Blockchain is a term almost synonymous with cryptocurrency. In the world of digital currency, blockchain ensures security as it records each transaction.
Tangle, hashgraph, and holochain are what’s predicted to come next after blockchain. These upcoming data storage system alternatives have much potential and could even usurp the mighty blockchain.
In this article, I will cover the three alternatives to blockchain and discuss each in depth, including their advantages and disadvantages. To understand how each alternative rivals blockchain, you need to first understand exactly how blockchain works.
What Is Blockchain?
Blockchain is a storage system for cryptocurrency transactions. It gets its name from its arrangement and format which is different from traditional databases that rely on tables for storage.
Here, information is stored in blocks. Once the blocks have reached capacity, the block is closed, taking no more information. However, the closed block always links to the previous block, thus forming a data chain.
Benefits of Blockchain
- Blockchain records digital information, and no one person, group, or entity controls it. Blockchain is uneditable. This means that transactions cannot be altered or deleted. The record remains as is with no disruption.
- Blockchain is decentralized. A decentralized system means that the database is not restricted to one location. Rather, blockchain is shared across multiple network nodes. This further ensures that records cannot be altered. And because of its nature, it also eliminates a common element of traditional banking systems; the processing fees and transaction fees.
- Blockchain records are time-stamped and arranged chronologically. The order makes it nearly impossible for hackers to successfully steal cryptocurrency as it would require immense effort, resources, and time. Also, blockchain is impeccably accurate.
Disadvantages of Blockchain
While blockchain certainly has its benefits, it is not a system without fault as shown below:
- Blockchain is spread over multiple network nodes, which leaves a heavy environmental footprint.
- It requires a sheer volume of redundancy.
- It lacks regulation as it is decentralized and only commonly governed.
3 Predictions for Blockchain Alternatives
Below are 3 blockchain alternatives that may suit the needs of the cryptocurrency industry better.
IOTA is a cryptocurrency, and IOTA is supported by IOTA Tangle. Tangle is unlike blockchain and is instead a distributed ledger technology (DLT). Tangle is interconnected, and transactions are verified by multiple parties at once.
Tangle’s multi-party verification serves three essential purposes. It shortens transaction time, requires less energy, and prohibits duplicate transactions. The multi-party verification also guarantees security.
Tangle is the self-proclaimed successor of blockchain. It certainly has its advantages over blockchain. Tangle does not have transaction fees, unlike blockchain cryptocurrencies. Additionally, tangle is financially advantageous as fractional payments, or micropayments, increase among users. Transaction costs associated with blockchain would render micropayments useless.
Hashgraph can easily be considered more efficient than blockchain. Blockchain does have a considerable disadvantage; it is created from one single chain. However, if too many blocks are created in a short time frame, blockchain must fit them onto the one single chain.
Hashgraph, on the other hand, requires no manipulation to maintain one chain. It does not discard any blocks of data. Each block is incorporated into the ledger and is never deleted. If multiple blocks of transactions are created in a short time, hashgraph has the capacity to grow quickly.
It is also cost-effective in comparison to blockchain. Blockchain requires proof-of-work (PoW) to maintain only one chain. This is not only costly, but also energy intensive.
Hashgraph operates on a system of fairness. There are no leaders, miners, or anyone else with special permissions governing transactions. Each transaction is given a timestamp based on the median time that each node received the transaction. Furthermore, the timestamp is used to determine the order of transactions.
Holochain is similar to blockchain in that it is decentralized and serverless. However, it relies on random peers to validate data. Also, the data must meet holochain’s rules before storage. Holochain aims to serve users moving beyond blockchain technology; it does not require mining while still being able to withstand any majority attacks from bad actors.
Like tangle and hashgraph, holochain is purportedly more efficient and more cost effective than blockchains. It relies on a distributed hash table (DHT) and uses Holo token (HOT) and HoloFuel.
While blockchain may be synonymous with cryptocurrency now, it may not remain so over time. Other alternatives are sprouting up that appear to be more cost-effective and with superior efficiency. Tangle, hashgraph, and holochain rival blockchain and could potentially become the leaders in cryptocurrency.
- Moralis Academy: What is Holochain, Holo, and the HOT Token?
- Moralis Academy: Breaking Down Proof- of- Work Mining and 51% Attacks
- 101 Blockchains: Alternatives to Blockchain Technology Gives Rise to Ecofriendly IOTA
- Holochain: An End-to-End Open Source P2P App Framework
- Hedera: What is Hashgraph Consensus?
- Investopedia: Blockchain Definition What You Need to Know
- IBM: What is Blockchain Technology