Are Tangle Networks the next big thing?
If you’re a person keenly interested in cryptocurrencies, the blockchain system and updates in topics of such sort, chances are that you’ve recently come across the concept of Tangle Networks. This novel distributed-ledger transaction system started by the IOTA foundation has even been claimed by many as the Blockchain successor.
Well, is it really? And what’s all the fuss about?
Before we delve into that, let’s take a small peek into the distributed ledger system and cryptocurrencies. What are they?
You’ve certainly heard about Bitcoins (₿) and it's also very probable that you regret not investing in those way back in 2010, after its big burst out in recent times. So, bitcoins are virtual currencies or cryptocurrencies that are transacted digitally based on the blockchain distributed ledger transaction (DLT) system.
Imagine 5 people sitting around a table. Each person pens down their names and the amount of an imaginary currency that they possess. Now for each transaction a person wishes to make, it's noted down on that paper. Once the transactions are done, there’ll be people among these that verify that such a set of transactions did occur to maintain the balance of the currency in circulation for everyone to see. This is exactly how a distributed ledger works.
Now on top of that, imagine that the person verifying the transaction has to solve a problem with the difficulty in regards to his work of compiling ’n’ transactions to get a value that ensures that the entire set of transactions get stored in an immutable block. And each new block would need to verify the cryptically secured previous block for the chain to continue. And bam, that’s Blockchain.
The blockchain is a decentralized system — meaning that there is no central governing authority or point of failure and that it is maintained by the users — one of its greatest strengths. The maintainers are called miners, and certainly no manual labor has to go unpaid. Hence, the miners are rewarded with cryptocurrencies such as bitcoins or ethereums on the block verification. The reward miners get for the verification of transaction is what keeps the system flourishing curiously.
Now coming back to tangle
Understanding IOTA Tangle 101
Consider having your smart TV, automobile or Fridge make automated maintenance, payments, upgrades or any kind of transactions. Or let’s consider a warehouse where the machinery handles data automation and transactions as well. In such systems that replace manual surveillance in an IoT (Internet of Things) network, we’d need a system that’s lightweight and moreover ensures the trust/security of transactions.
With all the benefits that the blockchain brought in, it is important to mention that it was extremely heavy, wasted a lot of resources on transactions, was heavily miner dependent and had low scalability potential. This concern would matter a lot when it comes into events such as machine to machine transactions. That’s exactly where IOTA and Tangle come in.
To define, IOTA is an open-source distributed ledger designed for the IoT ecosystem (Wordplay noice). Its primary innovation is the tangle network which functions with its transaction of IOTA tokens or mIOTA. These tokens can only be purchased with cryptocurrencies. The IOTA Foundation has also released its own mobile wallet for its currency management called the Trinity Wallet.
In case you aren’t familiar with Tangle yet, you may not be very late at all. In fact, it was only released about 4 years ago in 2016. I myself had just discovered it about 3 months back and honestly, it got me hooked. For years, blockchain has been the go-to standard for digital ledger based transaction systems. And then came similar solutions like the Hashgraph (Still a work in progress) and the Tangle, that works towards the same goal except without the block, or the chain. The Tangle network is based on an architecture known as Directed Acyclic Graphs (DAGs).
In layman terms, the Tangle Network is to mIOTA, what the Blockchain is to Bitcoins — It is the transaction settlement mode or the data integrity layer, the immutable architecture that handles its transactions.
Now how does the DAG work as opposed to the chain system?
Nodes. Instead of the classic block system, the tangle consists of non-sequential acyclic nodes connected to multiple other nodes in a tangle in a particular direction. This parallel orientation of nodes makes it easy to process multiple transactions simultaneously. Each transaction is confirmed by referencing two previous transactions, which reduces the time and memory to confirm a transaction. At the end, a Proof-of-work (PoW) puzzle is solved to confirm the transaction. (Check this out for an illustrated explanation)
Oh did I mention, that none of this has to be done by a miner?
