screenshot from https://tangle.blox.pm

There is no blockchain at all! Instead IOTA use the so called tangle. Whatch it live!

(pic 1: tangle vs. blockchain by IOTA Support)

This tangle approach is also called the 3rd generation of cryptocurrency with maximum parallelization, no fees for transactions, quantum proof (not hackable even with upcoming ultra-fast quantum computers), infinite scalability, very fast transactions and secure transactions (look at 4 Possible attack scenarios). That are many claims that has to be proven.

To take this in perspective to other blockchain technologies. Bitcoin is 1st generation, Bitshares for example 2nd generation. But what are the crucial differences and benefits of IOTA in terms of real world applications? Please hear one of the founders of IOTA David Sønstebø in this great interview. It is really enlightening but to make it short i distilled the 3 main reasons for IOTA:

1. micro payments for internet of things

In the tangle there are no fees because there are no miners. That's crucial for tiny amounts of money which has to be paid in machine to machine communication. Think of a high transaction fee of $5 to automatically remember you and update your shopping list on the smartphone when a sensor has detected a declining number of bottles in the fridge. It would be ridiculous, but that's current reality with Bitcoin. BTW if i made transactions i'm always nervous if must do anything with Bitcoin because there is this huge chunk of money for the pickaxes and i folding my hands to have no delays..

2. true decentralization

And because there are no miners there are no centralized structures in mining pools. There is no intermediary like with Bitcoin or the often criticized banking system of fiat money. These central structures lead recently to the voting war between users and miners and threatening the whole blockchain with uncertain outcome because of diametral incentives between the two parties.

3. true scalability

With IOTA the user at the same time is the miner. Because he has to confirm two transactions for every transaction he make. And that's also the reason for unlimited scalability und increasing speed of the network the more users are making transactions.

What we want and not

You as user want fast transactions with low or no fees to pay for goods or to exchange fiat money into Bitcoin or Bitcoin into Altcoins or just send to another wallet. Currently Bitcoin is often criticized for a) high fees up to $5 for tiny amounts of money (deadly for micro payments) and b) ridiculous long confirmation of transactions up to days with a huge backlog (deadly for ultrafast IoT applications) and c) blocksize debate and doubling with Segwit which is just a matter of time until another increase is necessary.

Where is the competition?

IOTA seems the solution to all these current issues with Bitcoin. What's up with Ethereum in comparison? Ethereum is known for his smart contracts what was a really new and good extension to Bitcoin because now you can handle complex business case without negotiation of two ore more parties. If you look many ICO's are based on smart contracts. For example in a crowdsale of tokens the smart contract can define necessary rules like:

• maximum number of tokens that can be provided to buyers (hard cap)
• the rate in exchange to Ethereum or other currencies for a token
• the blocking incoming orders if the hard cap has reached
• the bonus amount of tokens in percentage dependend on the reached percentage of sold tokens

A smart contract works fully automated based on defined rules and is written in Solidity (proprietary language of Ethereum) from what i know. IOTA claims it can be done as layer on top with Oracle (look in the IXI Modules section).

Other Contenders for the crypto crown are EOS and Tezos for example. They build operating systems for the blockchain. EOS unique features are easy DAPP development in comparison to the Solidity approach with Ethereum and millions of transactions per second.

Big developments behind the scenes?

David Sønstebø is always cautios to make big announcements for the Roadmap or Partnerships because he wants no speculative hype for IOTA. If you read the Interview for the Big Deal you can just guess what's coming next. But if you look the fast growing community on slack channel (video by Tangleblog, 12.400 on July 23th), the Partnership with Microsoft, Cisco, high decorated members with important connections to government, big companies and research institutes, examined by companies like Bosch, Innogy, Canonical/Ubuntu, SAP, UBS are signs of serious industry applications in the future.

What do you think about IOTA? Is it a disruptor for blockchain or just another niche in the cryptoworld?

Please leave comments and vote me up! Thank you!

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