The next generation of Distributed Ledger Technology
The IOTA Foundation is a non-profit foundation with the purpose of developing, maintaining and standardizing new open source protocols based on distributed ledger technologies (DLT). IOTA created the first open-source distributed ledger that is built to power the future of the Internet of Things (IoT) and cryptocurrency with feeless microtransactions and data integrity for machines.
The IOTA Tangle provides a revolutionary open source distributed ledger technology that is scalable, lightweight and makes it possible to transfer value or data without any transaction fees. It is particularly suited for the Internet of Things due to its asynchronous nature and low overhead requirements. In IOTA, there are no minors, instead each user is an equal validator.
- Users must verify 2 random transactions before their transaction can be processed
- Gives users the same incentives and rewards, compared to traditional bitcoin minors who profit from verifying blocks
- Fee-less transactions
- Efficiency on the ledger increases with increase in users
- Tangle uses a Directed Acyclic graph instead of Blockchain technology
- Capability to spread large amounts of information across the network
For more information on IOTA’s Tangle, checkout this article.
Tangle Compared to Blockchain
While Blockchain has been the biggest boom of 2017-18 there are specific qualities of the Tangle that gives it an edge against the other cryptocurrency technologies.
More efficient the more activity occurs on the ledger - Unlike Blockchains, which are inherently limited by the bottleneck of block size, and rigid chain, which leads to congestion and sky rocking fees when usage goes up, This is because each time a user uses the network, they also validate other user’s transactions.
No Fees – Because there is no decoupling of validation of the distributed ledger in IOTA Tangle, unlike Blockchain, it means that there are no other parties to compensate for doing the validation. Therefore, when transactions are issued in IOTA there is absolutely no fee attached to them. This enables for an entirely new economic model of real time fine granular payments.
Decentralized Network - There are no mining benefits with IOTA since it is a completely decentralized network. It would not attract mining farms that have enormous advantage and influence in the Bitcoin space for example.