That’s where the biggest goal of the Tangle system lies — reducing computational costs, power consumption and resources. The tangle network operates without miners and mining fees and solely depends on algorithmic methods/ post-quantum cryptography to verify transactions (Hey check out the Markov Chain Monte Carlo algorithm used for the node selection by Tangle). This enables mIOTA to be used across a wide variety of devices and machines with different power requirements and facilitating micro-transactions.
Blockchains vs Tangle — A quick overview
According to ZDNet,
IOTA promises to achieve the same benefits that blockchain-based DLTs bring — decentralization, distribution, immutability and trust — but remove the downsides of wasted resources associated with mining as well as transaction costs.
- Structure: While the blockchain is a DLT based on sequential chains of cryptographic blocks of data, the Tangle network is a non-sequential set of DAG nodes that flow in a single direction. Since, it doesn’t cycle back, the tangle allows for a more rapid transfer of data.
- Miner Fee: While the blockchain is extremely reliable on Miners and Miner fees for its maintenance, Tangle provides a miner-free environment, hence cutting down on resource wastage and costs.
- Scalability: Being extremely heavy, over time, the blockchain gets slower and less productive while it’s the polar opposite in case of the lightweight tangle that thrives on its scalability, being a boon especially when it comes to IoT micro/nano payments. The more the nodes, the faster the verification and better the graph.
- Decentralization and Security: As of now, the blockchain does have an advantage in this. The Tangle network is kind of centralized at this point and I’ll explain why below. However, the tangle network does boast about post-quantum cryptography to verify transactions besides other features that will certainly make it a security preference in the future. Currently the tangle verification consensus is based on the Milestone transaction verification placed by the Coordinator node (Yes, we’ll see this below too), which would also move towards purely Proof of Concept based in the future.
- Private/Public Ledger system: We’ve seen how both of these measure as public ledgers. The Tangle system has two public networks of nodes — MainNet and DevNet (expired, now ComNet maintained by the community), the former working on IOTA tokens, and the latter working free of cost for developer testing.
When it comes to private ledger systems, Smart Contracts in a blockchain does have an edge over the current tangle system. Nevertheless, the IOTA Qubic is a worthy competitor in its development stages.
The tangle is packed with innovation. However, in its run so far, it hasn’t been free of vulnerabilities and it has been compromised multiple times. Its hash function called Curl had been diagnosed with some serious issues at the initial stages. Therefore to ensure security, the Tangle has been using a central server called a ‘Coordinator Node’ as a single point of failure to manage all the transactions as of now, thus not making it really decentralized at the moment. Yet, this is just a temporary measure until the system is stable to function decentralized. In fact, it is making a move to be completely decentralized by 2021 with the phase 1/3 of its Project Chrysalis in motion.
Well, is it the next big thing? You really cant say. But the IOTA and Tangle is today, where the Bitcoin and Blockchain was in 2010.
Nevertheless, it is rapidly gaining market in everything that touches the network of things. Proof of Concepts are being developed by corporates such as Bosch and automotive giants Volkswagen, Jaguar, Land Rover, etc. It’s also applied in smart city testbeds, supply chain systems and is used as an immutable storage and validation mechanism in the Project Alvarium by the Linux foundation and Dell Technologies.
It certainly is a bold improvement to the transaction system, a very necessary one too when it comes to cost-resource efficiency and microtransactions. In the bubble of cryptocurrency, only time can tell what survives and what doesn’t. IOTA’s value has been pretty low comparatively, but it's still at its inception stages and the network is considerably small — so let's just give it some time and see if it blooms. Who knows, it certainly could be a ‘Ledger for Everything’ one day as they claim.
Well, if this was boring or confusing, grab a coffee and watch this video and some content by the IOTA Foundation itself. It certainly did a great deal in helping me get an idea, and I hope it will to you as well :)
The IOTA also has a very responsive and a friendly developer community, Click here to join their official Discord server for the community 😊
