The Tangle Visualized
In general, iota works in the following way. Instead of the global blockchain, there
is a DAG (= directed acyclic graph) that we call tangle. The transactions issued by nodes constitute the site set of the tangle (i.e., the tangle graph is the ledger for storing transactions). Its edge set is obtained in the following way: when a new transaction arrives, it must approve two previous transactions; these approvals are represented by directed edges, as shown on in the video. If there is no directed edge between transaction A and transaction B but there is a directed path of length at least two from A to B, we say that A indirectly approves B. There is also the “genesis” transaction, which is approved (directly or indirectly) by all other transactions. The genesis is described in the following way. In the beginning there was an address with balance containing all the tokens. Then the genesis transaction sent these tokens to several other “founder” addresses. Let us stress that all the tokens were created in the genesis (no other tokens will be created), and theres no mining in the sense “miners receive monetary rewards” -Iota whitepaper extract
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