Known as the “internet of things”, IOTA is a very unique cryptocurrency, because unlike almost many other currencies, it does not work on a Blockchain network but on a revolutionary Tangle network.
The Tangle network a blockless distribution ledger, which ensures IOTA is very scalable, lightweight currency suitable for microtransactions. In addition, it is the only cryptocurrency that has no transaction costs at all. Although Iota is still in its beta phase, the currency has already left a huge impression in the investor world. This is because it has positioned itself in one of the big cryptocoins in terms of market capital in a very short period of time.
There is currently no way to buy IOTA directly. So the only way to buy IOTA is to purchase BTC to use an exchange, and then switch it to IOTA.
STEP 1: GO TO BINANCE
Go to Binance and create a new account if you do not already have one.
Once your account has been confirmed, log in to your Binance account and click on funds at the top right, then “Deposits Withdrawal”.
Look in the “Bitcoin” list and click the Bitcoin deposit button. Then a series of numbers appears in the “BTC Deposit Address:” field. You must copy this series for the next step. This is your bitcoin wallet address.
STEP 2: BUY BTC
The second step is to get your Bitcoin, you can do that at a broker such as BTCdirect.
If you’re buying BTC for the first time from these two brokers, you will be asked to confirm your bank account.
Upon payment you will be asked to enter a bitcoin address. You must fill in the address that you have copied at Binance.
STEP 3: WAIT UNTIL YOUR BTC HAS ARRIVED
Once you have purchased Bitcoin and entered the correct BTC deposit address with the payment, you have to wait until the BTC arrives in your Binance wallet.
This process can take up to ½ hour, so don’t worry if it’s not immediately visible on the exchange.
STEP 4: BUY IOTA
Once your bitcoins have arrived, it’s time to buy your IOTA. Within the Binance exchange (click top left on exchange > Basic) go to IOTA/BTC. In the left box marked with “buy IOTA” you can indicate how much IOTA you want to buy using your Bitcoin.
Once you press “Buy IOTA” your order will be placed. When the order is fulfilled you will see your number of IOTAs on the right-hand box or in your balance page. Congratulations! You’re now the proud owner of IOTA.
The Tangle Network
The success of Bitcoin over the last 7 years has shown the value and strength of the Blockchain network. Since then, more and more cryptocurrencies have appeared on Blockchain technology. However, the use of Blockchain technology has a number of drawbacks.
One of these disadvantages was that it’s virtually impossible to use a traditional Blockchain for microtransactions. Microtransactions are impossible with a Blockchain because a chain always has a transaction fee for every purchase using the cryptocurrency. This means that a user must make a payment to the system, which is necessary to finance the costs of a block, and to keep the system operating. This means that it’s very difficult, or almost impossible, for developers to reduce these transaction costs in such a way that microtransactions become an option. This is partly the reason that, so far, microtransactions have not happened in any Blockchain cryptocurrency. This is a major disadvantage, given that on the current “Internet of Things”, microtransactions are starting to play an ever-increasing role.
Another disadvantage of a traditional Blockchain is that it’s a heterogeneous system. This means that the network naturally distinguishes between the roles within the system (think of pay, receiver, miner). More distinctions also mean more possibilities for conflict. These conflicts require resources within the system that they must constantly solve and help prevent. This creates an enormous amount of computational power that is lost to conflict resolution of the network itself.
These disadvantages have caused the developer to start creating a new system that deals better with these aspects than a traditional Blockchain.
Tangle is a blockchain-less approach that implements IOTA and uses a DAG (directed acyclic graph) instead of a global blockchain. When a new transaction takes place within the network, it must verify new two previous transactions within the system.
In the image you see a schematic representation of how that works within iota. In this image these verifications are indicated with arrows, and time runs from left to right.
A transaction can also be confirmed, even if there is no arrow directly between the transactions. As long as there is only one directed path between a transaction to another of at least length two. This has an indirect confirmation.
In other words, there are no miners in IOTA who confirm the transactions. So there is no block reward within the system. Thus no new coins are created by the network. So the stock of Iota will never change.
