Concepts like Artificial Intelligence, Internet of Things, unmanned aerial devices, Blockchain, and many others would have sounded strange fifteen to twenty years ago. But such techs are now a reality and the potential of what is to come, and what can be achieved really appears infinite. Typically, humans have been able to push the boundaries of technology by recognizing a challenge and trying to solve it. Soon, a new and better model is launched, a new company springs up, or a latest version is released. This has been the cycle (or more appropriately, the ladder) of life.
Blockchain tech is a giant stride in many industries, particularly the financial industry, considering the history of money and transactions. However, despite the novelty of this new decentralized tech, it still has some loopholes and inefficiencies. For this reason, quite a number of projects have sprung up, each trying to solve one or more of Blockchain and Bitcoin’s weaknesses. This article examines one of such projects – IOTA which is aimed at addressing several key issues facing the blockchain space. Before we delve in to discuss IOTA, let’s explore some of the current issues of Blockchain.
The Problem & Solution
- Scalability: In December, 2017 traders and crypto enthusiasts were left wondering the functionality and scalability of Bitcoin because transactions took hours and days to confirm. What this hinted was that with growing adoption, it would take longer to process transactions because the number of transactions a blockchain can handle can never exceed the number of network nodes.
Unlike blockchain where transactions are arranged chronologically, IOTA runs a Tangle system, or Directed Acyclic Graph (DAG). By this it means each new transaction must first assemble any two transactions that came before it, and attach a proof of work to it. Network nodes ensure that the approved transactions are not conflicting. The Tangle is envisioned to be a fast and infinitely scalable backbone for interoperability.
- Fees: One of the benefits of digital transactions over traditional systems is the reduced fees. However, transaction fees are bound to increase (and become outrageous) when the network becomes clogged. The tangle system of IOTA has made it such that there are zero transaction fees.
- Quantum Vulnerability: Although quantum vulnerability is not a practical issue today, it may become a major challenge in the future. Quantum computing may open a new door to very fast computers, so powerful that they can mine and confirm transaction easily, thus breaking the cryptography of first-generation crypto algorithms. With this is mind, IOTA has implemented a Winternitz hash-based cryptography and is making progress towards second-, and third-generation cryptography.
In conclusion, without a doubt the IOTA project is quite ambitious and rather impossible. But from experience, I have come to believe that nothing is impossible. In theory, if things like infinitely-scale able, fee less value transfer, and other advanced functionality are fully implemented, IOTA will grow to become a project to recon with.