The comparison between Bitcoin and IOTA seems legit as they are the first products of two different ledger based digitized technologies i.e. Blockchain and Tangle respectively. Though Blockchain is still at infancy, it has managed to take over world’s leading industries. Businesses are incorporating this technology in their process to smoothen their transactions. But then there are certain issues that are difficult to fix here. When it comes to Tangle, it is ready to solve all the problems faced by Blockchain technology. Let’s understand how!
What is Blockchain and Tangle?
Blockchain: A distributed data storage network, where the information is stored in blocks and they are cryptographically protected. Bitcoin and other cryptocurrencies are based on Blockchain.
Blockchain has miners and transaction fees. It has blocks that contains transaction information, has hard fork/soft fork capabilities, uses distributed consensus and HASHCASH for proof of work.
Tangle: Technically called as Directed Acylic Graph (DAG) i.e. a directed graph that consists of finite number of edges and vertices. Here directed means it only points one way, Acylic means it is non-circular and graph in this case means that Tangle itself is the ledger for storing transactions. In this architecture, it is impossible to return to the same vertex you came from. IOTA is based on this concept.
Tangle has zero miners, zero fees, no blocks and hence no hard/soft fork capabilities but it uses distributed consensus and HASHCASH lite for proof of work. Also, Tangle offers quantum security and offline capabilities.
How do They Work?
The major difference between these technologies is the way they verify transactions.
Blockchain: Each node of the Blockchain network receives a message, whenever a transaction is performed. These nodes then update their copy of bitcoin ledger to show the changes. This means, the transaction is included on the miner’s block with each transaction. But Blockchain is getting slower and congested as more users are coming in, resulting in higher transaction fee.
P.S. Higher the transaction fee, quicker the confirmation of transaction.
Tangle: Whenever a business is performed via Tangle and a new transaction is performed, the latest transaction must check and approve the last two transactions. Larger the users, more the transactions to approve two previous transactions, resulting in a faster and improved network. This technology is free and doesn’t require any transaction fee.
Blockchain vs Tangle
Blockchain gets slower as more users come in while Tangle works in the opposite way i.e. more the users, faster the network.
Time taken to confirm a transaction in Blockchain is longer as compared to Tangle. Sometimes, it takes 12 hours and at times a day or two depending on the fee offered for transaction. Whereas in Tangle, less users are causing the system to run slower. But once, this technology is widely accepted and used, it will become faster.
Using bitcoin and other cryptocurrencies for microtransactions via Blockchain is highly expensive. It doesn’t make sense to pay transaction fee of $3 to send a payment of $5. It means more traffic on the Blockchain, higher will be the transaction fee, slower will be the speed. While Tangle is feeless for both larger and smaller payments, making IOTA and Tangle perfect for microtransactions.
More number of users on Blockchain indicates less efficiency in transactions. They take much longer time to confirm a transaction while Tangle is scalable and can handle higher volume of transactions over time.
Next Read: IoT chain: Blockchain Based Operating System
For now, we are facing two major tech problems that will only worsen in coming future i.e. security of IoT and limitations of Blockchain technology. Considering recent massive DDoS attacks and several issues in Blockchain, IOTA and Tangle can be considered as a better alternative in case Blockchain technology crashes. For now, we have to just wait to see the future of cryptographic technology. If you have any opinion to share, please comment in the section below.