- To make a transaction, a user must confirm two other transactions within the network. This helps a user to contribute to the security of the network.
- This means that the network does not need a miner and therefore has no transaction costs.
- The more confirmed a transaction gets, the more the transaction is accepted within the network. That makes “double spending” impossible.
- The network becomes faster and more efficient as more transactions and users use the network.
NO TRANSACTION COSTS
Within the Iota network, making a transaction is free of charge. A user’s device is asked to confirm two other transactions on the Tangle network. This confirmation is a mini “proof of work”, which is similar to solving a math problem. This can easily be solved on the computational power of a mobile phone.
Because of this there is no need for “miners” or “strikers”. The fact that these separate entities no longer exist ensures that an enormous amount of energy is saved.
This also means that Iota is fully suitable for microtransactions.
Because of the Tangle network, each transaction only needs a sender to confirm two other transactions. More transactions can be confirmed as the number of users grows.
This means that IOTA grows linearly with the number of transactions as more users use the network. Which means that the IOTA is infinitely scalable.
The transaction time within IOTA is inverse in proportion to the number of transactions. In other words, more transactions make the transaction time shorter.
FINITE NUMBER OF COINS
Because there are no miner or strikers within the network, coins are never rewarded for the work they perform. This also means that IOTA will never receive more coins than were created during its inception.
So you’ve decided to buy IOTA and now you want to keep it in it’s own wallet?? IOTA currently has its own desktop wallet that you can download and use for free. Although the wallet is functional, we’re not going to claim that it’s perfect. At this stage IOTA is still a young crypto coin and there are many improvements in the wallet to be made. Especially when it comes to user-friendliness.
Fortunately, we’ve done it all for you so that you’re able to use the wallet without having to figure it all out for yourself.
If you prefer to use a hardware wallet, then you’re going to be quite disappointed, as they don’t exist yet. Trezor has announced that they are working to create compatibility for IOTA with their hardware wallet, and the should be available soon.
1. INSTALL THE WALLET
First, we have to install the wallet! You can do this by going to Github and downloading the correct wallet. You will find the most recent version of the wallet at the top.
If you have a Windows (64x) driver you need to download the IOTA.Wallet.Setup. [Version] .exe.
For Mac users, that is the IOTA.Wallet. [Version] .dmg. The version will regularly be updated, so we recommend that you check regularly, as they are constantly improving the wallet daily to fix any security flaws.
2. CHOOSE YOUR WALLET TYPE
During the installation you will see a selection menu asking if you would rather install a Light Node or Full Node.
Choose to make a Light Node.
In short, a Full Node is much better if you want to support the network. However, setting up a full node is a somewhat more complicated process, which we will not discuss in this manual (the official site itself talks about how you can do it).
3. CONNECT TO A HOST
You will now be asked to connect to a host. You will get a list of options where you can choose which host you prefer. To keep it simple, we recommend to connect to http://iota.bitfinex.com:80 .
This is a geolocation balanced DNS and works well for all locations where you want to use the wallet. You can always decide to change this host in the future, to another faster option within the list.
4. GENERATE A LOGIN SEED
We need a unique seed to log in to our IOTA wallet. This seed is incredibly important and is comparable to the Bitcoin Keys. Without this seed you can not access the same IOTA wallet.
In other words, keep this seed good or write it on paper.
To generate a seed you can visit this site. By randomly moving with your mouse, a random seed is created that is unique to you.
Copy this seed and write it down. Use this seed to log in to your wallet.
5. ATTACH YOUR RECEIVE ADDRESS
You are now logged into your IOTA wallet, there is only one step left to be done.
The IOTA receive seed (receive address) must be linked to the Tangle network. You can do this by pressing the receive tab and then attach to Tangle.
It sometimes happens that attachment does not succeed the first time, in which case you have to log in and log out. Then you can try again
If the receive seed is linked, then you can send your IOTA to your wallet . The moment the seed is linked, this is also permanent.