IOTA — The DLT based on physics

All good stories have tough beginnings, IOTA especially so. It has been the black sheep of cryptocurrency for many years. Many of them rightfully so. However its persistence in innovation and (sometimes delayed) humility in failure have led it on a path that can now resonate to the masses.

Let’s first explain some of the key innovations around IOTA, and where it is going.

The DAG
Blockchains enable only a single block at a time to be confirmed in linear fashion — lumping all transactions together and processing in a string, however DLT’s such as IOTA use a DAG (Directed acyclic graph), that allows many transactions to be placed at the same time as long as they are all travelling in the same direction. IOTA’s DAG is called the Tangle, it was the first of its kind in DLT.

The Consensus

The current consensus today uses a coordinator, a single node that confirms all transactions. This is has rightfully been a cause of criticism since inception, however it is simply a boot-strapping mechanism that has been put in place to prevent or limit unfortunate incidents, until the final solution is implemented. Although the coordinator has served its purpose (much like bitcoin had its own), it will shortly be a thing of the past — the Nectar implementation will be ready for incentivized testing within the next months.

The consensus that will be implemented for coordicide (removal of the centralized coordinator) will be FPC (fast probablalistic consensus). This consensus mechanism draws many parallels to the physical world, so much so — that the test network is called ‘Shimmer’ after the bees that shimmer when an attack is perceived.

However, I think that the parallels to physics go much deeper.

With the removal of the coordinator, there is a need to add additional control, IOTA has achieved hilariously, and brilliantly by implementing ‘Mana’. Mana being the life-force behind IOTA that grows and dissipates over time (much like video game life force disappears when used a lot). This acts as a spam prevention mechanism, and allows access to those that have gained access to carry out transactions.

Just like water and vapor are different states of the same thing, IOTA can simultaneously act as transactional and consensus mana. If the IOTA is moved too often, the mana behind it will have less strength to flow through the network (i.e it will become more like vapour than water). Larger pools (higher IOTA quantities) of water will be prioritized over others. The consensus mechanism will also filter the water (transactions) so that only clean water comes through.