Move Over Blockchain, Here Comes The “Tangle”

Move Over Blockchain, Here Comes The “Tangle”

By Kale Schulte and Kelsey Hopper

Blockchain technology has a very unique set of advantages that we touched on in a previous blog, Blockchain: The Supply Chain Revolution.  The fundamentals of a distributed ledger and the structure of a blockchain provide a potential paradigm shift in the way we track currency, goods, contracts and other systems that rely heavily on trust.  If you haven’t yet fully appreciated the profound possibilities of this technology, then you could be missing out on the advantages of being an “early adopter”.

However, even as blockchain technology’s mainstream adoption continues to increase, there’s little doubt that blockchain will face challenges with speed and efficiency caused by transaction processing delays inherent in the way the technology functions.  In blockchain, there are two types of participants – those who issue transactions, and those who approve them, called miners.  Because every transaction must be verified by this distributed network of miners before becoming accepted as true across the entire network, there is a delay before new blocks of confirmed transactions are added to the chain.

But what if there is a more efficient way?  It appears that there is, and according to current speculation, "IOTA" and the "Tangle" may quickly pioneer a post-blockchain world.

IOTA is a distributed ledger system/cryptocurrency designed specifically to enable fee-less transactions for the Internet of Things (IoT).  Instead of using blockchain, IOTA uses a mesh network called the Tangle to confirm transactions. Rather than blockchain’s separate transaction issuers and miners, with the Tangle, every user (in this case, an IoT device, referred to as a node) does both.  In order to issue a transaction, a node must verify two previous transactions, supposedly eliminating the delay that plagues blockchain.  Whereas blockchain transactions require a fee that is used to compensate miners for verifying transactions, Tangle transactions are fee-less, as nodes “pay” for new transactions by verifying previous ones themselves.  This system also ensures power stays decentralized – instead of power resting with a few bitcoin miners, every participant in IOTA/the Tangle shares the task of transaction verification.

This allows for some amazing potential applications.  Recent partnerships between IOTA and Microsoft, Bosch, Daimler, Samsung, and others are seeking to create a Data Marketplace using Tangle technology, with the goal of monetizing data created by the IoT.  In this data marketplace, verified environmental data from automobiles, anonymous healthcare data from wearables, even usage trends from devices in our homes will all be compiled and sold.  Additionally, a recent proof-of-concept solution by NetObjex demonstrated using the IOTA cryptocurrency for usage-based billing when wirelessly charging electric cars.  This, along with potential applications using the Tangle to monitor shipment conditions and routes, could shape the future of transportation management in our supply chains as automated transportation becomes mainstream.

Whether the Tangle replaces the Blockchain, operates as an alternative, or fails to live up to the hype, has yet to be determined.  Whatever happens, the buzz surrounding this technology is getting louder, and it’s worth paying attention.