What is IOTA whitepaper logic and how does Tangle technology revolutionize IoT transactions with zero fees

Tangle DAG Architecture: Zero-Fee Machine-to-Machine Transactions Enabling 20.4 Billion IoT Devices

Unlike traditional blockchain systems that rely on miners and sequential block validation, the Tangle employs a directed acyclic graph structure that fundamentally transforms how machine-to-machine transactions operate. Each transaction in this architecture simultaneously validates two previous transactions, creating a self-validating network that eliminates intermediaries entirely. This parallel validation mechanism enables the system to process transactions without transaction fees, making it economically viable for billions of tiny value exchanges between connected devices.

The DAG-based Tangle architecture scales horizontally rather than encountering bottlenecks like traditional blockchains. As more devices join the network, transaction throughput increases proportionally, supporting up to 20.4 billion IoT devices communicating and transacting seamlessly. This capacity makes zero-fee machine-to-machine transactions practical at scale, addressing a critical requirement for the Internet of Things where individual device transactions must remain economically feasible. The decentralized validation process means every participant contributes to network security simultaneously, creating a resilient infrastructure where transaction confirmation happens through the consensus mechanism inherent to the Tangle structure itself.

Coordicide to IOTA 2.0: Decentralized PoS Consensus and EVM Compatibility Delivering 50,000+ TPS

The Coordicide transition marked a watershed moment for IOTA, eliminating the centralized coordinator that previously governed the network. This evolution introduced decentralized PoS consensus, enabling true network decentralization while maintaining transaction security and finality. IOTA 2.0 now operates as a fully decentralized system where validators participate in consensus through stake-based mechanisms, fundamentally strengthening network resilience.

The redesigned architecture delivers exceptional performance, achieving over 50,000 TPS through innovative consensus mechanisms. IOTA Rebased introduced the Object Model, replacing the traditional UTXO architecture with a structure inspired by proven Layer 1 designs, enhancing state management and scalability. The integration of MoveVM directly on Layer 1 brings sophisticated programmability capabilities, allowing developers to build complex smart contracts and decentralized applications.

EVM compatibility represents another critical advancement, enabling seamless migration of Ethereum-native projects to IOTA's ecosystem. This compatibility layer significantly reduces developer friction and accelerates adoption. The Mysticeti BFT consensus protocol utilizes an uncertified DAG structure, enabling parallel transaction processing and maintaining IOTA's advantage in throughput efficiency.

Practically, gas-sponsored transactions eliminate barriers for end users by allowing developers or businesses to cover transaction fees. This innovation drives mainstream adoption by enabling users to interact with applications without managing cryptocurrency holdings. Furthermore, composable DeFi utilities create building blocks for advanced financial instruments, positioning IOTA as a comprehensive settlement layer for tokenized assets and real-world applications.

Enterprise-Grade Adoption: From TWIN Trade Solutions to BitGo Integration Supporting Institutional Access

IOTA's institutional landscape transformed substantially through BitGo's integration of IOTA Mainnet support, establishing the first regulated custody pathway for U.S. institutional investors. This collaboration represents a critical infrastructure milestone, as BitGo's regulated custody services and insurance mechanisms address long-standing institutional investor concerns regarding secure asset management and compliance standards.

The BitGo integration fundamentally restructures institutional access by providing a compliant framework aligned with U.S. financial regulations. Institutional investors now benefit from regulated custody infrastructure that combines security protocols with insurance coverage, enabling confident participation in IOTA's ecosystem. This regulated custody model removes traditional barriers to institutional capital deployment, particularly for enterprises and funds requiring adherence to stringent compliance frameworks.

Beyond custody solutions, this partnership catalyzes broader enterprise adoption by legitimizing IOTA within institutional investment structures. BitGo's global custody offering positions IOTA alongside established digital assets, while the integration specifically strengthens U.S. market access—a strategic priority for enterprise-grade adoption. The infrastructure maturity demonstrated through this collaboration signals that IOTA has evolved beyond retail-focused applications toward serious institutional consideration.

This enterprise-grade adoption layer proves essential for scaling IoT transaction networks requiring institutional participation. As enterprises evaluate blockchain infrastructure for supply chain and IoT applications, the presence of regulated custody and compliance-aligned frameworks substantially accelerates decision-making and deployment timelines, establishing IOTA as a credible choice for institutional-grade infrastructure.

FAQ

What is the fundamental difference between IOTA's Tangle technology and traditional blockchain?

IOTA's Tangle uses directed acyclic graph (DAG) architecture instead of blocks and chains. It eliminates miners, enables parallel transactions, and achieves zero transaction fees through a distributed confirmation mechanism where users validate each other's transactions.

Why can IOTA achieve zero transaction fees? What is the technical principle?

IOTA uses DAG（Directed Acyclic Graph）technology instead of traditional blockchain. Participants verify transactions directly without mining, eliminating transaction costs. Users perform proof-of-work when sending transactions, replacing fee mechanisms entirely.

How does Tangle technology apply to Internet of Things (IoT) transactions?

Tangle enables direct device-to-device transactions without intermediaries through decentralized networks. It ensures data integrity, reduces transaction fees to zero, and provides secure data exchange channels for IoT devices across distributed networks.

How does the DAG (Directed Acyclic Graph) structure in IOTA whitepaper work?

IOTA's DAG structure, called Tangle, stores each transaction as a node. Every new transaction must validate two previous transactions, creating an interconnected network. This replaces traditional blockchain blocks, enabling feeless transactions through mutual validation without miners.

What advantages does IOTA have over Bitcoin and Ethereum in terms of transaction speed and costs?

IOTA offers zero transaction fees and faster confirmation speeds compared to Bitcoin and Ethereum. Its Tangle technology enables scalability where network efficiency increases with size. This makes IOTA ideal for microtransactions and IoT applications without mining overhead.

How is the security of Tangle technology guaranteed? Are there any risks?

Tangle ensures security through cryptographic verification rather than computational work, making it lightweight for IoT devices. While the network has faced past vulnerabilities like double-spending attacks, IOTA's team continuously optimizes protocols to mitigate threats. Security strengthens as the network matures.

What are the practical application cases of IOTA in real IoT scenarios?

IOTA applies Tangle technology for supply chain tracking, smart logistics, and device-to-device transactions across 20.4 billion connected IoT devices. Its zero-fee architecture enables automated machine economy transactions, industrial data monetization, and autonomous device coordination without intermediaries.

How to participate in the IOTA network? How do ordinary users obtain and use IOTA tokens?

Download an IOTA wallet, create an account, and obtain tokens through exchanges or mining. Use the wallet to send, receive, and manage IOTA tokens. Participate in the Tangle network by performing proof-of-work on transactions.