IOTA Sounds Great On Paper, But A Cryptocurrency Without A Blockchain Might Not Be An Excellent Idea

IOTA Sounds Great On Paper, But A Cryptocurrency Without A Blockchain Might Not Be An Excellent Idea

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When IOTA was founded in 2015 by the quartet of David Sontesbo, Sergey Popov, Dominik Schiener, and Sergey Ivancheglo, there was little doubt that they were unto something that could potentially fast-track the mass-market adoption of cryptocurrencies. IOTA was founded to merge cryptocurrencies with Internet of Things to encourage mass market adoption of cryptocurrencies and to fix some of the fundamental problems behind the complexity and scalability hurdles of Blockchain technology.

For one, IOTA wanted to integrate seamless transactional communication between IoT devices, with improved accuracy, at lower operational costs, and without the core complexities of a Blockchain. In the last couple of years however, the general Blockchain and cryptocurrency industry has seen an unraveling that suggests that IOTA’s Tangle might be a mess. This piece draws provides insight on some of the technical problems ailing IOTA, how a non-blockchain solution won’t probably fix the Blockchain, and how a new emergent blockchain-powered project protocol plans to succeed where IOTA failed.

                       Here’s what’s wrong with IOTA

·      A cryptocurrency without a Blockchain

IOTA is a cryptocurrency without a Blockchain; instead, its security is built on “Tangle”, which is a function of a mathematical idea called Directed Acyclic Graph (DAG). IOTA believes that the “Tangle” is a better alternative to costly and complex Blockchains. However, researchers at MITs Digital Currency Initiative (DCI) have revealed that they found “serious cryptographic weaknesses” in the current Curl implementation on IOTA. The MIT researchers revealed that “we can forge signatures of valid spending transactions (called bundles in IOTA). We present and demonstrate a practical attack (achievable in a few minutes) whereby an attacker could forge a signature on an IOTA payment, and potentially use this forged signature to steal funds from another IOTA user.” The researchers maintained that IOTA’s decision to create Curl, its own cryptographic function was a penny-wise pound-foolish move that flouts a cardinal rule in cryptography. There are more widely-known, tested, and trusted cryptography functions which are provably more secure that IOTA’s P-Curl function. Unfortunately, the argument of IOTA’s founding team that they intentionally adopted the insecure code to prevent people from copying their source code doesn’t hold much water.

·      Network not robust to withstand attacks

Apart from the fact that IOTA is a cryptocurrency without a Blockchain, it’s Tangle network has not proven to be tamper-proof. In November 2017, IOTA’s network crashed and remained inoperable for almost three days. It was reported that IOTA developers decided to shut down the network because they discovered a bug in the Coordinator (COO). The two main problems with that decision is that IOTA runs a massive centralized risk as seen in the fact that anybody with a strong enough incentive can encourage node operators to shut down their nodes. Secondly, IOTA’s network’s survival in hinged on its Coordinator (COO) which is supposed to protect the network. However, a bug in the Coordinator places the entire network at risk – one could not begin to imagine how things could have gone wrong massively if cybercriminals had discovered that bug before the developers found it. One of the reasons the Bitcoin and Ethereum Blockchains have remained popular is that they have grown big and robust enough to withstand attacks from outside and it is practically impossible for either the Bitcoin or Ethereum foundation to shut down the networks.

·      Misrepresentations in Marketing

The second major problem with IOTA was that there were allegations of questionable misrepresentations in marketing. For instance, in November 2017, news broke that IOTA has some “partnerships” with several high-profile tech firms such as Fujistu, Deutsche Telekom, and Microsoft to build a decentralized marketplace. Interestingly, a Microsoft representative didn’t confirm the partnership, noting instead that “IOTA is a Microsoft Azure customer and plans to use Azure to test and deploy its Data​ ​Marketplace.” A few weeks later IOTA came out with clarification nothing that it didn’t have a formal partnership with Microsoft. The firm noted that they are working tech exercise of IOTA’s Tangle network, but that Microsoft is participating and not necessarily partnering on its data marketplace.

There’s blockchain-powered IOT project in town.

IOTW is a new project designed to leverage Blockchain technology and cryptocurrencies to activate a new level of growth and interconnectedness in the Internet of Things. Using a simplified Proof of Assignment, IOTW seeks to enable IoT devices with the ability to micro-mine cryptocurrencies – the best part is that regular everyday users gets rewarded with cryptocurrencies instead of the current set up in which professional mining farms earn all the crypto in the markets. With IOTW, all IoT enabled devices can become part of the network without the need to invest in new hardware or sophisticated mining rigs.

All you’ll need to do to join the IOTW ecosystem is to have your device download the IOTW software through a firmware upgrade. Once your device is turned on and connected, it becomes a part of the IOTW blockchain ecosystem where it can be functional in mining, communicate with other IoT devices, and become a part of a data marketplace in sharing energy consumption and usage data. In exchange for being a part of the IOTW network, users are rewarded with cryptocurrencies in the form of IOTW tokens.

The tokens can be used to buy repair services or spare parts for the devices. You can also use the tokens to buy other goods, services, or media content on the open market. The more interesting point to note is that IOTW is an IOTA alternative that is built on an actual blockchain and backed by a simplified network effect. As seen above, IOTA could be fundamentally flawed because it lacks a blockchain and it runs a pseudo-centralized model. The fact that IOTW doesn’t require additional hardware costs unlike IOTA that required a computer motherboard suggests that IOTW will succeed where IOTA failed. The fact that IOTW also enable the purchase of specific data, big data, media content, and microtransactions also suggests that its ecosystem will grow to become more robust than the IOTA ecosystem.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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