IOTA/Tangle: Pay It Forward

Blockchain technology promised a compelling vision: decentralized networks allowing open innovation and peer-to-peer transactions without intermediaries or fees.

Entities are working to fulfill much of that promise.

As blockchain adoption has increased over the last decade, early adopters have struggled with sluggish transaction times and rising fees.

As financial rewards for validating certain blockchain transactions became increasingly competitive, their networks strayed from a pure decentralized network to becoming dominated by powerful players.

 IOTA, based on its distributed ledger technology it calls “The Tangle,” considers itself to be the missing link for the Internet of Everything and Web 3.0.

“Powering a secure, scalable and feeless transaction settlement layer, IOTA will empower machines and humans to participate in flourishing new permissionless economies – the most important one being the Machine Economy which we are building.”

Meet ‘The Tangle’

IOTA’s does not consist of transactions grouped into blocks and stored in sequential chains, but as a stream of individual transactions entangled together.

In order to participate in the IOTA Tangle network, a participant performs a small amount of computational work that verifies two previous transactions. Rather than creating a hierarchy of roles and responsibilities in the network, every actor has the same incentives and rewards.

In order to make a transaction in the Tangle, two previous transactions must be validated with the reward for doing so being the validation of your own transaction by some subsequent transaction. With this ‘pay-it-forward‘ system of validations, there is no need to offer financial rewards. Transacting with IOTA is and will always be completely fee-free.

Moreover, without the need for monetary rewards, IOTA is not limited to transactional value settlements. It is possible to securely store information within Tangle transactions, or even spread larger amounts of information across multiple bundled or linked transactions.

This structure also enables high scalability of transactions. The more activity in ‘the Tangle’, the faster transactions can be confirmed.