Blockchain vs Tangle – Which One is the Future?

The year of 2017 was memorable for the crypto craze. Nothing has changed from that times and still, there is a lot of excitement about cryptocurrencies today. Optimists believe that Bitcoin will fundamentally alter payments, economics and even politics around the world. The most optimistic supporters even started mortgaging their houses in order to buy Bitcoin. Pessimists claim Bitcoin is a bubble and inevitably will suffer a collapse. Whatever happens to Bitcoin, technologies underpinning cryptocurrencies will still be truly transformational structures, ones that could have an impact the way the Internet did 20 years ago.

Every cryptocurrency works under a certain technology. Which one is going to come out on top in the future? Will they coexist and function as completely different systems? To answer these questions it is necessary to go deeper into the subject. So, what exactly are Blockchain and Tangle?

Blockchain is cryptographically secured distributed data storage network in which information is added to the blockchain and stored in blocks. To put it simply, it is a chain of blocks. All the blocks are linked to each other. Each block consists of several transactions. These transactions are identified by their block height, which makes it easy to find and identify particular transactions. It increases security, because in order to change a particular transaction, you will have to change information in preceding blocks too.

In Tangle we have a completely different scenario. Tangle is a new concept by IOTA developers. They wanted to create a solution which has no mining, no transaction fees and is fast. In Tangle, transactions are linked to each other like a big web tangle. There is no concept of blocks. The technology itself is based on a Directed Acylic Graph. A DAG is a directed graph, which consists of a finite number of edges and vertices. In this architecture you can never go back to the same vertex you came from. In Tangle, you do not need to wait for blocks to be mined. The transactions are verified simultaneously, which provides a greater speed and a bigger number of transactions at a time.

Like the Bitcoin, Ethereum, Litecoin and etc. are more associated with Blockchain, Tangle is associated with IOTA. IOTA, with the tagline “Next Generation Blockchain,” is one of the newest contenders in the increasingly crowded cryptocurrency field. Partnered with Microsoft, Fujitsu and several other companies, IOTA considers itself the first marketplace powered by the Internet of Things.

When it comes to comparing Tangle with Blockchain, there are many differences as they are two completely distinctive architectures built on the same principles.

Common blockchains cannot be adjusted to a no-fee settlement layer because the fees are integrated by design as a monetary incentive for miners and thus as protection for the network. That is important because the field of application (like Bitcoin) often lies in financial systems to replace currencies ($, €). It is quite evident, that Bitcoin and nearly all other cryptocurrencies weren’t made to function this way. Considering hundreds of thousands of nano-payments each day in the near future, these Blockchains would generate an enormous amount of fees, just for conducting transactions, while costs of these nano-payments often undermatch the fees.

In these terms, IOTA that operates on the Tangle network has more chances as it is better at transaction volumes, cost and security in a quantum computer environment, when it arrives.

What do you think about the future of Tangle and Blockchain? Please, share your thoughts in the comments.