IOTA Protocol And Zero Transaction Fees
Bitcoin has gobbled up all the headlines as of late, but there’s at least one cryptocurrency out there that has laid down the gauntlet. The 10 minute transaction time has been something that has been discussed but not addressed, as altcoins like Litecoin have managed to reduce the time it takes to generate a new block down to two and a half minutes. IOTA dispenses with the blockchain entirely, and that’s what makes it so interesting to investors.
IOTA announced in November, when the surge began, that it wanted to develop a “decentralized data marketplace.” At first, there were many people scratching heads and wondering what precisely that was. Organizations collect an unaccountable amount of data from various devices. These can be anything from smart watches to smart thermostats, to smart refrigerators. In other words, “Internet of Things” devices. This data sits in a database and goes to no particular use.
IOTA systems manage this problem in two distinct ways. Firstly, it secures the data in a distributed ledger. Secondly, it allows transactions between the owners of that data and anyone that is interested in purchasing it. The result is that IOTA has seen an increase in value around 250% over the past two months, which outpaces even Bitcoin.
IOTA Doesn’t Use a Blockchain
What has many in the cryptocurrency world baffled, is that IOTA has dispensed with the blockchain entirely. Instead, it uses something called a “tangle.” The sense in pursuing this approach has to do with the current cost of transactions using Bitcoin. It can cost up to $50 per transaction due to the volume of transactions, and blockchain seems inefficient at operating at the scale necessary for IoT data.
This, in turn, has led to a spirited debate between proponents of blockchain and proponents of tangle, with each claiming theirs is the future of cryptocurrency. What we know right now is that IOTA can be a game changer and there’s quite a few that are wagering that it will be. But will it? We will see!
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