IOTA, currently the #10 largest cryptocurrency by market cap, has been withstanding a barrage of bad press and FUD (Fear, Uncertainty, Doubt) over recent months.
There are a number of reasons for the FUD surrounding the IOTA project, so let’s go over them.
1) Problems with the IOTA Wallet
Bitcoin.com released an article about a month ago titled “IOTA Attacked for Subpar Wallet Security Following $4m Hack”. This title alone is a FUD-bomb.
What’s interesting to note, is that this is the ONLY article about IOTA on Bitcoin.com. Can you say “Conflict of Interest”?
As IOTA is potentially one of the largest long-term competitors to Bitcoin and other major cryptocurrencies, it’s safe to say these journalists have some sort of bias towards IOTA’s success.
Debunking the Bitcoin.com FUD
Neither the wallet nor the Tangle (IOTA’s ledger) are in any way at risk — people lost their money because they used phishy internet sites to create their seed for IOTA’s wallet.
Although IOTA’s tech is in no way at fault for the investor losses, it is true that it would have been better if the wallets generated their own seeds for users.
In the latest update, the IOTA Wallet now displays a warning for users to not use online seed generators.
As an actual user of the IOTA Light Wallet myself, I have to say it is one of the worst user experiences out of many different wallets I’ve used for different coins.
Overview of the Light Wallet
You can download the latest versions of the IOTA Light Wallet here at their github for Windows, Mac, etc. You must install the wallet to your computer and generate an 81-character seed with only the letters A-Z and the number 9.
Why they excluded the other eight numbers is beyond me, but an 81 character seed with 27 options for each character is still strong. There are 80 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000* possible combinations for an IOTA seed.
(*combinations calculation corrected thanks to u/bambinka)
Once installed, here is what the light wallet looks like once you’re inside.
If you’d like to send IOTA from an exchange like Binance to the wallet, you’ll need to click the “Receive” button and generate an address to attach to the tangle.
To receive IOTA in the light wallet, you simply attach the generated address to tangle by clicking the purple button and copy this address over to your exchange wallet to send the funds. Simple enough.
Light Wallet Updates and Disappearing IOTA Balances
Now here’s where things get a bit hairy for the IOTA Light Wallet. Whenever you update your wallet, you need to reattach all of your addresses to a new node on the tangle.
Upon opening an updated IOTA Light Wallet, many users are stricken with panick when they see their zero balances.
If you sent IOTA in separate amounts to your wallet, for example ten times, you will need to reattach each of those ten addresses and you will see your IOTA balances trickle in as you labor through the process.
Aside from the inconveniences, the IOTA wallets have never been attacked or compromised in any way.
2) The MIT DCI Report
Back in December there was major FUD about a report put out by the Massachusetts Institute of Technology’s Digital Currency Initiative (DCI).
On Friday, MIT Technology Review published an article on the cryptocurrency IOTA. The headline stated that the currency “could outperform Bitcoin.” However, we here at the MIT Media Lab have issues with the story. Specifically, my colleagues in the Digital Currency Initiative (DCI) recently uncovered a gaping hole in IOTA’s software. And while that flaw has now been patched, we certainly disagree with reporter Michael Orcutt’s assertion that IOTA is “secure.” As the Director of the MIT Media Lab, I felt it important we outline our specific concerns.
One of the main attacks against IOTA in this DCI report was that IOTA’s high-profile business relationships, such as Microsoft are “nebulous”.
The partnership with Microsoft was super hyped in the media. However this was not IOTA’s doing. Microsoft clarified that this was not IOTA’s mistake and used the term “partner” themselves.
3) IOTA is not “tamper-proof” because it uses a centralized coordinator
The function of the central coordinator in early stages of the IOTA network was transparently communicated since day 1.
The IOTA team has explained that the coordinator is a temporary measure to bootstrap and protect the network during its infancy.
Once there are enough full nodes and transactions to secure and sustain the IOTA network, the coordinator will be removed.
4) IOTA’s hash function is vulnerable to attacks
The DCI’s attempt in creating a vulnerability is extemely unlikely, because the DCI group’s theoretical situation considers the victim is:
(a) BOTH dumb enough to follow obviously malicious instructions from an unknown attacker AND capable enough of coding IOTA transactions by hand
(b) Dumb enough to enter their seed into a malicious piece of software provided by the attacker.. if you give someone your seed for ANYTHING, you’re screwed.
When confronted about the practicality of the attack, DCI decided to mislead the public into believing the IOTA network had a vulnerability, rather than address the practicality issue.
It’s also important to note, before giving any major weight to what is said from an organization attached to the MIT brand, that DCI is only very loosely associated with MIT.
MIT’s DCI: A group of academic fraudsters and Zcash shills?
DCI is kind of like a student club within a school. They don’t represent the official views of MIT.
What they actually accomplished with the IOTA report was academic fraud.
- They presented a “vulnerability” using a scenario that is ridiculously unlikely.
- They also refused to release the code as proof to the IOTA foundation.
You might wonder why DCI engaged in such academic fraud? Conflict-of-interest.
- The researchers are involved in competing projects like ZCash
- DCI gets funding from Bitcoin Club.
IOTA: Pushing through the FUD towards dominance
Although the devs at IOTA are totally surprised that IOTA has met so much opposition, they are focused on moving the project forward to realize IOTA’s vision.
IOTA’s technology enables companies to explore new business-2-business models by making every technological resource a potential service to be traded on an open market in real time, with no fees.
IOTA is building a strong network of business partners
While some still try to discredit
#IOTA’s research and development, those with a keen eye for what makes businesses succeed can see what the future has in store for IOTA. The IOTA Volkswagen Partnership is one example.
IOTA Volkswagen Partnership: Volkswagen has announced its plans to leverage the IOTA technology and support its cryptocurrency to transform the automobile sector.@IOTAcurrency @Reddit_IOTA @Volkswagen @JohannJungwirth @Stefferber #IOTA #Volkswagen https://t.co/C8D3ZFCtRi
— CoinGape (@CoinGape) February 22, 2018
People tend to forget that VW is the biggest car company in the world. Here’s their portfolio of brands to remind you what we’re talking about here.
Volkswagen is the biggest car company in the world with a market cap of over $80 Billion USD. They manufacture over 10 million cars per year, that may well be suited with IOTA tech one day soon.
This is from the main stage at Bosch Connected World.
The city of Taipei partnering with IOTA to adopt the technology is also major news for the project.
#IOTA is one of the innovative players in the #cryptocurrency world because of its unique technology. With #Taipei City always thinking ahead and with IOTA’s technology, this partnership is a strategic move to usher in the era of #smartcities to the citizens of Taipei. #smartcity pic.twitter.com/nWMy3b2os1
— IOTA News (@iotatokennews) February 20, 2018
Conclusion: making sense of the FUD
Some coins and their development teams consider IOTA a real threat (why else would a BTC developer or LTC founder post such tweets?). Don’t underestimate the power of FUD. It’s a very powerful way to cast doubt on projects.
The people who do see IOTA’s potential want to buy as cheap as possible so they do what they can to bring the price down, including spreading FUD.
IOTA produces it’s own type of FUD with its disruptive potential
FEAR from those who do understand IOTA’s potential to impact their interests in other projects.
UNCERTAINTY because if IOTA succeeds, they may be poorly positioned.
DOUBT from those who believe they have safely invested in other coins but can see IOTA winning the race for IoT dominance.