Ripple and IOTA are relatively new cryptocurrencies that have shown great promise to cryptocurrency investors. How are these two coins different?

Ripple, built upon distributed open source internet protocol is a cryptocurrency based on blockchain technology.

IOTA, an open-source distributed ledger, also called the future generation cryptocurrency is built upon the technology platform called Tangle.

How IOTA’s Tangle is Different from Blockchain?

Blockchain consists of a chain of blocks representing transactions and these transactions are uniquely identifiable by the height of the block. As it is a chain of blocks, if a block is to be changed then the same information change has to happen at previous blocks also.

Tangle makes use of DAG (Directed Acyclic Graph) which is a mathematical concept of a directed graph with no cycles in it.

Using this concept, IOTA focuses on an integrated machine to machine and decentralized transaction execution, unlike Blockchain where the control of transactions lies with miners.

Blockchain deals with payment to payment transactions whereas IOTA deals with machine to machine transactions.

Transaction processing with Blockchain and Tangle IOTA

If you wish to transact via Tangle, you need to confirm previous two transactions before you send yours. The transaction input is signed with private keys.

Using a specific algorithm, two unconfirmed transactions are randomly selected and referenced by your transaction. Your transaction will be accepted by the network based on some proof of work.

The whole idea behind this working style of IOTA is: The more people use IOTA, the more transactions are referenced and confirmed. This makes the network more scalable and faster as the confirmation rates and timings improve with the increasing number of connected devices.

The working style of Blockchain is quite different from Tangle. Each node or block in the chain receives the transaction request message, updates its own ledger copy, and passes on the message to neighboring nodes.

The transactions involve monitoring by miners which takes longer time for execution as compared to Tangle which does not have any involvement of miners for a specific purpose of monitoring transactions.

What IOTA has to Offer and Ripple Does Not

  • Zero Transaction Fees – Sending IOTA from one account to another involves no transaction cost. No other cryptocurrency including Ripple, based on blockchain is free of transaction costs
  • More robust technology platform – Unlike the blockchain technology which comes with a limit on the number of users using it at a given point in time, Tangle offers a distinctive advantage on usage as its efficiency and security provisions get enhanced by increasing number of users. There is no limit on how many people can use the Tangle simultaneously
  • IOTA is future-proof – Future era is the quantum computing era and Tangle is developed to work seamlessly with quantum computers while Ripple with its blockchain technology will be more vulnerable to decryption

What Ripple Offers and IOTA Does Not

  • Awareness – Ripple cryptocurrency as it is based on blockchain was introduced quite before IOTA and hence has increased awareness among users across the world. This will make its use rampant and will increase its reliability too
  • Credibility – Ripple is readily being adopted by major financial institutions all over the world and at a much faster rate than any other cryptocurrency. While IOTA is quite new to the market and hence less experienced by users
  • Availability – Ripple is available in simpler forms as compared to IOTA and hence it becomes convenient for users to buy it

Other Notable Differences Between IOTA (Tangle) and Ripple (Blockchain)

This was a brief on the key benefits and problems associated with Ripple and IOTA. Tangle is an improved version of the Blockchain. In future, machine interactions will outnumber human interactions.

If we talk about near future, benefits provided by Ripple are more as compared to IOTA while looking at the establishment of Tangle in coming years, IOTA has the potential to outmatch Ripple in terms of benefits, reliability and ease provided to users.

However, it would be premature to say that IOTA (Tangle) will replace Ripple (Blockchain) as its application areas are yet to be realized in entirety.

Happy investing!

Disclaimer: The views expressed here are the views of the author and do not reflect that of Groww.