IOTA, the ‘anti-blockchain’, ‘distributed ledger’ technology aiming to power the IoT, Smart Cities and beyond

Scalability is fast proving to be the make-or-break feature in the distributed technology race.  Nowhere is this a more pressing issue than with the IoT (Internet of Things).  In the talk given here by Terry Shane, it’s stated that, “by 2025, the IoT will exceed 100 billion connected devices”.  This means in just 7 short years, there may be, “12 devices for each man, woman and child.”  Considering many of these devices will be constantly and autonomously communicating with each other without human intervention and the scope of the issue becomes apparent.
IOTA, “a next generation permissionless distributed ledger that utilizes a novel invention, called a “Tangle”” is proposing to solve this problem. Terry states, “it has no blocks, no chains, no miners and there are no fees ..and it only gets faster as it scales”.  How is this achieved? Think Napster where utilizing the network requires a small amount of work to be done by you.

“Apart from the data structure, the other major difference is how IOTA achieves consensus and how transactions are made. As mentioned previously, there are no miners. What this means is that each participant in the network that wants to make a transaction has to actively participate in the consensus of the network by approving 2 past transactions.”


The fundamental challenge IOTA aims to solve is the “Blockchain Bottleneck” effect. (below)

Blockchain Bottleneck

IOTA tackles the problem using a mechanism they call the “Tangle” (based on the mathematical concept of DAG (Directed Acyclic Graph)

The issues of Transaction Consensus, Validation and Confirmation

There’s little information on exactly how transaction validation is enforced.  The IOTA dev section does partially describe how “PoW on the Tangle” operates but questions arise.  When a client needs to validate 2 transactions in order to get their transaction into the network, it’s unclear how bad actors are punished.
As for transaction consensus and confirmation, IOTA offers two methods.  The first, a centralized system called a “Coordinator” run by the IOTA Foundation which can give a definitive transaction confirmation.  This is achieved by issuing “Milestones” every 2 minutes which contain the referenceable transaction information.  Replacing “Milestone” with “block” makes this system sound suspiciously like a typical blockchain, minus the trustlessness.
The second, method for transaction confirmation is more complex.  An entity on the network can essentially “ping” as many other random entities and ask if it’s “seen” a certain transaction (by ID) and if it’s confirmed it.  This gives a “probabilistic answer”.  More information can be found here on both methods described above.


The impact on society of having a truely scalable, fast, free and verifiable distributed ledger cannot be overstated.  Recently, the Taipei municipality and the IOTA Foundation partnered on Taipei’s Smart City Living Lab which should make for a great “proving ground” of the IOTA network and developers.   Give IOTA a try by downloading the recently released IOTA Wallet app

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