Will IOTA Replace Bitcoin?
OTA is better than traditional blockchain using cryptocurrency for the following reasons:
- no transaction fees,
- faster confirmation times,
- higher number of transactions that can be handled,
- security, and
- scalability of the system.
The traditional Blockchain depends on ‘miners’ to verify transactions and as a result, they charge a transaction fee for mining work. This creates a problem for small transactions that would make the user spend more money in transaction fees than the total value of the transaction itself. Also ‘miners’ usually verify transactions which are bigger in value in order to be able to charge a higher transaction fee. As a result, a lot of mid to small sized transactions are not confirmed or take a lot of time. With the elimination of transaction fees, confirmation times take a huge dip.
IOTA – The Tangle Based Cryptocurrency
Each transaction in the Tangle is assigned a certain score on the basis of the number of transactions that directly or indirectly confirm it. As the number of overall transactions increases, older transactions get more and more secure as the score is directly proportional to the amount of computing strength it would take to duplicate the transaction and thus cause a fraud.
Also one of the major drawbacks of blockchain is that there is a limit about how big the ledger can get, and thus how many transactions it can handle per second. As the Tangle is a distributed ledger, the problem of increasing ledger size with increasing number of transactions does not occur. Already the number of transactions per second by IOTA has bypassed both Bitcoin and Ethereum, another blockchain based cryptocurrency.
Another huge opportunity with the IOTA system is the fact that it can operate using the IoT (Internet of Things) backbone. This means that machines could now have their own unique wallets and exchange money for services and data. To wit, a connected car could transfer the exact amount of fuel money to the fuel station without you having to interfere, or pay the toll on highways, or parking without you having to hunt for your credit card or retrieve change. This potential will be realized over the next twenty odd years as smart cities become the norm.
All of these advantages point to the fact that IOTA could replace not only Bitcoin but blockchain technology in general. While there are currently concerns about the feasibility of IOTA, closely following the IOTA foundation could give you a better idea of how this new disruptive cryptocurrency shapes up.