IOTA is neither blockchain-based, nor driven by any of the commonly strapped consensus protocols that coordinate activity and designate roles within the network/system (such as Proof-of-Work, Proof-of-Stake, etc.)
IOTA instead employs a DAG (Directed Acyclic Graph) topology in how inter-dependencies and relationships between events occurring are structured in the distributed ledger, whose function is to guarantee the integrity of the data flowing within the system. DAGs generally allow for much more flexibility and range of possible implementations (of algorithms, programs, strategies, etc.) in a wide variety of conceivable applications and scenarios.
DAG: chains of transactions without blocks.
IOTA is particularly geared towards the future landscape of the Internet-of-Things and the explosion of constantly absorbed data accompanying those networks of connected devices (e.g., sensors and actuators) on a global scale. As such, IOTA focuses on the emerging machine-to-machine economies and their associated markets (e.g., data-driven insights marketplace, machine learning and AI, outsourced computations and fog computing, etc.) – “data is the new crude”, as is often said these days.
The DIKW Pyramid/Hierarchy, used to represent the structural-functional relationships between data, information, knowledge and wisdom. “Typically information is defined in terms of data, knowledge in terms of information, and wisdom in terms of knowledge” (Rowley, 2007).
One of IOTA’s core founders, Belarus-based Sergei Ivancheglo (better known as Come-from-Beyond), is well-known in the “crypto” community since the early days of bitcointalk.org and as the creator of the NXT platform, which marked the first successful implementation of a Proof-of-Stake consensus.
Other founding members include Mathematics Professor Serguei Popov and Norwegian David Sønstebø. As an entity, IOTA itself is based/registered as a non-profit foundation in Berlin, Germany and dedicated to developing industry standards and open source protocols for the IoT – a largely uncharted territory, but one of critical importance in the future world on the horizon (just like quantum-proof cryptography) that will inevitably determine and shape the dynamics of interaction and nature of governance in many domains, both institutional and socio-technical/socio-economic.
IOTA combines a number of exotic technologies in what is often seen as an unconventional and unorthodox approach to distributed systems design and engineering – it’s choice of ternary-based logic circuitry baffling many. Since hardware/processors in use today employ binary (zeroes and ones), while balanced ternary (-1, 0, 1) is mostly limited to specialized custom hardware in research labs, IOTA’s hardware component – the trinary JINN microprocessor, intended to support large-scale distributed computing, is integral to the project’s vision and has been quietly in the making since 2014 (IOTA’s reference implementation presently emulating ternary logic on binary circuitry).