Estimated reading: 2 mins

What is the IOTA Tangle?

Did you know that there are several types of blockchain technology? Here we will explain how the IOTA tangle works. Let’s put it into perspective. Bitcoin handles 3-4 transactions per second which compared to Visa’s 1,700 isn’t a lot! So IOTA came up with the concept of the tangle or DAG (directed acyclic graph) storage system to make transactions faster, free and extremely scalable.
IOTA is the ‘Internet-of-Things’ that enables business-2-business models by making every technological resource into a service traded in real time with no fees. For example, data storage, electric car charging, Fitbit data, internet gateways and solar grids.

How does this tangle work?

One transaction has a link to two other transactions, referred to as edges, and they validate the transactions. The new transactions that are added to the tangle, they do not have edges and are unconfirmed; these are the tips of the tangle.
With a new transaction, the algorithm selects two ‘tips of the tangle’ at random, which then adds to the tangle and verifies two other transactions. The new transaction is now the new tip, which means that the more transactions that are received, the faster the process becomes.
Usually, to trust a block, there must be several transactions, but for IOTA each transaction has a ‘weight’, showing how much work the node has done for each transaction, the higher the number, the more proof-of-work. It also has a cumulative weight which is the sum of the connecting transactions. They are the weight from the previous transactions until the ‘tip of the tangle’. The older the transaction, the more cumulative weight and the more trustworthy it is.
You do not need a full copy of the tangle to add transactions. You only need a small part of the tangle to create and verify transactions, so storage is far easier. IOTA also has no miners which mean no fees so moving and spending IOTA is entirely free.

Why is this different to Bitcoin?

IOTA is a response to all the shortcomings of Bitcoin and other early cryptocurrencies. IOTA, unlike Bitcoin, has no centralisation in the respect that mining happens by a small number of large companies. This results in a small group of commercial interests wielding a significant amount of control over those blockchains.
Mining for many cryptocurrencies involves huge amounts of electricity. Both of these issues do not exist with IOTA due to traditional mining not being done away with.

 

Want to learn more about blockchain technology?

See this post on Blockchain 3.0: the next generation of blockchain technology

Learn about the 5 Key Differences Between Hard and Soft Forks

Easily set up your IOTA Wallet Seed

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