So, IOTA community and crypto enthusiasts are wondering whether it will be able to process 1 million transactions per second or more.
IOTA’s Tangle
A majority of cryptocurrencies are based on blockchain technology. However IOTA, the 11th largest crypto by market cap, is powered by directed acyclic graph (DAG) technology which permits unlimited scalability and high speed processing.
Notably, NANO is another cryptocurrency, which works on DAG, but takes only about 2s to confirm a transaction. However, NANO is marketed purely as a payment cryptocurrency.
Ability of Tangle
The biggest advantages of IOTA are “No Blockchain, scalable, decentralized, fast, fee-free, quantum secure, and the best option for the IoT.”
To complete a transaction, only two transactions are required. Due to this simple rule, “the more people use IOTA, the more transactions get referenced and confirmed.”
As a result, confirmation rates and transaction times get better, as more people start using it, unlike Blockchains which face congestion.
Secondly, IOTA does not use blocks. Therefore, scalability issues are completely avoided.
The crypto is designed such that it has no need to “order values of seeds and addresses in the right order.” IOTA achieves this by saving transactions on different devices, in an unordered and split manner. So when a node is synched, it just iterates through all transactions. The values pertaining to all transactions will be automatically grouped into their addresses, irrespective of whether they are in the prior order.
When all transactions are processed by the Tangle, the addresses (or ledger) will have all balances. There is only a need to confirm that there are no negative balances.
IOTA has only drawback. Its scalability is limited only by the network bandwidth. However, that is resolved through the process of clustering where transactions are executed within a sub tangle. That means, only local network bandwidth is used. Other sub tangles continue to operate independently. Therefore, it may be only a matter of time when we see IOTA executing millions of transactions within seconds.