IOTA

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IOTA
Iota logo.png
Founded 2015
Headquarters Berlin
Key People Dominik Schiener, Co-Founder, Co-Chairman of the Board of Directors; David Sønstebø, Co-Founder, Co-Chairman of the Board of Directors
Employees 50
Products Cryptocurrency Foundation and Coin
Twitter @IOTAecosystem
LinkedIn Profile
Website IOTA.org
Blog IOTA blog

IOTA is the name of both a cryptocurrency and the organization that is fostering its development. The IOTA foundation focuses on developing transaction and payment systems around "IoT" - the Internet of Things - by using a cryptocurrency that has been designed specifically to support a distributed ledger for extremely low-value transactions.

Company Overview

While based on distributed ledger technology like bitcoin, ether and other cryptocurrencies, IOTA uses "Tangle," which addresses many of the perceived inefficiencies of blockchain technologies.[1] The foundation claims that IOTA differs from blockchain in its data structure, scalability, consensus model, security, and lack of a systemic need for transaction fees.[2]

According to its fans, IOTA is the "blockchainless blockchain," bringing the benefits of distributed ledger technology without the costs and efforts of blockchain itself. The lower costs and greater speeds and efficiencies of IOTA compared to blockchains, if realized, will allow IOTA to be commercialized for data exchanges in IoT, where, for example, a connected refrigerator might communicate with local supermarkets over the internet.[3]

IOTA Foundation

The founders of the IOTA Foundation established it as a not-for-profit organization in Germany. According to its website, it has five divisions: general administration, social and public policy, research and development, ecosystem, and business and industry streams. Its supervisory board, as of June 2018, is composed of representatives of Volkswagen, Object Management Group and Fujitsu, and a management board. The two founders, Dominik Scheiner and David Sønstebø, along with Ralf Rottmann, make up the management board.[4]

Donations of IOTA to the foundation's treasury from developers and stakeholders provide the initial funding. The fiat-value of the foundation's assets will vary directly with the demand for IOTA coins, the supply of which is fixed. The IOTA Foundation is pursuing additional sustainable streams of funding.[5]

Implementation

In May 2018, the United Nations Office of Project Services announced that it was working with IOTA on a pilot project to deploy IOTA in its technology to help the UN with project management. The low energy demands compared to other distributed ledgers is particularly interesting for remote UN locations.[6] Since Volkswagen’s Chief Digital Officer (CDO), Johann Jungwirth, joined the IOTA Foundation’s Supervisory Board in January it is not surprising that Volkswagen has announced that it is interested in using IOTA for distribution of system update data in its autonomous car ecosystem. Volkswagen and IOTA demonstrated their proof of concept on June 11, 2018, at CEBIT, which is a huge European technology trade show. IOTA has also said that Volkswagen is considering using IOTA for trip planning, booking, and payment services within the smart vehicle ecosystem.[7]

Products and Services

Cryptocoin

IOTA was issued as a coin in a three-stage process starting on July 11, 2016. IOTA is not mineable.[8] The total supply of 2,779,530,283,277,761 IOTAs ("2.779 quadrillion IOTAs") had already been created as of June 2018.[9] According to CoinMarketCap on June 20, 2018 the value of the total supply was $3.246 billion, making it the eighth largest cryptocurrency by market capitalization.[10] IOTA is the largest non-blockchain distributed ledger technology cryptocurrency.

Distributed ledger technology without blockchain

The technology behind IOTA is called a tangle architecture. It constitutes a block-less network without building data blocks like in a blockchain. In a tangle, a tangle node validates other transactions when it seeks to have its own transactions included in the network.[11] This validation replaces paying miners to build blocks. Instead of a blockchain's series of one-after-another transactions, IOTA's tangle is a web of transactions wherein each one references two previous transactions. This allows multiple simultaneous validations, a very low cost feature - especially compared to blockchain validation - that enhances the scalability of the IOTA network.[12]

The web of transactions is called a directed acyclic graph: directed because it grows or continues sequentially and acyclic because the route to any one transaction from an earlier transaction is undefined and could be attained by more than one path. In contrast, a blockchain's one-after-another structure means that there is only one route in time for a transaction to have followed. IOTA Foundation presents the following comparison of the two models:

              Block v DAG.png         

IOTA indicates that in the blockchain at a given moment many miners work on one transaction while in a directed acyclic graph many nodes can work on many transactions.[13]

