Tangle is the transaction storing and processing mechanism of IOTA, a Cryptocurrency network that was developed to enable fee-less micro-transactions for the growing ecosystem of Internet of Things (IoT) devices.
Tangle is the other name to describe the IOTA’s directed acyclic graph (DAG). It is a data integration and transaction settlement layer developed to focus on the Internet of things (IOT). Tangle acts as a string of individual transactions which are interconnected to one another and stored in a decentralized network node of the participants.
The Tangle, which is the data structure behind IOTA, is a particular kind of directed graph, which holds transactions. Each transaction is represented as a vertex in the graph. When a new transaction joins the tangle, it chooses two previous transactions to approve, adding two new edges to the graph.
How does IOTA Tangle Work?
With new cryptocurrencies appearing, and disappearing every single day, it is becoming increasingly difficult to know which currencies are worth investing in, and which ones are not.
For those that are just starting out, it can be a somewhat daunting prospect, particularly when you factor in the technological jargon, and concepts that work hand in hand with this type of innovation. IOTA is one of these currencies, and Tangle is the system that it works on.
Tangle technology is trying to solve scalability problem with a totally different technology. Tangle is made by sites (transactions on the DAG graph) and Nodes (Issuers of transactions). The verification process is set up, that newly issued transaction is obligated to approve two old transactions. As a result of this solution, the responsibility of verification transactions belongs to everyone, who issue a new transaction. In conclusion, Tangle allows to process transactions in the network without miners and transaction fees.
Blockchain vs Tangle
The brilliance of the Tangle is that transactions are processed in parallel. The Tangle differs from blockchain in two main ways:
IOTA is able to achieve high transaction throughput by parallelizing validation. As the Tangle grows with more transactions, IOTA becomes faster and more secure with transaction finality happening more quickly as network critical mass is approached.
The way consensus is achieved in a blockchain Technology is through a rigorous mechanism that requires multiple parties to “race” against each other in an attempt to add the next block and earn the block rewards. Since “miners” and “users” are decoupled entities, block rewards paid to miners will eventually mostly consist of users’ transaction fees. In the Tangle, “miners” and “users” are no longer decoupled entities.
Transaction fees: There are none, sort of. The cost of writing to the Tangle is performing proof-of-work on two other transactions. There is no “gas” cost or needing to “tip” miners in order to get your transaction faster. In fact, “mining” isn’t even a thing for the Tangle. There isn’t a need for it.
Scalability: The fundamental bottleneck of normal block chains like Bitcoin or Ethereum is the time it takes to achieve consensus by creating new blocks. The Bitcoin blockchain can only handle 3-4 transactions per second. Ethereum, around 15-20. To date, Tangle has seen transaction spikes well into the hundreds of transactions per second. However, it theoretically scales infinitely as larger and larger numbers of devices are writing data.
Lightweight: The core idea behind Tangle is that even devices with very low computing power, like a toaster, can write data to the Tangle, and therefore perform proof-of-work in a reasonable amount of time. How this is achieved gets into “snapshotting”, which is the subject of another blog post.
Data Marketplace: IOTA gives you the ability to sell your data by giving people the ability to subscribe to your data for very small amounts of money. This is a powerful concept, given that one the biggest limiting factors for machine learning and AI applications is access to quality data.
“Quantum-secure”: A common criticism of blockchain, in general, is that quantum computers will be billions of times more capable of performing hashing algorithms than classical computers.
Smart Contracts: These don’t yet exist for IOTA/Tangle, and it’s a gigantic drawback for developers. In fact, the lack of smart contracts will be a showstopper if you want to build any sort of Decentralized Application or “DApp” with IOTA.
Vulnerability: While there have been no publicly documented successful attacks against the Tangle, a common criticism is that it’s mathematically easier for malicious nodes to attack it. For example, it only requires 34% of the total hashing power to successfully attack the Tangle, versus 51% for Bitcoin or Ethereum, etc.