IOTA and the “tangle” AKA The DAG, is a new take on blockchain and peer to peer payments / decentralized ledger keeping. The internet of things is a common phrase tossed around these days and basically means exactly what it sounds like; the intertwining and communicating of “things”. So maybe your phone or your TV remote control communicating and interacting with your car or even perhaps your shoes! Basically these are boring examples as surely you can think up some gadgets or objects in your day to day life that would be interesting if they interacted with each other. Founded by David Sonstebo and a solid team of developers this open-source project popped onto the scene in early 2017 and is currently trading on Bitfinex at just under $.50 USD. It can claim one of the top 10 market caps at just over 1.3 billion USD and only is actively exchanged on one exchange so far, which is quite a feat in its own. IOTA and the tangles source code has stood the tests and audits of MIT students and professors recently and they claim that, although it’s young and a few bugs found, it for the most part gets an “A” on it’s source code audit.
The best way to explain the difference in a Blockchain and the Tangle would be to look at the following diagram and snippet from the IOTA whitepaper;
‘In general, a tangle-based cryptocurrency works in the following way. Instead
of the global blockchain, there is a DAG that we call the tangle. The transactions
issued by nodes constitute the site set of the tangle graph, which is the ledger for
storing transactions. The edge set of the tangle is obtained in the following way:
when a new transaction arrives, it must approve two1 previous transactions. these
approvals are represented by directed edges, as shown in Figure 12. If there is nota directed edge between transaction A and transaction B, but there is a directed
path of length at least two from A to B, we say that A indirectly approves B. There
is also the “genesis” transaction, which is approved either directly or indirectly by
all other transactions (Figure 2). The genesis is described in the following way. In
the beginning of the tangle, there was an address with a balance that contained all
of the tokens. The genesis transaction sent these tokens to several other “founder”
addresses. Let us stress that all of the tokens were created in the genesis transaction.
No tokens will be created in the future, and there will be no mining in the sense that
miners receive monetary rewards “out of thin air”.’
Fee-less, peer-to-peer, open source and publicly verifiable.. This technology is potentially disruptive to our favorite disruption the blockchain! We believe there’s plenty of room for both as not all purposes could be served with the tangle model and vice versa. This coin is a must own for this reason alone though, it’s currently the ultimate hedge to a portfolio of cryptocurrencies in a sense, yet at the same time IOTA’s price doesn’t traditionally run, or necessarily need to run inversely with bitcoin either, making it even more attractive.
We think of IOTA and the Tangle like this potentially; The blockchain and bitcoin in 2009. Brand new, unexplored mostly and very ripe. So IOTA being the first coin to market using this technology in part makes it the bitcoin of the tangle. Taper your excitement though, this technology is young and yet to be fully proven to be as dependable or util as blockchain. The second factor to consider is the current market cap already has a great deal of the hidden/potential value priced in, e.g. the hidden and potential value bitcoin and blockchain created since inception represented as a price from genesis to current price was exponentially greater than the delta in market cap upon release of IOTA tokens and where it could land in the same given amount of time. But then again I guess we shall see.
In conclusion, IOTA is a strong project and proposal to FinTech, PayTech and technology in general and we recommend not sleeping on it friends.