Security

Controversy: IOTA v. MIT v. The Industry

In September 2017 the MIT Digital Currency Initiative published concerns on GitHub about the IOTA technology. The concerns had arisen over the previous few months and had privately been disclosed to IOTA developers. The MIT researchers were concerned that, although IOTA had addressed one of the problems satisfactorily, serious vulnerabilities remained.[14] On January 7, 2018, IOTA published its response to the criticism and an update on relevant developments at IOTA since then. The response indicated that IOTA was frustrated with what it said was a misunderstanding by the MIT researchers.[15] Late in February 2018, an anonymously leaked 124-page pdf of the email exchange between MIT and IOTA was published on an IOTA-friendly blog, The Tangler.[16]

After the email leak, IOTA said that the "properties of the IOTA protocol discovered by DCI were in place by design as a copy-protection mechanism, and that DCI has not uncovered any actual vulnerability in the IOTA protocol."[17] There have been a number of other concerns raised by developers and computer scientists that IOTA developers appear to be responding to. These concerns focus especially on the vulnerability of the in-house developed hash function to hacking, the addressing scheme which demands that addresses be single-use, and the role in the present version of the IOTA software code for a central coordinator which has control over the protocol.[18]

IOTA finds stolen coins

In January 2018, €10 million ($11 million) worth of IOTA digital tokens were stolen from the wallets of more than 85 IOTA investors from around the world. One year later, the European Union Agency for Law Enforcement Cooperation, or Europol, announced that a 36-year-old man from Oxford, England, had been arrested - the result of a collaborative effort between the governments of the U.K. and Germany, as well as the IOTA Foundation. According to IOTA co-founder and board co-chairman Dominik Schiener, most of the stolen funds were recovered (except for a relatively small amount), though they were being held as evidence in a police investigation.[19][20]

Trinity wallet hack

The foundation reported that it stopped confirmations on the network on February 12, 2020 because users reported that funds were missing from their Trinity wallets.[21] The move was controversial because the network is supposed to be decentralized. The foundation, however, controls a central coordinator node which is used to halt transactions on the network. The foundation said the network would re-launch on or before March 2, 2020[22]

The foundation warned all Trinity users to be aware of the hack and said in a blog post, "Passwords and seeds have been obtained by the attacker. All Trinity Desktop users from 17 Dec to 17 Feb should change their wallet password (and anywhere else it has been used). Note, changing password alone does not make you safe, you will also need to use the migration tool."[23]

Key People

  • Dominik Schiener - Co-Founder, Co-Chairman of the Board of Directors
  • David Sønstebø - Co-Founder, Co-Chairman of the Board of Directors

References

  1. Basics. IOTA Foundation.
  2. Advanced. IOTA Foundation.
  3. IOTA: The $3.7 Billion Crypto Developers Love to Hate. Coindesk.
  4. The IOTA Vision. IOTA Foundation.
  5. Basics. IOTA Foundation.
  6. UN Division Looks to IOTA Ledger Tech for Higher Efficiency. Coindesk.
  7. CEBIT '18: IOTA and Volkswagen Present Proof of Concept for Autonomous Cars. Cointelegraph.
  8. The Internet of Things, Blockchain-less Token IOTA Launched: Interview with Co-Founder. Cointelegraph.
  9. IOTA or MIOTA What is The Difference?. LiveBitNews.com.
  10. Top 100 Coins By Market Capitalization. CoinMarketCap.
  11. Internet of Things and Blockchain Technology: How Does It Work?. Cointelegraph.
  12. Advanced. IOTA Foundation.
  13. Advanced. IOTA Foundation.
  14. tangled-curl. MIT Digital Currency Initiative.
  15. Official IOTA Foundation Response to the Digital Currency Initiative at the MIT Media Lab. IOTA Foundation.
  16. FULL EMAILS OF ETHAN HEILMAN AND THE DIGITAL CURRENCY INITIATIVE WITH THE IOTA TEAM LEAKED. The Tangler.
  17. Official Statement Regarding the MIT DCI Email Leaks. IOTA Foundation.
  18. IOTA: The $3.7 Billion Crypto Developers Love to Hate. Coindesk.
  19. IOTA: Almost All Tokens From $11 Million Hack Have Been Found. Coindesk.
  20. IOTA says bulk of $11 million stolen tokens found, hacker worked alone. Reuters.
  21. Trinity Attack Incident Part 1: Summary and next steps. Medium.
  22. IOTA Foundation expects to reactivate network by March 2 following $2M user wallet attack. The Block Crypto.
  23. Trinity Attack Incident Part 2: Trinity Seed Migration Plan. Medium.