The IOTA Foundation was founded by Dominik Schiener and David Sønstebø and is a non-profit organization whose goal is to build the backbone of The Internet of Things (IoT). IoT is becoming increasingly popular as the world becomes more digitized. The vision of Iota is that we’ll live in a world in the future where machines transact and do business with each other completely autonomously.
A use-case might be your self-driving car dropping you off work, then going at work itself to make itself money. It will work as an autonomous taxi-service and when it has no customers it will park itself at a parking lot and pay the parking fee from its own wallet. When it needs fuel it will pay for it by itself, as well as its own insurances, taxes etc.
To realize their dream, the IOTA Foundation understand that they must develop a completely free, decentralized and secure payment-network, that can handle nano transactions, scale with adoption and operate autonomously. Since transaction speeds do not increase with increased adoption on the blockchains we know today, IOTA decided to implement a completely different data type for their network. It is called a Directed Acyclic Graph (DAG).
A DAG consists of nodes and edges. Nodes in this case are transactions and edges connections between transactions. With blockchain transactions are bundled together in blocks by miners and are then connected one-dimensionally, each block points to the next. With a DAG transactions are not bundled together, but each new transaction points to (and verifies) two older ones. There is no need for 3rd parties like miners to reach consensus The users are the miners. When transacting, you are verifying two other transactions in the process. The amount of PoW required from each participant of the network is incredibly tiny, hence usage of the network is virtually free. IOTA call their DAG “The Tangle” and if you visualize how the above would physically look, you’d understand why. You can do so here http://live.iotaknot.com/ .
The technicalities of IOTA makes it impossible for the network to grow from nothing to something without being vulnerable to security breaches. As such IOTA is currently secured by a centralized node, The Coordinator, run by the IOTA Foundation. The Coordinator will be shut down when the network increases enough in size to be secure on its own.
Several other minor exchanges that I do not think is relevant to mention.
