What is the Tangle Ledger of IOTA?

IOTA is a project that focuses on the Internet of Things. It facilitates free transaction processing system so that various micro-transactions between machines would be feasible. Learn more about its basics here. For example, in Bitcoin network, a low-value transaction like 100 Satoshi (the bare minimum unit of Bitcoin) would require a fee that is more than the value of the transaction. The same applies relatively to the cryptocurrencies that run on transactional charges. IOTA’s public ledger aka the underlying transaction system is based on a blockchain called Tangle. And in fact, Tangle ledger is a blockless chain. Simply put, the representation looks like a directed acyclic graph (DAG). Here, each transaction is linked to two previous transactions and two other transactions that happen later. Any new transaction coming in must approve two past transactions, and when the new transactions get two more approvals, it will be confirmed. As the new transaction maker supports previous transactions, he doesn’t have to pay any fee. Neither there is a special place for mining alone. Hence there is no chance for minting and distributing new coins. So, all coins are generated in the beginning.

Double Spending

The transactional approval process requires a small proof-of-work; similar to that of a Bitcoin network.Let’s take an example. First, the attacker will maintain multiple addresses. He pays a merchant, and the merchant decides the transaction is legitimate after the Tangle grows to a certain level. Thus he provides the goods and services.Now the attacker initiates a double spend transaction, and he uses his resources to make this transaction a legitimate one by passively approving them through creating secondary transactions. The inflow of legitimate transactions must be higher than the transactions generated by the attacker to avoid this attack. The attacker might even prepare the double spend transaction well in advance and would grow a sub-tangle around it. And initiates a transaction with the merchant where it grows with another sub-tangle. However, the users who want to set up a full node must use mutual tethering. That means they have to find the neighbor’s IP to join the network. And the attacker has to set up multiple nodes to manipulate the system. Without having a look at all the nodes, the attack becomes difficult. But at some point, the sub-tangle created by the attacker should merge with the mainchain. At this point, the other nodes will identify the fraudulent transaction. Even if the transaction is slid through, the weight (difficulty level of Proof-of-Work) will fall behind the current level. And they would never be considered for verification. So an attacker has to be fast and should have significant hashing power. Mathematically, as long as 67% of the network hash power is controlled by the good actors, who chose to build on legit transactions, the double spending problem will not be a threat. Anyhow, the network would see inconsistencies for a short period due to the incoming fraudulent transactions. That is similar to the 51% attack in the Bitcoin network, where if an attacker has the 51% of the present network hash power, he can ingest fraudulent transactions. Currently, there is a mechanism called Coordinator (Coo) to prevent the 34% attack scenario. Any node can check the activity of Coo so that it is not doing any malpractices having significant power in the network. However, as this kind of networks grow progressively, the cost of an attack would become massive. Thus it does not interest anybody to wage an attack.

Token Distribution

As all the tokens are created in the beginning, an ICO held in Nov – Dec 2015. And all the tokens were sold. The developers and founders did not hold any. And a part of proceeds from the ICO was used to establish IOTA non-profit foundation.

Who maintains a full node?

There is no mining reward. So one might be skeptical that who would maintain a node with all the data and contribute hash power when there is no incentive to do so. Unlike Bitcoin, IOTA has attracted companies that are looking into the Internet of Things. And there are people who believe in the technology. IOTA thrives with the help of volunteers. It is much like people running a TOR network node for which the network benefits them. There is a slack channel #nodesharing, and it is filled with the ever-growing IOTA enthusiasts.


  • No massive mining like Bitcoin, thus no wastage of electricity.
  • No transaction fees.
  • Highly scalable – The more the transactions, the faster the transaction confirmation time.
  • Quantum Proof
  • Strong Community


  • Depends on Proof-of-Work for security
  • Coordinator mechanism is required until the network grows to a substantial level


IOTA focuses on being a feeless payment system. Nothing fancy like smart contracts or smart assets.

Author’s Bio: Raghunath is a Writer and Cryptocurrency Researcher. He is enthusiastic about Bitcoin, and the underlying technology, and tries to understand how the future evolves with block chain tech. He frequently blogs about cryptocurrencies at ecoin4dummies.com.

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