IOTA. Cryptocurrency, which does not need Blockchain. | Business Biceps

With the advent of cryptocurrency Bitcoin, people do not stop to argue that blockchain solves many problems, it is a real revolution in the world of finance, and that he has countless opportunities. Indeed, blockchain has very interesting properties, you can learn about them in the article “What is Blockchain“. But it has one problem, it is very difficult to scale. Bitcoin users have had the opportunity to get acquainted with this problem.

But there was a team of guys who decided to challenge this problem, it is the developers cryptocurrency IOTA. Instead of using the classic for blockchain blocks chain, they decided to use the network, called DAG or Tangle (hence the logo cryptocurrency).

DAG (Directed Acyclic Graph)  – it is storage system, wherein the individual elements refer to each other. Directed means that the relationship between the points always has a definite direction. Acyclic meaning that you can not create cycles within this structure and modify the source data.

Each square represents a single transaction, called Site or Plot. Portion contains information about the sender, the recipient and the number of coins (Figure 1). He also has a connection with two other transactions, they are called the edges or joints, their purpose – check transactions (Figure 2).The image below (Figure 3) you can see a sample of a large coil in the IOTA network. Toward the end of our coil, we find a number of deals that have two or more incoming joints. This means that these transactions are not supported. This so-called coil ends.

I hope you understand a little terminology work IOTA network. Let’s look at how to add a new transaction in a tangle. We need to attach our new deal to one end of the coil. The algorithm randomly selects two of them and ensure that transactions are not contradictory.

If one end of a transaction contains an altered, it is ignored and a new ending is selected. If everything is checked, the transaction is attached to the two previous transactions. This adds our transaction into a ball and verifies two other transactions. Now our business is part of the coil and becomes the new end (Figure 4).

This method does IOTA tangle incredibly scalable. For each transaction, added into a ball, supported by two other transactions. This means that the network is not slowed down by a large flow of transactions.

This is to be trusted?

You may be a reasonable question, how do we know that we can trust the deal? In traditional Blockchain everything is clear, we use the number of confirmations to check whether to trust unit. And what about in the IOTA?

In fact, there are not many differences. IOTA network has approximately the same testing equipment as well as classic blockchain. Each segment has weight. You can see it in the picture, this number shows the amount of work done by the node to complete the transaction. In other words, the larger the number, the more time spent node to perform the transaction. Each transaction also has a total weight is the sum of its own weight + total weight of all transactions that confirm the transaction. It seems rather complicated, but it’s true.

Below, we see an example of a coil in which each transaction has a weight of 1 unit. Let’s check out how reliable the transaction is highlighted in pink. To do this, we need to calculate its total weight. Sum up the weight of two approved transactions that it confirmed, also summarize the transaction confirmed that, in turn, two other transactions, etc. Summary plot of the weight is 6 units (Fig. 6).

Transactions with high cumulative weight, tend to be older and have a direct or indirect verification. Thus, we can trust these transactions more than others.

So now we know what a tangle of IOTA and how it works. But what advantage he has against traditional blokcheynov? Tangle IOTA solves two big problems: Scalability and miners.

Scalability

As we have already realized, the IOTA network becomes faster only when there is more transactions. This means that the IOTA can handle a virtually unlimited number of transactions per second, while the traditional blockchain can handle only a few.

But there is another aspect of scalability, many of whom, for some reason, forget – this storage. In blockchain you need a full copy of the string before you can start adding new transactions. Blockchain bitcoin, currently weighs 150 gigabytes, and continues to grow. Keeping all of this data is very problematic for some devices, and over time will become even more difficult.

Tangle IOTA much easier and simpler. To add a transaction does not need a full copy of the coil, it requires only a small part of what makes IOTA network is much more promising.

Miners

For IOTA network do not need miners. Typically miners create blocks and check transactions. For this hard work miners are paid on each transaction confirmed them. But no network IOTA miners, and therefore no transfer fee. Sending funds IOTA network is free.

Now you know how it works IOTA network and how it differs from the classical blockchain. Stay Business Biceps, ahead of you expect a lot of interesting and useful.

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