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What is IOTA? The Beginner’s Guide

What is IOTA? It is a very ambitious project aiming to become a payment standard in the world of IoT. This article has IOTA explained for amateurs. We’ll go through its history, tech and all critical features. This is our IOTA beginner’s guide.

IOTA Beginner’s Guide – A different cryptocurrency

Let’s try to place IOTA in the correct category in the crypto universe. This is easier said than done because it’s very difficult to find any other project like IOTA.

We place cryptocurrencies into three groups: platforms, tokens, and currencies. Platforms are also known as ecosystems or DApp operating systems. The most known examples of these are Ethereum, EOS, and TRON. Tokens are simply created on one of these platforms and they have utility inside one specific program.

In the currency category, we have coins meant to be as P2P digital money. The best-known currency is, of course, Bitcoin. Other examples of currencies are Litecoin, Bitcoin Cash, and Monero.

IOTA doesn’t really fit any of these categories.

The main reason is that IOTA doesn’t even use a blockchain (we’ll get to this later). It differs from other known cryptocurrencies technically and is also the only one with a clear focus on the IoT world. You’ll find a quick two-minute IOTA presentation from the video below.

There are no direct competitors for IOTA right now. Some projects have some similarities, for example, VeChain is also using RFID sensors. In the big picture, IOTA is in a category of its own.

The IOTA network has also its own native token, MIOTA. The letter M comes from mega, which means a million. If you buy 100 MIOTA tokens you are in fact, buying 100 million IOTA tokens.

This MIOTA solution was done due to the large number of tokens that were originally created. This was done because IOTA was designed for very small micropayments. It’s easier to make a payment of 10 IOTA than 0.000001 IOTA, for example.

Next, we’ll go through the history of the project.

IOTA explained – The background in microprocessors

IOTA became known for the public in the ICO boom of 2017, but the project has been around for much longer than that. There are few who really understand the reason why it even exists.

We can trace IOTA’s history to the year 2014 and to a project called Jinn. This was (and still is) a project aiming to develop a revolutionary microprocessor for the backbone of the IoT infrastructure.

Jinn microprocessors could operate on a mobile phone, car, or any other electric device. They would be also IOTA network nodes and transaction deliverers. The third piece in this puzzle is Qubic. This is a platform or marketplace for handling information collected by IoT sensors. More details of Qubic & Jinn later.

IOTA was born from a need to create a network, where data collected by Jinn microprocessors and handled in the Qubic platform could be stored, distributed and paid for.

iota qubic
The front page of

Jinn project had an ICO in 2014 on the NXT platform. There were certain regulation problems though, which forced the team to re-organize and make a new ICO in 2015. Thus, IOTA was born. Here is a Bitcointalk form topic about IOTA’s ICO, which eventually collected 250,000 USD.

The founders of IOTA are German Dominik Schiener, Norwegian David Sønstebø, and Russian Sergey Popov & Sergey Ivancheglo. The latter is also one of the NXT founders and the founder of the Jinn project.

An interesting fact of the IOTA’s ICO. Founding members bought their shares from the open market, so there were no coins locked for the founders. These days we see ICOs (especially IEOs), where only 20-30% of the tokens are sold to regular investors.

MIOTA token has had a rough ride

IOTA project started to move forward very fast and the IOTA MainNet was published already in 2016. IOTA didn’t raise any attention until late 2017 when the popularity of the MIOTA token exploded.

IOTA Foundation was established in 2017 in Germany. This is a non-profit organization, which sees over the project development. A similar organization is behind most of the cryptocurrencies. Sergey Ivancheglo is the only founder not part of the IOTA Foundation board anymore.

The native token MIOTA rocketed from around 0.4$ to 5$ in November 2017. The whole crypto world was suddenly excited about seemingly endless possibilities of IoT. At its peak, MIOTA token was the 7th biggest cryptocurrency in the world in the market cap.

Back then, Bitfinex was the leading exchange in the market. MIOTA was added to their selection in late 2017, which boosted the token significantly. When the crypto bubble burst in January 2018, MIOTA crashed like all other coins.

iota price

In the spring of 2018, we saw a short rush all the way to 2.5$, but this was short-lived. In December 2018, MIOTA price had crashed 90% lower from that peak.

The all-time low of MIOTA was recorded in the July of 2017 at 0.148$. The price is 0.19$ when this article is written. IoT has disappeared from headlines and MIOTA token has crashed to 24th place in the cryptocurrency rankings.

What is IOTA? It is an IoT solution!

As the title suggests, IOTA is essentially a solution to the IoT world. It wants to be THE protocol for micropayments, data transfers and collecting information with hardware sensors. Let’s take a quick look at IoT if you are not familiar with the subject.

Internet-of-things is the fourth step in the industrial revolution. The first step was industrialization in the 19th century, meaning the development of electricity, hydro, etc. The second step was taken in the early 20th century with mass production. The third step was the late 20th-century automation and IT.

