IOTA summarized

I’ll give it a go to try and explain from my own understanding of how it works…

With bitcoin or other more classic blockchains, there are nodes that are responsible for authorizing a transaction. Multiple nodes need to authorize a transaction before it becomes permanent in the blockchain.
In IOTA however, every device (wallet address) needs to authorize two other transactions in the tangle before it can send a transaction itself. This means that there is no need for nodes because actually every wallet acts as a node. Another consequence of this is that the more transactions happen, the quicker transactions are authorized.

Currently there is still the “Coordinator” in the tangle, which is a temporary sort of supernode that guards over the tangle’s integrity. With time and as the tangle becomes bigger and with more transactions, they will take these “training wheels” off. My personal interpretation is that the Coordinator is in place to prevent attacks on the network. When IOTA becomes big enough, the amount of wallets and transactions in the tangle will make it quasi impossible to attack the tangle with malicious wallets/devices because it would take millions of those devices to do so.


I will try answer your question as good as I can from my perspective. The price is fundamentally how much of one entity people are willing to give for another entity. So even if the price of IOTA goes up relative to the dollar, the price of a m2m service will stay the same. That only means that it will be more expensive to buy a m2m service with a dollar.

In terms of IOTAs value and market cap, if there are no fees paid to miners and no trx fees, how does the IOTA protocol have a value? How can the market cap be justified?


The value of IOTA is related to the network effect. The value of IOTA increases as more people use IOTA.

The value of IOTA is derived from peoples desire to use it. Its fast, free and secure so people will want to use it. There is a limited supply of IOTA. The basic laws of economics (supply & demand) come into force. Demand is increased as more people want to use IOTA, supply is limited and hence the price of IOTA raises. Transaction fees are not necessary to create value.


Yeah that seems like correct reasoning

Hi Fredrik,

Thanks for posting, the summary and offering to answer questions.

  1. The project seems extremely ambitious (nothing at all wrong with that) - realistically, what are the chances of it being a success?

  2. No shortage of tokens - almost 2.8 billion - if the project is a success, who do you think will buy the tokens and to what end, other than investment? Why are they necessary?

  3. The 6 listed application of IOTA on the website, practically cover every possible application I can think of (microtransactions, data transfer, voting, masked messaging, everything as a service, anything that needs a scalable ledger) - too much for me to compute! Is there a specific application you think will successfully adopt the technology early on?

  4. How can all these things be connected, for example, bikes and drills? I presume this is for others to consider, bike and drill manufacturers. Any early partners?

  5. FUD - I’m still not sure what this stands for, but I understand it’s negativity about the project / team. Some people have complained that the CEO is rude and say they have been banned from slack for asking reasonable questions (if true, not very crypto IMO). Others say that you only have one developer and he’s a heroin addict. Weirdly, I like the fact that your CEO describes himself as a narcissistic genius (sounds like the sort of person that could change the world) and I’m not too concerned about substance abuse if the person is amazing at coding and can do the job. Revert to question one, can the team deliver?

Thanks in advance,



Some good questions there James. My understanding is not complete enough to answer them in the detail I think your looking for. I am bullish in IOTA but I would be keen to see some good answers to these questions. I can tell you what FUD means though. Fear Uncertainty Doubt.

1 Like

I have been worried about the same issues Vitalik raises here. Few points are cleared in the comments, but I have a problem with the team’s and especially Sergey’s additude. He is a genius like Vitalik, but acts like a teenager. I would be surprised if he won’t have damaging arguments and wars with some other core member or important resource and that is a risk for the project. I really hope they can deliver, the idea is brilliant but the goal is far away.


Hi. I got few questions :

  • Is IOTA PoW ASIC resistant?
  • Does each full node has to store all tx that were not pruned?
  • With countless tx over the world, I think the bandwith will be saturated. How IOTA anticipate this problem?


I’m not sure, but I think IOTA currently is not ASIC resistant due the fact it uses a SHA-3 algorithm for generating hashes. However it should be possible to change the hashing algorithm in order to prevent ASIC attacks.

NIce summary Fredrik. There is a detailed video at

I am working on an app that takes inputs from an IoT device and stores the input data and triggers a micropayment - I’ll let you know how it works. I am looking at implementing what IOTA calls Masked Authenticated Messaging in this effort.

Dave Regan


Carsten Stocker, Ph.D. gives a hefty example that also shows the logic. He covers Masked Authenticated Messaging (MAM).

Masked Authenticated Messaging (MAM)
One of the most anticipated, and probably one of the most unique, modules for IOTA is Masked Authenticated Messaging. MAM makes it possible for sensors and other devices to encrypt entire data streams and securely anchor those into the IOTA Tangle in a quantum proof fashion. Only authorized parties will be able to read and reconstruct the entire data stream. Essentially, it works a lot like a radio where only those with the right frequency can listen in, in MAM only those with the right channel IDs get access to the data


Thank you for the video! Sounds like an interesting project you are working on. Do you have a Demo or GitHub of the project that you can show? I would love to help you out.

@bixo Not yet, but I am going to begin working on a prototype in the next month - I did some data flows, customer pain analysis, competitor-review and market-growth potential analysis already. Using US Bureau of Census data, it is clear there is a market I can create value in (and take a profit from).

Bottom line is I must find a way to implement the idea in IOTA as soon as humanly possible :slightly_smiling_face: I am working on the value proposition/business planning now, but will soon focus on detailed technical planning and prototyping. I am not a developer, but I have enough knowledge, education, and experience to work with experts to implement the idea.

Lastly, there are great opportunities for follow-on products in the sense that once the first prototype is proven to work, the payment process methodology can be rolled over into other great monetized projects. I attended the Blockchain Economic Forum 2017 last week in New York. It was all about VCs investment perspective and ICO regulation … the immediate ROI view/money side. No game-changing projects surfaced there. I am convinced I have two or three game-changers given a solid IOTA implementation approach.

I met Ivan on Tech there and thanked him for providing guidance through his YouTube channel. His panel talk was definitely one of the better presentations. We should talk since I need your help :smile: and since we can do some good in the world while making a tidy profit! Seriously though, I will soon be looking to create a team of like-minded folks to move the project along.


What do you guys think about the recent segwit2x hardfork postpone and what will it mean for IOTA?

The price fees will continue to increase the nearest months unless they come up with a solution (which they probably will not do, after all they have had 3 years to come up with a consensus). Personally I think this will make many bitcoin users switch to IOTA which has zero transaction fees and also draw a lot more public attention towards IOTA. What so you guys think?

1 Like

I think you’re right, it will snowball, the more people that join the tangle, the stronger it will get and the more efficient it’ll get and which will in turn bring more users and so on… this could be the catalyst.

1 Like

IOTA price at 0.77 now!


What do you guys think of the new data market?

1 Like

This is exactly what a decentralized technology could, and should, be used for. The possibilities that come with this are ones that create an new form of economy and a new industrial revolution.

Simple question. Can we expect a sort of beta program to come out with IOTA as a basis for selling our redundant computer processing power for the market, similar to ethereum’s Golem program? If so, is there an expectant timeline for the release of it?