How Does IOTA Solve Bitcoin’s Scalability Problems?
IOTA’s solution to Bitcoin’s problems is to do away with several key concepts and topographical constraints of a blockchain. MIOTA, IOTA’s cryptocurrency, is pre-mined and consensus of transactions occurs differently as compared to a blockchain. IOTA developers have proposed a new data structure (a way to organize numeric representations within a computer’s memory) known as Tangle.
Tangle is a Decentralized Acyclic Graph (DAG), a system of nodes that is not sequential. Thus, each node can be connected to multiple other nodes in a Tangle. But they are connected only in a particular direction, meaning that a node cannot refer back to itself. A standard blockchain is also a DAG because it is a sequential linked set. But IOTA’s Tangle is a parallel system, in which transactions can be processed simultaneously, instead of sequentially. As more systems are attached to it, the Tangle becomes more secure and efficient at processing transactions.
In Bitcoin, a group of systems running full nodes that contain the entire history of transactions for a ledger are required for confirmations and consensus. This process is energy- and computation-intensive.
Full node miners are not required in Tangle. Each new transaction is confirmed by referencing two previous transactions, reducing the amount of time and memory required to confirm a transaction. An easily-solvable and straightforward Proof of Work (PoW) puzzle is added to the transaction as a final step. The two transactions that are chosen are referred to as tips. IOTA’s system uses a tip selection algorithm with “confidence” as a measure to approve the transaction. If a transaction has been approved 97 times in the past, then there is 97% confidence that a node will approve it in the future.
Related to the concept of a “confidence” is a transaction’s weight. As it moves through Tangle, a transaction gathers weight. A transaction’s weight increases with the number of approvals. Once a transaction is confirmed, it is broadcast to the entire network, and another unconfirmed transaction can choose the newly-confirmed transaction as one of the tips to confirm itself.
This method of confirming a transaction results in no fees and low power consumption, enabling mIOTA to be used across a wide variety of devices and machines with different power requirements.
IOTA is facing a significant positive movement in today’s market. The altcoin is having an overall gain of 3.50% with a price level of $0.13. The market capitalization is $388,690,598 and volume traded of $9,466,724. It is expected that the positive movement will be not that significant as IOTA is having a strong resistance level of $0.15. But any further upsurge above the given resistance level can result in major price recovery for the crypto asset. Apart from the minor positive movement, IOTA will be looking to cross a $0.15 mark again.
IOTA is facing price consolidation for the past few days now. It showing movement between the price band of $0.10 and $0.15. However, currently, it is on positive movement with a 1.46% overall gain. The current price is $0.141882 with the market capitalization of $421,680,533 and volume traded of $11,803,185. IOTA needs to break the level of $0.20 again and maintain stability over the mark at the same time.
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