IOTA is built around the mIOTA cryptocurrency which uses tangle technology based on decentralized acyclic graph (DAG), rather than blockchain as in the case of bitcoin. There is less overhead with tangle as the duties of verifying transactions are shared between device nodes. When a transaction is made, the devices in the transaction verify the two previous transactions. This is in contrast to blockchain where the entire ledger is verified in processing intensive mining on separate computers. By sharing the load of verification between devices, the need for mining is eliminated.
The mIOTA cryptocurrency is limited to micro-transactions. (This term might be less likely than language like “permission-less transaction” to bring to mind a self-emptying wallet.) Gartner research claims that transactions of IoT devices are likely to reach 20.4 billion by 2020. The currency for devices was created with an inherent cap on the total amount of 27 quadrillion.
This distributed ledger makes it possible for IoT devices to carry out transactions without external support. This independent transaction system might be used, for example, when a smart fridge orders food based on a tallied list of used groceries, or a vending machine pays to be resupplied, perhaps by drone stock drop.