What is IOTA Cryptocurrency?
IOTA is a public blockchain is different from Bitcoin or Ethereum because it uses Tangle technology at the core. The Tangle is a new type of a distributed ledger that is based on a Directed Acyclic Graph (DAG) meaning there are no blocks, no chains, and no miners. We will look at the technology in detail.
First, let us start with the history of the organization behind IOTA:
History of IOTA Foundation
It was initially funded through a December 2015 crowd sale where approximately $500,000 worth of cryptocurrencies were raised. All of the token supply was issued to the crowd sale participants, with no tokens reserved for founders, developers or advisors. This is rare in the cryptocurrency industry.
IOTA’s founding team did not keep any IOTA tokens for themselves initially. The community was generous enough to donate about 5% of the total supply to IOTA Foundation, the non-profit that runs IOTA.
The team released software called TRINITY, which allows users to buy IOTA tokens directly using android, iOS, PC, Mac, and Linux.
How does IOTA work?
IOTA was born in the cryptocurrency bull market of 2017. This was a time when hundreds of blockchain products flooded the market. Since the inception of Bitcoin and later with the development of Ethereum, every project had been trying to solve different use cases.
However, every project had one big limitation. Blockchain did not scale well. Even in 2020, no blockchain project has scaled to the extent that they can compete with Visa. Bitcoin’s Layer 1 still processes only 7 transactions per second. For a blockchain to be used by a global audience, this needs to scale exponentially.
This is exactly the kind of problem that the creators of IOTA wanted to solve. Instead of using a blockchain, IOTA using something called DAG (Directed Acyclic Graph) or Tangle. Directed means that the link between these items always have a direction and Acyclic means that you cannot create loops inside the structure. Let's take an example of a Tangle.
Each square represents a single transaction and is also called a site that contains the details of the transaction such as sender, receiver and amount. It also has a connection to other transactions represented by arrows. These are called Edges and they validate the transaction.
When a new transaction is to be added, two of the tips of a site are selected at random through an algorithm. It then verifies the validity of the site. In turn, this process of adding a new transaction verifies another transaction and our transaction becomes the new tip of Tangle.
This technique makes IOTA’s Tangle incredibly scalable. Every new transaction verifies two other transactions. The network does not slow down as the volume of transactions go up. In-fact it speeds up.
How does Trinity work?
Trinity is a virtual wallet software developed by IOTA Technologies for the buying and selling of IOTA tokens. It is a simple Graphical User Interface (GUI) that is easy to understand, fast and reliable. It is password protected and encrypted. The home page of the software is very simple but powerful. It shows the history of transactions and purchases. One can send or receive IOTA tokens through the computer-generated encrypted hash address which is a one-time-use address. It also shows the stock value of IOTA tokens with respect to the U.S Dollar.
Where to buy IOTA cryptocurrency?
After the background, we address the main question - where can I buy IOTA? You can buy IOTA tokens from the official Trinity wallet or you have other alternatives.
|Exchange Name||Transaction Fees||Payment Method(s)||Pros||Cons|
|Etoro||No fees for unleveraged trading but a spread of 2.45% for IOTA||Credit card, Debit card, Paypal, Wire Transfer, Local Online Banking||
|Binance||0.1%||Bank transfers, Debit cards, Wire transfers, Cryptocurrencies||
|Coinbase||1.49% or a fixed fee||Credit card, Debit card, Paypal, Cryptocurrencies||
|Paxful||0% for maker / 1% for taker||Credit card, Cash, Paypal, Western Union, Cryptocurrencies||
How to buy IOTA - a step-by-step process
Buying IOTA on Etoro
You can buy it through eToro’s trading platform. With Etoro, you can trade IOTA using fiat currency like USD, Euro, etc.
- Sign up for an account at eToro. Click the Signup button on the top right
- Verify your email address
- To deposit money in eToro, you need to pick a payment method first. You can choose Paypal, Skrill, pay via Credit/debit card or Wire Transfer the money into eToro from your bank account
- eToro requires depositing a minimum of £200 into the account. This money can be used for buying different tokens if you want to buy less of IOTA
- On the top menu, click on “Top Markets” and select Cryptocurrencies
- You will see a search box for trading pairs. Type IOTA/Euro or IOTA/GBP depending on what you have in your account. You can select IOTA price GBP and pay
- Click on “Trade” and you will see the screen to get it with the current price and a graph on it.
Buying IOTA on Binance
Binance is a leading crypto exchange. If you want to buy cryptocurrencies with your local fiat currency – like US dollars or Japanese Yen – you should purchase Bitcoin or Ether from another exchange. An exchange such as Coinbase can be easy for new traders who want to buy or hold cryptocurrencies.
