IOTA and the Chrysalis network upgrade
What is IOTA?
IOTA is a distributed ledger built for the “internet of everything” as they call it, a network for exchanging value and data between humans and machines. IOTA’s network is called the Tangle, which is not based on a blockchain, but a directed acyclic graph, allowing for parallelised transactions. It immutably records the exchange of data and value. It ensures that the information is trustworthy and cannot be tampered with or destroyed. This network structure was chosen to overcome limitations of traditional blockchains, namely transaction fees, scalability issues and high energy consumption.
The IOTA Foundation created the IOTA token after roughly $500,000 was raised from crowdfunding in 2015. As there are no miners nor stakers, value and data can be transacted without any fees.
IOTA aims to become the backbone of the Internet of Things (IoT). There was a deliberate focus on industries: mobility, healthcare, smart cities, digital identity, or industrial IoT – The overall idea is to enable devices anywhere to exchange value, information, and digital assets with each other. IOTA is posed to play a central role in the next industrial revolution, enabling economic relationships between machines and bridging the human and machine economies. It provides new possibilities for different industries, such as:
- Simplifying collaboration between traders, governments, logistics, and end-consumers and, therefore, enabling faster and more cost-efficient global trading.
- Leveraging the use of data produced by connected mobility devices with increased security, better accessibility and more affordable data.
- Gathering infrastructure data and insights that can be used and shared to benefit residents, visitors, companies, and local governments alike.
- Securing electronic healthcare data and maintaining privacy for new models of care.
A huge variety of projects are being developed using IOTA, and new use cases are being developed every day. As the demand for alternative investment options is growing, IOTA offers an interesting opportunity for future-orientated and tech-savvy investors.
What is the Chrysalis upgrade?
Due to early design decisions, there were certain setbacks in achieving this ambitious goal. However, IOTA reacted to these and continuously improved the protocol, which is now culminating in the so-called Chrysalis network upgrade. Chrysalis is the most extensive upgrade in the history of the IOTA network, touching all aspects of the protocol: libraries, wallets and software implementations developed by the IOTA Foundation.
A few examples of components in the Chrysalis upgrade:
- The new EdDSA signatures allow the protocol to run more efficiently, reducing transaction size, network bandwidth, and processing time. With the Ed25519 signature scheme, reusable addresses will be introduced to the IOTA protocol.
- Alongside this new signature scheme and reusable addresses, IOTA now works with a UTxO model, with which the global state of ownership is recorded with transaction out-puts, the same way as it is done on the Bitcoin blockchain.
- A new signature scheme also changes the way in which addresses are displayed. The Bech32-based address format is shorter, more eligible and, as a result, more user-friendly than the old Tryte-based format.
Furthermore, for those more familiar with IOTA: the Chrysalis upgrade already contains many aspects required for the removal of the Coordinator, a component currently safeguarding value transactions on the IOTA network, similar to milestones in the early Bitcoin network. The upcoming changes introduced by the Chrysalis upgrade provide the basis for removing the coordinator. Companies and organisations building on IOTA do not have to wait until the removal of the Coordinator, expected later this year, for the complete decentralisation of the IOTA network. They can start implementing their business solutions right after the Chrysalis upgrade without fear of major breaking changes with the removal of the Coordinator.
All of these components lead to more usability, increased performance, reduced energy consumption, and stronger security with the IOTA protocol. After the network upgrade, IOTA will form a foundation for upcoming features developed by the Foundation such as smart contracts and tokenisation, while applying industry best-practices for cryptography and usability.
Learn more about the next steps on IOTA’s journey to becoming the backbone of IoT (Internet of Things) by reading our article.
Crypto Finance and IOTA – A long-term partnership
Crypto Finance has been a partner of IOTA since a very early stage and the first professional storage infrastructure solution for the IOTA crypto token worldwide. The group has continuously shared their input and suggestions regarding secure storage solutions for the industry partners and users of the IOTA protocol. The partnership between the Crypto Finance group and IOTA Foundation lay the groundwork to set the course in the crypto industry for the future: Providing open dialogues, healthy feedback culture, and bridges between different sectors, projects, and service providers.
“The inputs from Crypto Finance Group as a partner providing trading and custody solutions to professional institutions were extremely valuable for us during the development of Chrysalis.” comments Jakub Cech, Director of Engineering, IOTA Foundation.
Crypto Finance was one of the voices from the industry that wanted a change from the Winternitz one-time signature scheme (W-OTS) to the EdDSA signature scheme, allowing the reuse of private keys and simplifying the handling of their customers’ token holdings. The enormous improvements in conflict handling due to the change from an account model to a UTXO model are also in accordance with the Crypto Finance Group’s services.
The Crypto Finance self-custody solution is designed to meet the needs of financial intermediaries and significant partners across a variety of industries working on concepts that use IOTA. “We are proud to support the IOTA Chrysalis upgrade with our top-tier infrastructure, as demand increases among our clients and with industry partners for the IOTA token without compromising on security,” says Stijn Vander Straeten, CEO of Crypto Storage AG, the technology division of the Crypto Finance Group.