We are now taking our first steps in the fourth stage, which is known as IoT. The idea is quite simple: electric devices are “talking” to each other without a man in the middle. This is made possible with the internet and so-called Mesh networks.

IoT provides endless opportunities in data collection, data delivery, and micropayments. According to many estimations, there will be 70-100 billion devices connected to the internet by the year 2025. The information collected by these devices is valuable and there are many entities willing to pay for it.

iota iot

The most popular examples of IoT are robot cars or self-driving cars. They can read data from countless sensors and choose a route or a parking place based on traffic information. They could also pay for toll roads automatically etc.

In the future, your fridge might order more food for you automatically when it sees some products are missing. Or, your self-driving car might go charge itself and pay for the electricity itself. Your car would also send data to other cars about traffic, accidents, weather and road conditions.

There are already many IoT devices in your household. For example, every new smartphone and TV are connected to the internet these days. Many people have also washing machines and fridges with WiFi-connections.

But, how does IOTA fit into this picture? See the video below, which has IOTA explained with IoT possibilities.

IOTA wants to create an IoT protocol, which offers 100% free data transfers and almost endless scalability. The current blockchain solutions can’t provide a similar framework. Bitcoin certainly not, but even the 3rd generation blockchains have their limitations.

As mentioned earlier, IOTA is more than just a distributed network for data transfers. IOTA is just one part of the puzzle, where Jinn microprocessors and the Qubic platform are the two other key components. These three pieces make one hell of a puzzle!

IOTA explained – The Tangle

Next, it’s time to look at the IOTA’s tech. How can IOTA offer so unique attributes compared to other blockchain projects? The reason is: IOTA is not using a blockchain at all but a solution it calls Tangle.

Tangle is a DAG, meaning Directed Acyclic Graph. It consists of network nodes, just like Bitcoin, which deliver transactions in the IOTA network.

Directed acyclic graphs are used in maths and information technology science to model different kind of data structures. They are also well-known in the machine learning world. The concept of DAG has been around for a long time, so this isn’t something IOTA has created.

See below a short introduction of Tangle.

Tangle can remove the bottlenecks of traditional blockchains. The trick is: when a new transaction is sent to the network, the node sending it must first confirm two other transactions. This also means that adding new nodes and transactions makes the network capacity higher.

There are no miners in Tangle. There is a small Proof of Work though, which is the transaction confirming operation each node must perform before it can process its own transaction. This work makes it possible that no fee is required.

So, there are nodes in the IOTA Tangle, just like there are nodes in a traditional blockchain. Their tasks are also quite similar meaning sending and confirming transactions. There are also full nodes in IOTA, which record the Tangle information.

The good thing is that a node doesn’t need the entire Tangle information to confirm a transaction, just a small part of it.

The IOTA network is not yet in its final form. This is due to the fact there is still a “supernode” called the Coordinator, which is run by the IOTA Foundation. This is an extra node supervising the network traffic. It’s there to ensure network safety.

You’ll find a video above titled Coordicide. This is the next step, which will eventually remove the Coordinator node from the network. That is when IOTA’s Tangle will be close to its final, decentralized, form. The Coordinator is currently also limiting the network capacity.

IOTA’s Tangle is also permissionless, just like Bitcoin. This means that anyone can join the network.

What is IOTA – Qubic & Jinn

Let’s check at the two key pieces in the IOTA puzzle, which were already mentioned earlier. Qubic and Jinn. Let’s start with Qubic.

Qubic is a quite large module and difficult to understand at first glance. One can say that the Qubic protocol is like an umbrella to different services, which connect IOTA’s Tangle network to the outside world.

In practice, Qubic brings smart contracts, oracles and distributed computing to the table. Smart contracts and distributed computing might be familiar terms already to many readers, while oracle is a data-delivering component. You can read more about them from the Chainlink guide.

Below is a video explaining Qubic.

It’s important to understand that Qubic has the components to connect IOTA’s Tangle with the data sent by Jinn microprocessors.

The key person here is Sergey Ivancheglo, who is one of the four IOTA founders. He had a vision of the Qubic concept already in 2012 and wrote in the Bitcointalk forum in 2014 how he needed Jinn microprocessors to finalize it.

”I keep working on Qubic. I found a good solution to the last obstacle, but it requires technical base for the implementation. The solution will be based on Jinn (ternary processor), before Jinn is designed and prototyped I need to create an emulator to prove the concept.”

You could say that Jinn is like the hardware department of IOTA. There is very little information about the actual prototypes. The goal of Jinn is to create a microprocessor, which could be installed in any IoT device. It could operate as a node of Tangle and send transactions.

One should understand that Jinn and Qubic are the reason why IOTA was originally founded. ”IOTA is needed for Jinn’s visions to become a reality.”

