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As if understanding blockchains wasn’t hard enough for the average person, IOTA changes the game again by introducing yet another new technology: a directed acyclic graph (DAG)!
This DAG is known as the ‘Tangle’ – a blockless decentralised ledger. In their whitepaper, IOTA posit that one main problem with the Bitcoin Blockchain “is the concept of a transaction fee for transactions of any value. The importance of micropayments will increase in the rapidly developing IoT industry, and paying a fee that is larger than the amount of value being transferred is not logical.”
The main idea of the tangle is the following: to issue a transaction, users must work to approve other transactions. So the benefit of the Tangle, is the transfer of resources with zero fees. The quid pro quo seems to be that in order to send a transaction, you must also perform work in support of the network by confirming 2 other transactions.
With IOTA, anything with a chip in it can be leased in real time. This means that things like Appliances, Tools, Drones, eBikes etc. and resources such as computer storage, computational power, WiFi bandwidth etc. can be turned into leasing-services effortlessly. And with a market cap of over $1bn, it seems that people see a future for such a service.
However surely the attractiveness of IOTA will largely depend not only on the rate of adoption for the Internet of Things, but also the mainstream understanding and accessibility of commiting resources to such networks. And if the only point of difference to the network is the issue of fees, then it would seem that this could come under heavy competition too as the rise, development and diversification of blockchain technology accelerates.
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