IOTA is a distributed ledger technology (DLT) that empowers individuals to have control over their private data, run tamper-proof programs, and engage in asset ownership and trading without the need for intermediaries. DLTs, as the name suggests, maintain a ledger of token ownership across multiple nodes. However, unlike centralized systems, DLTs require consensus among independent nodes to agree on the ledger's state. This introduces the challenge of protecting the network from malicious actors. IOTA takes a unique approach, setting it apart from other protocols.
The core of IOTA lies in the Tangle, a structure where new transactions validate previous ones, in contrast to the typical blockchain used by most DLTs. In blockchain-based systems, transactions are grouped into blocks and linked together, creating a natural bottleneck. However, IOTA bypasses this limitation by utilizing the Tangle, which allows for a more scalable and efficient network. It eliminates the need for centralized validation and offers a decentralized and secure environment for transactions and data exchange.
The Tangle is a replicated data structure across a network of nodes, forming a directed acyclic graph of blocks. It enables parallel validation of transactions without total ordering, eliminating intermediaries and offering a highly performant consensus and ledger solution.
Unlike traditional cryptocurrencies, IOTA requires no fees for transaction processing. The amount deducted from the sender's wallet is exactly the same as the amount added to the recipient's wallet, making transactions seamless and cost-effective.
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Main development of IOTA is fostered by the IOTA Foundation, which is a non-profit organization based in Berlin, Germany.
The IOTA protocol is continuously evolving through research and development. It consists of two main public networks: the IOTA mainnet, which is the production-level network managing IOTA tokens, and the Shimmer the staging network for testing and deploying the latest protocol updates. The Shimmer network acts as a testing ground to validate new features and improvements before they are implemented on the IOTA mainnet.