This document provides an overview of IOTA, a distributed ledger technology designed for the Internet of Things. It summarizes IOTA's Tangle network which uses a directed acyclic graph structure instead of a blockchain. Key points include: IOTA aims to enable micropayments and data transfer between devices; the Tangle reaches consensus in a self-regulating way without fees by having nodes validate two previous transactions; and the tip selection algorithm uses a Markov chain Monte Carlo process to determine the validity of transactions and prevent double-spending attacks.

1. IOTA
Ledger of Things

2. Internet of Things
“50 billion connected
devices in 2020”
-Cisco
Intro-Video

3. Smart Centralization

4. Cloud EVERYTHING
4

5. Potential problems
of IoT
5

6. Single Source of Failure
6

7. Censorship
7

8. Smart Devices, Dumb Network
8

9. Data Transfer
Money Transfer 9

10. Blockchain
“Why the Blockchain
Is the Biggest Thing
Since the Internet” -
NASDAQ
Distributed Ledgers

11. ● Every party has an
individual copy
● Prone to tampering
● High cost to compare
datasets
● No way of verifying the
original dataset
Traditional Ledgers
11
11

12. ● Datasets shared amongst all
parties
● Every party can verify the
datasets of other participants in
the network
● Tampered datasets are excluded
● An immutable single source of
truth is established
Distributed Ledger
12

13. Single Source of Truth
Shared Truth
13

14. Illustration from Bitwage.com
+ = ?
14

15. Blockchain’s Limitations
● Scalability
● Storage
● Bandwidth
● Fees
● No Data Privacy
● Expensive Data Storage
15

16. I o T Requirements
● Low Resource Consumption
● Widespread interoperability
● Billions of nano-transactions
● Data Integrity
16

17. The solution
Rethink from scratch
A revolutionary new
distributed ledger designed for
Machine-to-Machine
interactions.
17

18. Blockchain without the Blocks
and the Chain. What???
Tangle
18

19. ● Limited to Block Size and
Time
● Not scalable
● Transaction Censorship (fee
thresholds)
● Centralization
● Consensus Decoupled
● 80% of miners from China
● ...
“Include my
transaction, here is
my fee”
Blockchain’s Limitations
19

20. Tangle
20

21. Tangle
● Bundles all transactions in a Directed Acyclic
Graph (DAG)
● Completely self-regulating, consensus no longer
decoupled
● Very Scalable. Low overhead Proof-of-Work to
prevent spam
21

22. ● No Fees
● Scalable
● Quantum Proof
● Modular
● Lightweight
● Offline 22

23. $0.01
- $0.01 + $0.01
23

24. Data Integrity
● Data is tamper-proof
● Enables automatic
processes
● Remove humans from the
equation
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25. Scale
Usability
Blockchain
IOTA
Tangle
Scalability
25

26. Go Offline
Offline Tangle Cluster
Main Tangle
26

27. If this then that
Smart Contracts
Turing Completeness
Security
Very Cheap
Scalable
Low Entry Barrier
(based on SQL) 27

28. OUR VISION
28

29. Things
29

30. Sharing Economy 2.0
Anything with a chip in it can be leased Devices trade resources among each other
30

31. No longer bound to machines hardware!
31

32. Cloud, Fog and Mist
EDGECORE
● Real Time Processing
● Avoid network congestion
and signal collisions
● Incentive for interoperability
● Data Integrity
Requirements
32

33. CURRENT
STAGE 33

34. Protocol and Network Statistics
◉ Official launch July 11th
◉ 1 year of development
and testing
◉ Community of 1000+
◉ More than 2m transactions
◉ $60m+ of value transferred
◉ More transactions per
second than any blockchain
34

35. (Unofficial slide)
◉ Tech problems with auto-discovery/slow syncing
and double-spending wallets
◉ Network currently down
◉ Community Management
◉ Funding of Foundation and Big Deal
◉ Anniversary update, Release 1.1, +1 Dev,
+1Bussines, Phase 2 (utility), Exchanges

36. IOTA Foundation
We are an open-source, non-profit Software
Foundation. Goal of the Foundation is it to
establish IOTA as a standard in the IoT stack.

37. Foundation members
David Sønstebø Dominik Schiener Sergey Ivancheglo Serguei Popov

38. USE CASES

39. Bandwidth on demand

40. Supply Chain Visibility
Banks
Insurance Providers
Customs
Importers/Exporters
Shipping Liners
Logistic Companies
10110
00110
01011
< / >

41. Smart-Grid

42. Other Use Cases
● Sensor Data selling & Data Marketplace
● On-demand API access
● Data Integrity (insurance, banking, etc.)

43. and now...
End of IOTA Foundation
presentation

44. ...The Tangle
in more details

45. Skipping over the whitepaper

46. Basics
● DAG Basic Examples (trees, direct, indirect, confirmation)
● Approvment DAG (IOTA) vs Transaction DAG (BTC)
● Main Idea: Issuing a Tx needs PoW (Approving other Tx)
● Approving means
Signature verification &
Check for double spendings
● But which Tx to approve???

47. A bit of terminology
● Genesis & Tips
● (own) weight (∝ amount of PoW)
● cumulative weight ● Score

48. Tip Selection Algorithm
● Only guideline for network, no rule
● Simple strategy: Choose two random tips
● Does not encourage approving tips by lazy nodes
● Because probability that their tips will get approved is equal to
the one of the tips that did real PoW
● Solution: Bias towards end (i.e. tips with high score)

49. Tip Selection Algorithm
● Simple strategy 2: Choose two tips out of the 10% with the
highest scores
● Problem: Vulnerable against double-spending “large weight”-
attack will eventually always succeed

50. Tip Selection Algorithm
● Mitigation strategy: Cap Max weight of transaction
● This drastically decreases probability of attacker
● But he can still beat us by pre-building a parasite-chain

51. A parasite
● Main tangle tip score ≈ Sum of main tangle weights
● Parasite tangle tip score ≈ Sum of main tangle and parasite
chain weights
● Parasite chain can be build without broadcasting
● Idea: main tangle should have more active
hashing power
● which is ∝ cum weight

52. The Final Tip Selection Algorithm
● How do we figure out which tip is on the main tangle?
● We place some „particles“ deep in the tangle
● And let them walk towards the tips
● With affinity to high cumulative weights (MCMC)
● This will very unlikely select lazy tips
● and very unlikely parasite chain tips

53. Double Spending
● Conflicting Tx can exist in the Tangle
● Network has to decide which Tx (SubTangle) will not get
orphaned
● Methodology: Run tip selection Algorithm many times and
see how often the conflicting Tx are (indirectly) approved by
the tips
● Result: Transactions in the subTangle with less hashing power
will eventually get orphaned

54. Interesting Details
● All addresses can only get used once
● Spamming the network actually helps it
● Coordinator helps network until enough nodes are online
● Tx actually have a particular structure (bundles)