A step-by-step process for Binance:
- Go to www.binance.com and register
- Verify your Binance account and submit all the documents they ask for
- Enable 2-Factor Authentication to protect your account
- Send your BTC or ETH to Binance deposit address
- Alternatively, you could buy BTC via one of Binance’s Fiat Gateways. These gateways work in some countries only. So check if they work in your country first
- Wait for the confirmation of deposit
- Go to the exchange screen by clicking “Exchange > Basic” on the top left menu
- On the right-hand side, select the trading pair IOTA/BTC or IOTA/ETH
- You will see a graph in the middle and a buy box below that
- Click on the ‘Market’ option
- Enter the BTC / ETH amount that you want to buy for
- Click the buy button and you are done! Tokens should be in your Binance account
Buying IOTA on Gate.io
Steps to buy on Gate.io:
- Create an account
- Verify email address
- Set up 2-Factor authentication for security
- Deposit BTC / ETH / USD on Gate.io. Gate.io does not support Fiat deposits
- Click on the Markets in the top menu
- On the left panel, select IOTA(MIOTA) with BTC/ETH/USD
- Below the graph, enter the amount you wish to buy and it will reflect in your account
Buying on Coinbase
Coinbase is one of the most popular crypto exchanges in the world. It provides a brokerage service as well as a trading platform. However, they are known for their high fees. If you are looking for an easy way to buy some tokens, this may be the best place to start before you graduate to more advanced exchanges.
Steps to buy on Coinbase:
- Sign up for an account
- Verify your email and identity
- Set up 2-Factor Authentication to secure your account
- Deposit money in your Coinbase account. Using a credit or debit card is faster but attracts more fees than a Bank Transfer
- Click on “Buy/Sell” from the top menu
- Select IOTA from the search. Check the price.
- Enter the amount you want to buy and click on “Buy IOTA”
How to store IOTA securely?
Blockchain has been touted as the most secure database or ledger in the world. It also gives the power back to the common users to control their crypto tokens. This also means that the users have to shoulder the responsibility of storing their tokens safely. Most hacks in the blockchain world are due to a mistake or a slip by the users or a centralized exchange that takes custody the tokens.
IOTA faced a controversy recently as $4 million worth of tokens were stolen by hackers. This led to a heated discussion about IOTA’s security. But it was later discovered that the attack did not break the IOTA blockchain. The hackers actually used advanced phishing techniques to lure the token holders into sharing their sensitive information.
IOTA’s co-founder David Sønstebø reminded the community that they are responsible to keep their tokens secure and reiterated the fact that decentralization has its advantages but also means the users have the responsibility of being their own banks.
In light of such responsibility, here are a couple of things that users can do to keep their tokens safe:
- Use only legit and trusted software like Trinity
Generate a Strong Seed
The Trinity generates a private key for users to access their account.
Change the Seed often
Store the Seed in a private and secure place that only you can access.
You can purchase IOTA and store it in Trinity IOTA wallet:
- Download the Trinity software from https://trinity.iota.org/
- Register yourself by following the instructions on the screen
- Once you have registered click on the Buy button
- Enter your country
- Enter your email id, a verification mail will be sent to your email and you will be asked to enter the verification code
- Select your Trinity account
- Enter the amount you want to purchase, you will be given the amount of IOTA tokens you will be getting
- Enter your details as asked on the screen
- Enter your billing address
- Enter your payment information
- And you’re done! Your IOTA tokens should reflect on the home page of your IOTA wallet
Ledger Nano X - Hardware wallet
Steps to store IOTA on Ledger:
- Once you purchase Ledger, plug it into your machine with the cable provided
- Go to http://ledgerwallet.com/start
- Choose your model of Ledger
- Install Ledger Manager Chrome Extension
- Upgrade your firmware, if there is an option
- In the app, you will see a list of cryptocurrencies. Select IOTA
- The app will ask if you want to allow this installation. Click on the button on the hardware wallet to allow installation
- Scroll by pressing the button on top right and choose appropriate cryptocurrency on your Ledger screen
- Now open the IOTA app on your Ledger Nano by clicking the top two buttons at the same time
- Go to Settings > Browser Support > Yes
- On your computer screen, there will be a blue button which says “Sign in with Ledger”. Click on that
- Once done, you will see your public key and your balance on the screen
- Send your Lumens from your exchange to this public address. Wait for the blockchain to register the transaction
- You are done!
Always test a small amount before you send a large amount.
Frequently asked questions
How to buy IOTA with a credit card?
You can buy IOTA tokens with a credit card/debit card from Trinity wallet, eToro etc.
How to buy IOTA with USD or any other currency?
You can use a number of exchanges like eToro or Coinbase.
How to buy IOTA in Canada?
You can use exchanges like Bitbuy, Kraken, Coinsquare and NDAX to trade IOTA in Canada.
How to buy IOTA cryptocurrency with Paypal?
You can use Coinbase or Paxful to use Paypal.