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Since 2008, everyone has been frantically engaged in exploring blockchain-based applications, beyond cryptocurrencies to solve real-world problems. On the way to their discoveries, however, are some twists that need to be unraveled.
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The immutable nature of blockchain has led to unprecedented transparency and security of data sharing that has made distributed registries and crypto-currencies more and more commonplace. According to the Blockchain.info cryptocurrency portfolio, the number of daily bitcoin transactions increased from 1 in January 2009 to 4.9 lakh in December 2017. The most promising use case for the blockchain, other than the cryptocurrency, was the Internet of Things (IoT) to record huge data exchange between two smart devices
Finding Scale
There is a limit to the size of the Bitcoin block – 1 MB from now , which can handle only seven transactions per second – quite slow. This transaction speed is non-existent compared to VISA which processes around 2,000 transactions per day on average and PayPal around 200. With the increase in data usage, blockchain capacity to take over large Datasets, like scalability, are questioning. Bitcoin blockchain, you must store all the transaction history from the beginning. Until now, it's not so dramatic because the size of it is manageable. If the number of transactions pbades to VISA, Mastercard etc., the block will explode, "says Serguei Popov, co-creator of Tangle, another accounting company, and co-founder of IOTA in Brazil. Entanglement-based Cryptocurrency
Tangle is a block-free technology created around 2014 that serves as an alternative to the blockchain's scalability problem. It is based on DAG (Directed Acyclic Graph) which gives it a form of entanglement, because the transactions are linked to each other via nodes. These transactions are recorded in multiple layers in one node, further connected to other nodes via its edges.
Since there are no blocks to extract unlike blockchain, transactions are checked in parallel which saves time and speeds up the process. "Tangle removes the need for extraction and proof of work, unlike the blockchain network, validation is done by distributed validators, which are the known parts of the network." If the validator submits the transaction that is incorrect, it does not will not be accepted by the rest of the validators, "says Raj Chowdhury, general manager, HashCash Consultants .The company helps companies in cross-border payments and badet movement using blockchain. of innovation at ICICI Bank, Chowdhury carried out commercial financing and remittances using blockchain technology in 2016 for bank – first time in India
Validation Faster
in Tangle to record a new transaction, the user must approve the previous two transactions in the network instead of waiting for the relevant parties in the network u blockchain approve it. For example, in blockchain, when A sends a bitcoin to B, the transaction is validated by the miners (network people) with consensus. The block is then added to the chain. In Tangle, since there are no blocks, there is no mining. A is presented with two previous transactions, which he / she must validate. This adds its transaction to the network, which would also be validated by the next user. This significantly reduces the time taken in validating the transaction. Currently, IOTA can record 500 to 800 transactions per second, according to reports.
"Theoretically, IOTA Tangle can have as many transactions as it wants because every new transaction checks two existing transactions in the network, so it looks scalable and faster than bitcoin or ethereum blockchain, which is limited however, it is still too early to conclude, since Tangle is a very new concept, "says Vishal Nigam, president and founding member of the Indian Blockchain Council.
More transactions, more there are verifiers, therefore, there is no limit to the number of transactions occurring within a specific period of time.
Free Service
Chain Miners blockchain to validate the transaction receive a fee.However, since in Tangle IOTA, the consensus on the validity of the transaction does not involve minors, it is free of any transaction fees. The fees depend on the size of the transaction, the volume of transactions in a network, and the time frame you want the transaction to be confirmed. While, currently, it is about $ 1, however, in December last year, it has risen by almost $ 40. "For micropayments, transaction fees are very high, for example, if you send $ 100 for which the fee is $ 40, then it's not feasible," says Nigam. from IOTA to India. "It must do the same as Bitcoin and Ethereum – build the ecosystem around technology in India. People here know IOTA as a play to buy and sell, "says Nigam.
Despite the benefits of the blockchain, how Tangle or Hashgraph (another DAG-based distributed ledger technology that is claimed to be superior to blockchain), it would take another three or four years to understand. "I do not think that there will be a single encryption system that will dominate everything.There will be several of them for different purposes, for example, bitcoin for storing value, and IOTA for IoT The traditional blockchain approach, however, would not die, concludes Popov
(This article was first published in the May issue of Entrepreneur magazine.)
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