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Fundament of the Week: IOTA and Tangle technology

Today we will take a closer look at another technological innovation in the field of cryptocurrencies which is the project that the team around the IOTA cryptocurrency is working on.

What is IOTA?

IOTA is an open-source distributed ledger that aims to facilitate secure payments and communication between IoT devices (read our article about the Internet of Things concept ).

Instead of using blockchain technology, as in the case of Bitcoin, IOTA uses a streamlined acyclic chart and also allows users to trade at no charge, unlike other cryptocurrencies.

Confirmation and transaction times are faster than on a blockchain, and the number of individual transactions that the system can process at once is unlimited. This is a clear advantage over the often slow blockchain. IOTA was founded in 2015 by David Sønstebø, Dominik Schiener, Dr. Sergei Popov and Sergei Ivanchek.

What is IOTA Tangle?

Iota Tangle is the name of the platform or system on which IOTA operates. Instead of using a blockchain, as is the case with other cryptocurrencies, it is replaced by a different concept, which in this case is colloquially referred to as "Tangle".

It is mostly a generalization of the established blockchain protocol known as the DAG type. IOTA Tangle uses the Winternitz signature, which is hash-based cryptography that is used instead of ordinary elliptic curve cryptography or ECC. These hashing algorithm-based signatures provide much faster processing than ECC (elliptic curve) cryptography signatures.

In mid-2017, a security issue has appeared in the IOTA hash function known as Curl. It has been found that signatures can be easily forged, but developers have quickly replaced the hash function with Kerl (SHA-3 version). The new hash function works with three variables as opposed to binary operations. This makes IOTA and Tangle much safer.

Tangle protocol Figure 1: Tangle Protocol scheme

How does Tangle work?

Here is how Tangle works from several basic aspects.


Because the Tangle protocol is set up and implemented, its scalability is almost infinite. Unlike blockchain-based networks, which slow down as more users are added, Tangle actually becomes much faster. This is because the growing number of users leads to faster validation time. The lower hash power required for transactions over the Tangle network is also another incentive to use Tangle for new users.


Tangle does not use blocks and does not require the sequence values of the addresses to be maintained in the correct order. This means that all transactions can be stored on multiple different devices, at different locations, in different orders, and even split and mixed.

If you synchronize your node, the system simply repeats all existing transactions and groups them into their addresses, regardless of order. Once Tangle has processed all transactions, the book and addresses will display all balances, and all the user has to do is verify that there are no unfavorable balances between the addresses.

This excellent feature is ideal for use in cases where there are a large number of interconnected devices.

Multi transaction

They are defined as a large number of transactions that are in a chain but use the same address. In addition, these chains are designed so that only the first transaction has a value, while subsequent transactions are assigned a value of zero. This results in a situation where no "regulation" is required and no transactions are skipped. So, as a result, there are no transaction fees in Tangle which makes it possible to perform micro and nano transactions.

JINN processors

As already mentioned, Tangle works with "ternary" JINN processors, unlike typical and more widespread binary processors.

These are general-purpose processors that have the power and ability to process thousands and thousands of transactions per second. This is partly due to the fact that, unlike binary processors, they can circulate around 0, leading to a balanced transaction that helps build a self-sufficient network.

Tangle versus Blockchain Figure 2: Tangle versus Blockchain

Quantum resistance

Unlike other blockchain-based networks, Tangle is quantum resistant. With the development of technology, it is likely that systems that are to be considered safe may in fact be quantum computers. Due to the astronomical computing power offered by quantum computers, some blockchain-based technologies may be vulnerable to attack in the future. Tangle uses one-time Winternitz signatures, so for now it can be argued that the Tangle protocol is quantum resistant.

Masked authenticated messages (MAM)

The Tangle protocol also allows nodes to exchange authenticated and encrypted data with each other. The quantum-resistant nature of the Tangle protocol ensures that data sent from its network are also resistant to any quantum computer attacks. MAM also allows you to share data with specific parties.

Data transfer

Another key feature of the Tangle protocol is network data transmission. IOTA allows users to establish communication channels between devices. The data sent via these communication channels are fully authenticated and protected against unauthorized access.

Jakub is a crypto trader and founder of Trader 2.0 project, which helps hundreds of traders from central Europe to understand cryptocurrency trading and its challenges. Jakub not o...


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