IOTA in focus, is it blockchain 3.0 or a failed experiment?

IOTA in focus, is it blockchain 3.0 or a failed experiment?

By Austras | Crypto in focus | 25 Nov 2021


How good a blockchain is, doesn't always result in it being a good investment. Popularity, community and the crypto's history is very important. IOTA was built to bring about the next big blockchain revolution, but the road has been all but steady. How does it hold up and is it a good investment?

Background

Sergey Ivancheglo, Serguei Popov and David Sønstebø founded IOTA in 2015 and announced a token sale on a bitcoin forum. IOTA was originally built to try and construct low cost processors, the project saw utility within the market of IoT, communication between devices. They project was released in 2016 with a "genesis" transaction, it contained all the IOTA that would ever be made, it was then sent out from the genesis node to other addresses. The amount was roughly 2,7 quadrillion IOTA, this high number was picked to allow for easy microtransactions between machines, the ticker you see on Coingecko or Coinmarketcap isn't incorrect, it's displaying MIOTA, or million-IOTA which is why the supply is missing six numbers.

The network exists as a DAG (Directed Acyclic Graph), which is different from blockchains and have put the network at a disadvantage as they need to prove that this consensus method works. Several upgrades and several bugs have been battled in the project's history. Implementations from the team such as the Chrysalis upgrade which saw the network speed increase by several tenfolds helps drive it forward. The underlying nature of how the network is built has caused it to be inherently centralized, but many of the team's upgrades to the network have been changes to move away from this, such as the move from "tangle" to "hornet."

On paper this project might sound good but it has been plauged by issues, most of it is related to the team and founders. There has been active drama between the original creators which ended in two out of the three original founders leaving. David, in particular, has been infamous for being very outspoken and hotheaded in comment sections and social media. When it comes to bugs, the network has had its fair share, the network used to rely on a single coordinator node to maintain security. This node had been slowed down several times, and the resulting congestion was usually solved by engineers 15 hours later.

The worst case that happened was when the network was attacked and IOTA worth 1.5 million dollars was stolen, the team's response was to shutdown the entire network until they could fix the issue and hopefully track the culprit. The network was down for over 12 days before being resumed, very troubling.

Network

IOTA is built as a DAG (Directed Acyclic Graph) which is different from a blockchain. Every active node has its own version of the network and can commit transactions to it. Following transactions are used to verify previous ones which results in a large net of transactions taking place instead of blocks. This means that the more active nodes IOTA has, the quicker it is. As all nodes perform small mounts of "PoW" technically, this means that the transactions can be free. Every node confirms two previous transactions (if they aren't faulty) when making its own transaction and commits a very easy cryptographic puzzle. In the case of conflicting transactions existing on several nodes, they work together to reach a consensus an orphan one of the transactions.

When it comes to data IOTA can store on its network fairly easily, it can be sent via web API  through the IOTA oracle service to the TANGLE. The oracle feed is verified by the nodes and organisations can commit data directly. Originally IOTA had checkpoints in its network history for transactions taking place, this was verified by a centralized service node managed by the IOTA foundation known as the coordinator. Several changes have been made so that the network moves towards a more decentralized management system knows as the "hornet." It has recently gained access to solidity smart contracts and the EVM.

Use cases

IOTA hasn't had much use outside of speculation and research purposes. The team has committed several changes which can see a huge increase to the use case of IOTA. It does now support smart contracts on the dev net which will help it gain larger use. Most of what IOTA has been used for is IoT, where developers and companies use IOTA to store and send information between devices running the network. This has been troublesome for smaller devices as they need to be able to support a network node.

The base network having no transaction fees and running very quick transactions makes it very easy for users to send transactions once they get their wallets set up. Wider adoption will probably see an increase now that the network supports smart contracts.

IOTA today

IOTA is a hard token to place. It uses DAG which is very different from most other cryptos today. The question regarding it's decentralized nature and security still remains up in the air and that is putting off many investors. Speaking of investing, most of the use for the chain in the past has been solely for IoT and research purposes. If the team can keep building IOTA's security and help build a smart contract eco system, IOTA might see way more use and a higher spot on the marketcap list.

Pros:
  • Free and near-instant transactions
  • High node count
Cons:
  • History of development and hacks
  • Complex protocol to run, rough on simpler IoT devices

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Austras
Austras

Product manager & tutor, love learning & teaching others. || https://cointr.ee/dorfel


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