Tangle

IOTA’s distributed ledger, by contrast, does not consist of transactions grouped into blocks and stored in sequential chains, but as a stream of individual transactions entangled together.

In order to participate in this network, a participant simply needs to perform a small amount of computational work that verifies two previous transactions. Rather than creating a hierarchy of roles and responsibilities in the network, every actor has the same incentives and rewards. In order to make a transaction in the Tangle, two previous transactions must be validated with the reward for doing so being the validation of your own transaction by some subsequent transaction. With this 'pay-it-forward' system of validations, there is no need to offer financial rewards. Transacting with IOTA is and will always be completely fee-free.

Moreover, without the need for monetary rewards, IOTA is not limited to transactional value settlements. It is possible to securely store information within Tangle transactions, or even spread larger amounts of information across multiple bundled or linked transactions.

This structure also enables high scalability of transactions. The more activity in ‘the Tangle’, the faster transactions can be confirmed.

For more details on how the Tangle works, please Tangle whitepaper : The Tangle Whitepaper