTA tangle verifies two other blocks, removing the need for mining.

What is IOTA good for?

We’ve learnt that IOTA is super fast, can handle any number of transactions at once, has no fees and can even go offline. Those are some pretty powerful features!

With these, IOTA might help us unlock whole new micro-economies, which would never have been feasible without IOTA’s tech. For example, NIWA might be interested in buying data from your home weather station at one millionth of a cent per data point – currently that’s too ridiculous an amount for anyone to bother about, but with free-of-charge super fast transactions, it might make sense. And then your weather station could use that IOTA to buy power off your solar panel, which is also making IOTA from drones that are re-charging at it… the possibilities are endless!

And if this is starting to sound like IOTA could be a currency for the Internet of Things (IOT), that’s exactly what IOTA (aka Internet of Things Application) is intended for.

drone charging

What’s the difference between IOTA and MIOTA?

Because IOTA are intended for tiny micro payments, each coin is a very very very very small unit. They’re so small, that when people trade in IOTA they group them up in to bundles of a million IOTA, which are called megaiota or MIOTA. When you buy and sell IOTA you will typically be trading MIOTA, not IOTA itself.

Sounds great! Where can I get some?

Here at Easy Crypto we can sort you out if you want to purchase MIOTA. We’ll deliver your IOTA in a secure portfolio file, but if you want set up your own IOTA wallet, check out our how-to guide.


Click here to read more of our 101 series on cryptocurrencies.


This article is not financial advice. It is purely for information only and is based on the author’s understanding and research, but we cannot guarantee the accuracy of any statements made. We strongly recommend that you do your own due diligence before purchasing any cryptocurrencies, and make sure that you are fully aware of the risks involved. 

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