The Mathematical Functions of IOTA


The Mathematical Functions of IOTA
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The rise and success of Bitcoin during the last six years proved that blockchain technology has real-world value. However, this technology also has a number of drawbacks that prevent it from being used as a generic platform for cryptocurrencies across the globe. One notable drawback is the concept of a transaction fee for transactions of any value. The importance of micropayments will increase in the rapidly developing IoT industry, and paying a fee that is larger than the amount of value being transferred is not logical. Furthermore, it is not easy to get rid of fees in the blockchain infrastructure since they serve as an incentive for the creators of blocks.

Crytocurrency reliant customers and businesses.

In this paper we discuss an innovative approach that does not incorporate blockchain technology. This approach is currently being implemented as a cryptocurrency called iota, which was designed specifically for the IoT industry. The purpose of this paper is to focus on general features of the tangle, and to discuss problems that arise when one attempts to get rid of the blockchain and maintain a distributed ledger.

Cutting Edge (technology has been on the market for < 2 years)

The node chooses two other transactions to approve according to an algorithm. In general, these two transactions may coincide.

The node checks if the two transactions are not conflicting, and does not approve conflicting transactions.

For a node to issue a valid transaction, the node must solve a cryptographic puzzle similar to those in the Bitcoin blockchain. This is achieved by finding a nonce such that the hash of that nonce concatenated with some data from the approved transaction has a particular form. In the case of the Bitcoin protocol, the hash must have at least a predefined number of leading zeros.


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