What are the Advantages of IOTA over the Blockchain?

When people think of cryptocurrencies the word ‘blockchain’ tends to be the first thing that pops into peoples minds. But not all cryptocurrencies are build on the blockchain. IOTA which is currently sitting within the top 10 cryptocurrencies by market cap uses a little thing known as the tangle.

So the question that perhaps will define the industry in the years to come is, what is the better technology, blockchain or IOTA.

IOTA is a relatively new technology and many don’t really know how it works or even that fact that its not like every other cryptocurrency.

So what is IOTA anyway?

As mentioned above, IOTA is technology that is based on the Tangle and does not use the blockchain. The blockchain is a growing list of records, called blocks, which are linked together in a chain unlike IOTA, which uses the whole network – the tangle. All transactions are linked together in the Tangle. This has many advantages in terms of real world applications to technology so let me explain.

According to Udo Würtz, Fujitsu Engineer, Business Development Director EMEIA,

Many customers first ask us about a blockchain solution, but then find that IOTA suits their needs much better. This is all the more true when it comes to industrial scale

There are 5 key areas where IOTA can improve on the Blockchain.

1. The transaction rate

2. The scalability

3. The feasibility of micropayment’s

4. The efficiency

5. The verifiable manipulation security

The transaction rate

One of the big problems with the blockchain based cryptocurrencies is the low transaction rate. The higher the security measures are for cryptocurrencies such as Bitcoin, the lower the transaction rates. This is currently been improved however with technology such as the Lightning network but currently, the transaction rate is to low more many real world applications.

Unlike the Blockchain, the transaction rate increases dramatically as more users or applications use the system. Therefore with more traffic, the rate in which transactions get approved increases.

The scalability

So as mentioned above, the transaction rate increases with more traffic which means scalability also increases. With IOTA, the system continues to scale – the more subscribers and transactions the system has, the faster it gets. More importantly, the time in which it takes to validate a transaction theoretically approaches zero once you reach a certain size.


You may have heard terms such as the machine to machine economy where machines pay each other fractions of a cent to pay for services. Well the term micropayment is very important here and IOTA is a real micropayment currency.So basically one (1) IOTA which you would buy on an exchange is made up of a million (1,000,000) Mega IOTA’s. Lets assume that a single IOTA is worth $2. So this means that a single MIOTA is worth 0.000002 dollars. Even is within the next 10 years IOTA was for $20,000 each, a single MIOTA is still worth only 0.02cents. That means that IOTA can continue to pay even small amounts transaction-free.

The problem with blockchain applications as a payment system is the mining process . In essence, these are basically external data centers that generate new blocks and insert pending transactions. For this they get a so-called “financial reward”, for example, the transaction fee set by the sender of the transaction.

As a result, the smallest payment amounts for are ultimately made impossible by high transaction fees. You basically can’t even pay for a cup of coffee with Bitcoin the way it is currently. With IOTA, every person, machine and application is part of the network and you validate others transactions automatically. So it is possible to handle even very small amounts for free. The basic idea is that you approve 2 transactions on the tangle before your transaction is approved.

The efficiency

The problem with blockchain technology is that its very costly in terms of computing power and security assurance. If you want to use the Blockchain technology in-house, it will be difficult or even impossible to reproduce the power generated by miners. Cryptocurrency miners are required to guarantee the security and validate the block in the chain.

Currently there is much debate about the amount of power needed to sustain the blockchain with power consumption for Bitcoin Mining greater then Argentinas yearly electricity consumption. IOTA on the other hand requires minimal power to approve transactions that even a mobile device can do it meaning the whole mining process is not required.

The security

As mentioned above, the higher the transaction rate, the more blockchain miners have to neglect security of the chain. If the computer power required to authenticate the blocks is reduced to speed up transactions, then security is ultimately compromised. The blockchain is modifiable to allow this to happen. Many companies however to not want to compromise security over speed.

In the future, IOTA could help companies to verify their data more securely. Companies such as Fujitsu are looking to act as a trusted instance. The Trusted Instance (Fujitsu) keeps a copy of the Blockchain with all the data from the respective company. All transactions then take place both in the enterprise blockchain and in the blockchain of the trusted instance, ie at Fujitsu. In a review, the auditor only needs to compare the two blockchains. If both transaction histories are the same, no manipulation has taken place.

Could IOTA therefore replace accounting in the future?

According to Udo Würtz, Fujitsu Engineer,

Absolutely in many cases. The example of the Trusted Instance payment makes this clear: Basically, there is no need for the entire accounting, because the payment is immediate. The process would then automatically go to a Fujitsu Clearing Center. That in turn could tell other systems that the transaction has already been paid and is valid. There is no accounting and no invoicing. 

What makes IOTA important for the future?

The combination of the above 5 improvements over the blockchain are the biggest advantages of IOTA moving into the future. More importantly, IOTA is much more than a payment system unlike many other cryptocurrencies. In fact, companies can build on IOTA and the Tangle technology to support their IoT use cases. IOTA’s vision is the machine to machine economy and its not just about one robot paying another robot for services with IOTA but also sending information to control the robot.

For example, IOTA can carry the information that tells the robot to turn right, collect a package or pay for a service. Companies can connect and control their products based on IOTA and the Tangle and this idea is leading the way for industry 4.0.

When asking how Udo Würtz, Fujitsu Engineer, sees the future with IOTA he said;

I can imagine that micropayment’s make our everyday life easier. For example, we may soon be at the traffic light with our car and inductively recharge the energy, which is paid automatically and ad hoc via IOTA. In general, integrated IoT communication will continue to increase and it will be exciting to see what the IOTA technology is all about.

IOTA and the Hannover Messe trade fair

Where can I buy IOTA?

Currently IOTA can only be purchased on exchanges with the biggest one being Binance.

Create an account with Binance Here.

Alternatively if you want to buy IOTA stress free in Australia the easiest way for beginners is to buy from Coinspot Here

Source: http://www.fujitsu.com/

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