IOTA’s goal is to establish a DLT for the Internet of Things (IoT). The following characteristics are fundamental to this vision:
Traditional DLTs have limiting factors that make them unsuitable for attaining IOTA’s goal.
In contrast, the core data structure in IOTA is highly scalable. This is made possible with one simple rule: each transaction references and approves two existing transactions. This rule defines IOTA’s underlying data structure — the Tangle — which, in mathematical terms, is known as a directed acyclic graph (DAG).
Rather than being limited by a single site for attaching new transactions, DAGs offer multiple sites where transactions can be attached. Users can continue to attach new transactions on various parts of the Tangle without waiting for other transactions to confirm:
In IOTA there is no distinction between miners and users. All nodes can participate in consensus. This means that an IOTA node has a completely different role than a Bitcoin miner. IOTA nodes only perform basic operations that do not require much computational power (e.g. storing the ledger, validating transactions). Users can set up a node with minimal cost and actively participate in network consensus, and thereby bolster the security of the network.
The definition of a consensus layer — describing how nodes agree on which transactions are trustworthy — is at the core of IOTA. In the current IOTA implementation, nodes trust transactions which are referenced and approved by milestones, issued by the Coordinator. The use of this centralized “finality device” has been necessary to provide security during the network’s infancy.
The solution to Coordicide will ensure that the network remains feeless, while preserving decentralisation and security, and promoting unprecedented scalability.