IOTA (technology) uses directed acyclic graph
IOTA is an open-source distributed ledger and cryptocurrency designed for the Internet of things (IoT). It uses a directed acyclic graph to store transactions on its ledger, motivated by a potentially higher scalability over blockchain based distributed ledgers. IOTA does not use miners to validate transactions, instead, nodes that issue a new transaction on the network must approve two previous transactions. Transactions can therefore be issued without fees, facilitating microtransactions. The network currently achieves consensus through a coordinator node, operated by the IOTA Foundation. As the coordinator is a single point of failure, the network is currently centralized.IOTA has been criticized due to its unusual design, of which it is unclear whether it will work in practice. As a result, IOTA was rewritten from the ground up for a network update called Chrysalis, or IOTA 1.5, which launched on 28 April 2021. In this update, controversial decisions such as ternary encoding and quantum proof cryptography were left behind and replaced with established standards. A testnet for a follow-up update called Coordicide, or IOTA 2.0, was deployed in late 2020, with the aim of releasing a distributed network that no longer relies on the coordinator for consensus in 2021.Characteristics
The Tangle
The Tangle is the moniker used to describe IOTAs directed acyclic graph (DAG) transaction settlement and data integrity layer. It is structured as a string of individual transactions that are interlinked to each other and stored through a network of node participants. The Tangle does not have miners validating transactions, rather, network participants are jointly responsible for transaction validation, and must confirm two transactions already submitted to the network for every one transaction they issue. Transactions can therefore be issued to the network at no cost, facilitating micropayments. To avoid spam, every transaction requires computational resources based on Proof of Work (PoW) algorithms, to find the answer to a simple cryptographic puzzle.IOTA supports both value and data transfers. A second layer protocol provides encryption and authentication of messages, or data streams, transmitted and stored on the Tangle as zero-value transactions. Each message holds a reference to the address of a follow-up message, connecting the messages in a data stream, and providing forward secrecy. Authorised parties with the correct decryption key can therefore only follow a datastream from their point of entry. When the owner of the data stream wants to revoke access, it can change the decryption key when publishing a new message. This provides the owner granular controls over the way in which data is exchanged to authorised parties.