The Great Debate: Blockchain vs Tangle

The Great Debate: Blockchain vs Tangle

Author: 
Michael R.
Date: 
November 13, 2018
Read time: 
5 minutes
IOTA
Tangle
Blockchain

For those who have been following the scalability debate in the blockchain industry, there is no doubt you came across terms such as IOTA, tangle, or DAG. If these terms confuse you, have no fear. In this article, I will briefly explain tangle, blockchain and provide my opinion on the winner of the blockchain vs tangle debate.

 

For those who have been following the scalability debate in the blockchain industry, there is no doubt you came across terms such as IOTA, tangle, or DAG. If these terms confuse you, have no fear. In this article, I will briefly explain tangle, blockchain and provide my opinion on the winner of the blockchain vs tangle debate.

 

What is the blockchain?

Most of us understand the blockchain’s purpose and functions, so we will keep this brief. The blockchain is a cryptographically secured ledger of transactions. More simply, it is a linked list of blocks, where each block has a reference to the block before it, maintaining a complete history of the ledger.

Additionally, each node must independently verify and agree on the status of the ledger at all times. In other words, every transaction is eventually agreed upon by every node. Some nodes (not all) are miners, which we know are the ones who receive block rewards for confirming transactions and maintaining integrity in the network. Miners often invest substantial amounts of money in hardware for more hashing power to improve their chances of winning the block reward.
 

Bitcoin’s Scalability Issues

The linear block structure of the blockchain coupled with the fact that each node must keep an updated version of the entire ledger at all times makes for serious scalability issues. The blocks themselves can serve as a bottleneck since a limited amount of data can fit in a block and a new block is found every 10 minutes.

Source: blockchain.com
 

As more transactions occur on the blockchain, the more restricted the network becomes. The end result is long transaction times and high fees, making for unhappy users. We saw this first hand beginning in 2017 with Bitcoin. This period acted as a catalyst for several Bitcoin forks, proposing solutions for lower fees and faster transaction times.

Since then, not only has the blockchain architecture been receiving criticism, but so has the incentive for miners to contribute to the network. As more users send transactions on the blockchain, the miners become more in demand from a technical point of view, but unfortunately, mining has been unprofitable as of late. The effect then is fewer miners. The lower the number of miners that exist only snowballs into longer wait times and higher fees; exactly what we are trying to avoid. To reiterate, mining has become less profitable, hindering scalability as fewer people want to mine.

Still, keep in mind that the core development teams are working to roll out practical layer two solutions. Also, Bitcoin and Ethereum are the only projects to encounter scalability problems because they have had the opportunity to experience them. Let’s quickly summarize the pros and cons of the blockchain.
 

Pros of the Blockchain

The upsides of the blockchain are:

  • It has a proven history that the system works
  • Extremely secure, the system itself is difficult to compromise. If it is compromised through a 51% attack, the community can quickly avoid it
  • Layer two solutions are being built to remedy this problem
     

Cons of the Blockchain

The downsides of the blockchain are:

  • Not scalable by nature
  • Can have high fees and long wait times if the node count is low
  • Mining incentives can be debatable

All in all, the above sums up the blockchain’s architecture and it’s main issue being scalability. As more users are on the network and more transactions are broadcasted, the more bogged down a blockchain inherently becomes. As a result, a newer digital currency, IOTA, has presented an entirely different concept to the industry, called tangle. Let’s move on to the second part of the blockchain vs tangle debate.

Unlike the blockchain, tangle based digital currencies do not use blocks, have no miners, and no transactions fees - allowing for seemingly infinite scalability

What is Tangle?

Tangle has an entirely different architecture than the blockchain while aiming to serve the same purpose: to have a trustless, decentralized network for sending and receiving transactions. The first piece of clarification is that in IOTA, tangle is an implementation of a directed acyclic graph (DAG). DAG is a mathematical model for organizing all different kinds of information. In the context of IOTA, tangle is the name for the implementation of DAG. Make sense? Many people use DAG and tangle interchangeably, and that is why.  

So, let’s cut to the chase. Unlike the blockchain, tangle based digital currencies do not use blocks, have no miners, and no transactions fees - allowing for seemingly infinite scalability. If you were to visualize IOTA’s tangle, then you would see a graph like structure (similar to a tree) moving forward, rather than blockchain’s linear linked list structure made of blocks. This will make more sense as we look at tangle more specifically in the context of IOTA.

Source: coindrift.io
 

IOTA’s Tangle

As of now, IOTA is the biggest name in the industry to take advantage of DAG. As mentioned, IOTA’s network has no miners, no fees, high-speed transactions, and allows for improved scalability. How?!

In the IOTA system, every transaction sender must verify two other transactions. In essence, you can say there are no miners, or that everyone is a miner - either way, there is no block, block reward, or network fees. Technically, there is a small amount of proof of work required to verify the two other transactions, but it is negligible. Theoretically, it is said that as more people use IOTA, the more fluid and scalable it becomes, which is in direct contrast to how the blockchain operates where each node must verify each transaction as it happens.

Without getting into the theory behind DAG, let’s quickly summarize the pros and cons of tangle now.

Pros of Tangle

The upside of tangle are:

  • No fees
  • Fast transaction times
  • Scalable
     

Cons of Tangle

The downside of tangle are:

  • The technology is not as proven and tested
  • No true DApp functionality or Turing-complete solutions
  • Arguably less secure
  • Centralized. IOTA has synchronization issues and relies on a central coordinator node to synchronize the state between nodes. The IOTA foundation runs the coordinator. This is temporary until there are more users.

So, now you should understand how tangle differs from the blockchain and what pain points they solve.
 

Blockchain vs Tangle: Which one is better?

As of now, I would say blockchain for a few reasons. First off, Tangle it is not as proven or tested. IOTA has not had nearly the amount of users that Bitcoin has. Actually, MIT even released a post about some of IOTA’s vulnerabilities after some testing, which IOTA has since fixed, they claim.

Source: wikitribune.com
 

Additionally, IOTA developed their own cryptographic logic, which according to cryptographers is a big no-no allowing for high risk. I am not sure why exactly they did this, but they did. It is also known that IOTA is at risk of 34% attacks. This means that a bad actor only needs to dominate 34% of the network to easily exploit, as opposed to 51% or more with blockchain.

Lastly, as mentioned, IOTA uses a sole coordinator node due to its synchronization issues, rendering it completely centralized at the time of this writing. Unlike tangle, blockchain can be said to be decentralized, at least to some extent.

In summary, until IOTA can get rid of its coordinator node (making it completely centralized), make it less vulnerable to network dominance (34% attacks), and prove that its technology is ready to take on a potentially multi-trillion dollar user demand, I would feel safer saying that blockchain is the better bet as of now. This does not dismiss the fact that IOTA has a loyal community which may continue to grow, along with excellent marketing efforts. The technology seems promising and the team is dedicated, but there are still a few contingencies in the way (i.e. coordinator node) until it can be used 100% in a decentralized fashion.

So, there you have it. Have a better idea now? Hope this settled the blockchain vs tangle debate for now. If you enjoyed reading this and want to continue to go more in-depth about other cryptocurrency concepts, check out learn section!

Posted by Michael R.

Michael is an entrepreneur who has been deeply involved in the cryptocurrency industry since early 2014. He joined Cryptomaniaks as a cryptoanalyst, helping to create accurate and digestible content.

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