To understand what IOTA actually is, one should first rule out what it is not. In contrast to Bitcoin, IOTA does not use blockchain technology and does not need miners. Miners are computers in the network who are being paid to contribute to the security of the blockchain. IOTA is based on a directed acyclic graph (DAG), called tangle, in which miners are replaced by a central coordinator. No transaction fees are incurred as a result.

While blockchain slows down and requires more resources the larger the network becomes, a DAG does the exact opposite. The use of the innovative IOTA Tangle technology results in higher scalability and becomes faster and even more secure the more activity there is, according to the founders*. They further assume that it provides sufficient transaction capability and a data transfer layer for the Internet of Things.

To get more Information about how IOTA works in detail, check out the FAQ section on the IOTA website