How is IOTA different from Blockchain?

When it comes to comparing IOTA (or more specifically, the Tangle) with Blockchain, there are many differences as they are two completely distinct architectures built on the same principles. For those interested in a comprehensive comparison of Tangle vs. Blockchain, you can expect a detailed blog post from us soon. For this FAQ, I want to emphasize on two of the main differences of Tangle and Blockchain.

1. Data Structure

Instead of being structured as a sequential chain where blocks are added in regular intervals, the Tangle is based on a DAG (Directed Acyclic Graph). Through this, IOTA is able to achieve high transaction throughput (by parallelizing validation) and no transaction fees on transactions. As the Tangle grows and more participants make transactions, the overall system becomes more secure and faster, with confirmation times / transaction finality going down.

2. Consensus

The way consensus is achieved in a Blockchain is through a very rigorous mechanism, that requires multiple parties to "race" against each other in an attempt to add the next Block to the Blockchain and get the block reward / transaction fees. Because of this, consensus is decoupled from transaction generation and is largely performed by a smaller subset of the network, oftentimes with a high entry barrier (as is the case in Bitcoin) which leads to further centralization.

In IOTA, every participant in the network making a transaction also actively participates in the consensus. More concretely, you are referencing two transactions directly (branch and trunk transactions) and other transactions in the sub-tangle indirectly. Through this, validation is parallelized and the network stay completely decentralized, with no miners to delegate trust to or having to pay a transaction fee.