IOTA is just one piece in a bigger puzzle. None of these pieces (IOTA, Jinn, Qubic) could work without the other two. Together they make a software and hardware solution to serve the needs of the IoT world.

IOTA Beginner’s Guide – The partners

IOTA project has been running for five years already. During this time, it has formed significant partnerships with a couple of hundred globally known operators. These are certainly not some one-man kiosks. Let’s continue our IOTA beginner’s guide by looking at the partnets from the image below (source: Reddit)

iota partners

The entire partner list can be found here. The picture doesn’t have nearly all partners.

”748 unique entities with a known interest in IOTA, including 123 official partnerships/collaborators, 177 entities engaged in joint projects with the IOTA Foundation, 85 known IOTA Data Marketplace participants, 93 entities that developed one or more IOTA-based proof-of-concept and 440 academic references from 266 academic institutions.”

It is not difficult to see why IOTA has partnered with car manufacturers like Audi and Porsche. Almost every brand is currently studying the self-driving car field, which makes IOTA a natural choice for an IoT partner.

The same can be said of manufacturers like Bosch, Nokia, and IBM. You can check the details of each partnership from the official partner page. IOTA has certainly achieved a lot in five years in this field. Here is also a list of patent applications, where IOTA is mentioned.

IOTA Trinity hack

IOTA has made the headlines in early 2020 due to two unfortunate events. Let’s look at these next.

The first hit to IOTA’s reputation took place in December 2019, when the Coordinator node stopped working for 15 hours. This was caused by a bug in the software. As mentioned earlier, the Coordinator is a “supernode” operated by the IOTA Foundation.

IOTA founder David Sønstebø made the following comments on Twitter:

“Whatever the bug is, there is no reason to panic over such a minor issue pre-Coordicide. This is precisely why Coordicide takes time, one can’t execute it until all possible kinks have been ironed out.”

This didn’t really escalate into bigger drama, but worse was to come in February 2020. Then IOTA’s official wallet, Trinity, was hacked. You can read IOTA’s explanation of the events from this link.

It seems that hackers had found a vulnerability in the Trinity wallet a few months earlier. When the time was right, they started to empty IOTA wallet accounts of unfortunate users. IOTA devs quickly shut down the network when they saw something fishy was going on.

iota trinity wallet

The hacking wasn’t technically IOTA’s fault, because the vulnerability was in a code written by a third-party. IOTA added the Moonpay protocol to the wallet making it possible to buy IOTA tokens with a credit card.

There were 46 victims, who lost about 8.52 MIOTA tokens worth 2 million dollars at the time. The positive thing is that IOTA founder David Sønstebø has decided to reimburse victims from his personal funds.

IOTA as an investment

IOTA has gone forward as a project every year. It also offers a clear and detailed roadmap, which you can read at

The next goal is Coordicide, which means removing the Coordinator node from the Tangle and making the network truly distributed. Before this, we’d see Chrysalis update, which will bring in the UTXO model we know from Bitcoin.

GoShimmer is an update to IOTA nodes, which will enable the Coordicide. On top of these, Qubic and Jinn are also being developed constantly.

We shouldn’t forget IOTA Marketplace either. This is a platform for businesses and individuals to buy and sell IoT data. It is being developed and tested by many globally known brands. Check out the IOTA marketplace at

Check the video below, which is a good overview of IOTA’s development in 2020. There is also a good report of the Trinity hack.

So, IOTA is technically very different from other crypto projects. Tangle is one part and focusing on the IoT world is another. There are no clear competitors for IOTA in the crypto world.

IOTA has still performed very poorly in the past few years. MIOTA token didn’t really rocket up even early 2020 when the whole market was moving up nicely. This is probably due to two main reasons: the bad reputation of the project and the tech, which is difficult to understand.

Investors lost MIOTA tokens already in 2017 due to the IOTA wallet, which was still in beta and too difficult to use. When Trinity wallet was finally published, it got hacked too. Tangle, IoT, Qubic, and Jinn are also not well known for investors.

When you look at the project and its development, IOTA has every chance to succeed. It has a long history and hundreds of partners as well. There is also a dedicated team and community behind it.


If you want to purchase MIOTA tokens with fiat money, the best place is probably Bitpanda. It is a reliable, European operator.

Buy MIOTA from Bitpanda

Binance is the leading cryptocurrency marketplace, where you can buy MIOTA with bitcoins or USDT. If you have a Coinbase account, you can buy bitcoins there and send them to Binance and then convert into MIOTA.

The third option is to use eToro, which is also a very popular trading platform.

The official website is The official Reddit page is and the Twitter handle is @iotatoken. There is also lots of information on Youtube. We also recommend listening to the podcast below, where Dominik Schiener (one of the IOTA founders) is interviewed by Anthony Pompliano.

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