IOTA — The Next Big Thing?

IOTA May Eventually Out-Blockchain The Blockchain

Blockchain technology is no longer a secret code known only by black-hat hackers and underground splinter groups. Instead, the nascent technology is being deployed on what seems to be a limitless number of industry platformsand financial corporations. With all this massive adoption of Blockchain, some have argued that it is the technological equivalent of the internet, and will disrupt everything.

However, one company believes that Blockchain just the first iteration of a distributed technology that will eventually take over all data exchange throughout the world. That company, called IOTA, has created a technological upgrade to blockchain technology that it calls ‘Tangle,’ and is hyped as ‘out-block chaining the blockchain.’

The Tangled Web?

Tangle is not blockchain technology. Instead, according to its creators, it is the ‘next step in evolution’ of the blockchain technology. Tangle is a system of interconnected nodes that simultaneously validate transactions to participate in the network. This means that validation is, in itself, the means of creating transactions, and vice versa. The system in this way is self-validating, and self-regenerating.

Why is this important as an upgrade from traditional blockchain technology? The answer is multifaceted. First and foremost, the Tangle system provides a methodology for transactions that can be processed and verified on the distributed ledger without paying transaction fees.

Tangle creates a massive web of interconnected nodes, all of which are validating transactions to create transactions. Rather than the bifurcation of ‘miners’ and ‘users’ as in traditional blockchain iterations, Tangle unites these groups into single nodes, each of which functions to create, build, and validate the ledger.

Systems without transaction fees are critical to the ongoing development of distributed ledger technology, and particularly regarding the Internet of Things (IoT). As the IoT grows (one source suggests that as many as 80 billion devices will be connected to the internet by 2025), the need for data transfer and monetization via microtransactions will grow exponentially.

However, in traditional blockchain technology, these microtransactions carry with them fees that are higher than the actual transaction itself. Such a system is unsustainable, from IOTA’s point of view. With the fee-less system created by validating/creating nodes, the platform can run without fees and the constant bickering of the two opposing halves of the blockchain ecosystem.

Wow…That Was Fast

Tangle, on the other hand, creates a web of transaction validation nodes.

That means that each transaction must only be verified by the previous two transactions before it, and can, therefore, be validated at the speed that’s radically faster than anything the traditional blockchain is capable of producing.

However, not only does the rapid validation process occur, but it also has the same level of security and trust that traditional blockchain systems maintain. Because each transaction is required to confirm two previous transactions before itself being validated, the interconnectedness of the distributed ledger is supported, and any variation is immediately known.

When variation appears (that is, non-validated transactions), they can be immediately eliminated from the ledger for non-validation reasons. In this way, the trust of the interconnected node system is maintained, and the resultant ledger is ‘distributed’ and entirely immutable, as with the traditional blockchain platform.

I Guess It Works…

Should users have any doubt about the validity of the Tangle system, the recent agreement to handle microtransactions and data control for a massive number of participating corporations should remove all doubt. The deal, which includes names like Microsoft, Fujitsu, Bosch, Deutsche Bank Telekom, will enable business-to-business data interactions.

The participants have sent the IOTA cryptocurrency (MIOTA) through the roof in recent days as the reality that the company’s system is gaining massive traction for IoT and data usage internationally has been sinking in.The price for the coin has risen 300% in just the last week, with substantial upward pressure continuing.

Whether IOTA’s Tangle system is the answer for data transfer on the internet of things remains to be seen. However, it appears clear that the need for blockchain technology and its derivatives will continue into the future.

This story is published in The Startup, Medium’s largest entrepreneurship publication followed by 298,432+ people.

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