What about Ledger: IOTAs Tangle and Hashgraph

After explaining the difference between the distributed ledger technology and the blockchain yesterday, today we are talking about two alternatives to the blockchain: IOTA’s Tangle and Hashgraph. Of a lot of data clutter and blossoming trees.

As popular as blockchain technology may be, there are always certain points of criticism that call the concept into question. Especially the Bitcoin blockchain with its proof-of-work process now takes quite a long time to confirm transactions. While the number of transactions to be processed is constantly increasing, the technology does not seem to lag behind in terms of speed, the memory required by the blockchain, the speed and the result are no longer in the right proportions. There are several approaches to this problem of scalability, two of which are Tangle and Hashgraph. Both systems will be examined in this second article of the series “Was zu Ledger”. We will again address the more advanced user.

Tangle – a neat tangle

Just like the blockchain, tangle is a peer-to-peer network. This means first of all that they are operated by equal actors. The IOTA team that developed the Tangle want to stand up to the blockchain with better scalability, faster and more secure transactions. As the name of IOTA (Internet of Things Association) indicates, the network is designed to provide a payment system for the Internet of Things.

For this purpose, the DLT under IOTA, the tangle, wants to be no blockchain. Instead of a blockchain, IOTA uses a directional, i.e. directed acyclic graph (known as DAG for short): Unlike the blockchain, whose data structure is a concatenated list, here a single data node has more than one child. Therefore, these nodes are loosely distributed. In contrast to the chain of the blockchain, the tangle is a tangle of nodes. There are other crypto currencies like Byteball, whose data structure corresponds to a directional acyclic graph.

This node network grows with each new transaction. Because the tangle does not grow in one direction, it promises a simultaneous processing of many transactions. Therefore, a part of the network can also act temporarily detached from the rest and be reunited with the tangle at a later point in time.

All beginnings are difficult

Tangle also wants to differentiate itself from the Bitcoin blockchain when checking transactions. Each new transaction checks two existing transactions. These are selected randomly using an algorithm. There are two main criteria for the check: No more tokens may be issued than are available. In addition, the transaction must be signed by the rightful owner.

Because each transaction represents two already validated transactions, the network theoretically becomes more secure with each new transaction.

However, all beginnings are difficult. The first transaction, called Genesis, had no transactions to fall back on. Therefore, the tangle currently still operates with a “coordinator” who confirms all transactions. It is precisely for this reason that IOTA is controversial in the community despite well-known cooperation partners such as Volkswagen, Innogy, Telekom and others. If the network is large enough, this “coordinator” should no longer be needed.

While the problems of the Bitcoin blockchain in terms of speed and energy performance are solved theoretically, doubts about the autonomy of the technology arise with the Tangle.