In the world of distributed decentralized transactions, blockchain reigns supreme. Most applications that require digital ledgers are using blockchain technology. However, it has issues with scalability and cost that is prohibitive for the internet of things (IoT). So developers are looking for better solutions. IOTA has come up with a technology called Tangle that is being considered as "the next generation of blockchain". It might be able to resolve some of the issues IoT faces in the real world.
Problems with Internet of Things (IoT) and Blockchain Relationship
Smart homes, manufacturing facilities, healthcare systems, autonomous vehicles and more have started to use IoT devices. Even though using connected devices to automate processes is not a new phenomenon, the availability of wireless technology and the affordability of these devices have increased the adoption rate significantly. By 2022, there is supposed to be 1.5 billion connected devices in the world. The amount of communication and transactions between these devices will need better solutions than what's available today.
At first glance, blockchain seems like a great solution for IoT issues. As a distributed digital ledger, blockchain can help IoT devices record information without the need for a centralized architecture. This could save time and money. And smart contracts can provide machine-to-machine (M2M) automated transactions. So IoT experts have been exploring blockchain as a solution. But the expectations were misplaced. The big problems with blockchain and IoT are scalability issues and high transaction fees.
In the blockchain network, reaching consensus is a fairly involved process. It might work for a limited number of transactions. But IoT devices require a lot of them. Today’s blockchain technology can’t handle those large numbers and it leads to delays. Also, the unpredictability of the transaction fees adds another layer of difficulty. More transactions mean higher fees. This makes blockchain impractical for IoT networks.
IOTA and Tangle Solution
IOTA was born to address the digital ledger and backbone architecture needs of IoT devices. The founders David Sønstebø, Sergey Ivancheglo, Serguei Popov and Dominik Schiener are all veteran of the blockchain industry. So they understand the pitfalls and weaknesses of the blockchain technology. IOTA started with the purpose of solving problems for the IoT industry. It created the solution called Tangle.
While blockchain creates blocks of data and chains them together, Tangle uses Directed Acyclic Graph (DAG) to create a digital ledger. The core objectives of Tangle is the same as blockchain. It is a distributed database with peer-to-peer capabilities. Tangle still uses consensus and validation for transactions. Only the underlying mechanism is different.
In Tangle, there are no blocks. Instead, every transaction references past two transactions for attestation. The attestation indirectly validates a portion of the Tangle network. This architecture eliminates the need for miners. The users themselves are helping validate the transactions in the network. So there is no need to pay fees anymore. With IOTA Tangle, machine-to-machine communication becomes affordable.
Another important characteristic of a Tangle network is that the transaction settlements or consensus are parallelized. In blockchain, the transactions have to wait for consensus. The consensus process takes place in batches. The batches have to wait for available resources. As the number of transactions increase, blockchain-based applications have a problem keeping up with all the changes and maintaining consensus. Tangle networks have an easier time scaling because of the parallelized processes.
Benefits of IOTA Tangle
Here is a summary of the benefits Tangle provide:
Use Case for IOTA Tangle: Bosch and Autonomous Vehicles
Big name companies like Cisco, Volkswagen, Samsung, Microsoft, Accenture and more have shown interest in IOTA. Bosch, a leading global engineering powerhouse, is looking at IOTA for their self-driving cars. Last year, Bosch has partnered with Tesla to develop these autonomous vehicles.
Bosch is planning to use IOTA technology as the backbone for inter-car communications and transactions. For example, IOTA can help with the conceptual idea of “platooning”. A platoon is a group of vehicles that travel together in close proximity at high speed. The lead vehicle takes control of the other cars of the platoon. This helps the followers save energy and money. With IOTA, the followers can compensate the lead vehicle through microtransactions. Bosch is planning to implement platooning using IOTA.
In the fast-moving world of technology, both blockchain and IOTA Tangle are new and unproven. At the moment, both technologies are trying to prove themselves. But the IoT industry will be following IOTA Tangle closely as they have the highest stake in it.