Everything you didn’t know about IOTA
IOTA is a futuristic protocol in distributed ledger technology. It is more than just a cryptocurrency. Even as a cryptocurrency, with it’s zero transaction fee, unlimited scalability, ability for nano transactions and quantum resistance, IOTA overcomes all the limitations of traditional cryptocurrencies like Bitcoin, Ethereum and Ripple. It works on a technology called DAG (Direct Acyclic Graph ) and the IOTA implementation of DAG is called ‘Tangle’. IOTA has the potential to disrupt the entire financial, database management systems of the world by enabling micro/nano transactions in the IoT (Internet of Things) , as a facilitator in the IDoT ( Identity of Things ) , as a replacement to money in human to human transactions, in secure messaging, data storage, data security and validation.
Misconception 1 : IOTA transaction fees will increase when the network grows
Reality : IOTA transactions are free. By free I mean zero transaction fee. And it will always be zero however big the network grows.
Misconception 2 : IOTA transactions are not free in the sense that PoW is being done for each transaction. When number of transactions increase, it will require huge mining farms.
Reality : The PoW in IOTA is very small . Even when the network becomes huge, it won’t increase significantly. Not to the extent of requiring mining farms. As there are no miners involved, there is no competition for reward. Hence no progressively increasing network difficulty.
Misconception 3 : IOTA is premined and the developers hold most of the coins
Reality : IOTA is not premined. It was fairly distributed in an ICO. Read this bit from the IOTA Wikipedia page
"the team began developing IOTA in early 2015. To ensure equitable token distribution, a crowdsale was held from November to December 2015 during which 100% of the token supply was issued. Zero tokens were held for the developers/founders. The equivalent of 1,337 Bitcoins were raised from the crowdsale (in the form of BTC, NXT, and Jinn tokens). Since none of the token supply was allocated to developers/founders, the community decided to support the project’s vision by donating a significant amount of resources in order to establish the non-profit “IOTA Foundation” registered in Germany. "
As far as I know , the foundation currently holds just 5% of the total supply.
You can verify the current distribution of IOTA here
All statistics shown in the above website are dynamically recalculated after each milestone.
It’s true that early investors are holding most of the tokens. But don’t worry. Fair redistribution is slowly taking place naturally as is evident from the data obtained from the recent snapshots.
Read this post to understand this better .
Misconception 4 : IOTA has no real world applications now. It’s all a dream.
Reality : The following links illustrate the real world applications that IOTA already has.
Lot more will follow.
For updates about the real world applications of IOTA, please follow the official Twitter account of iota.
Misconception 5 : XYZ Coin is a better technology than IOTA because it is also using DAG and it has PQRS extra features.
Reality : IOTA has zero transaction fees. It has unlimited scalability (by unlimited I really mean unlimited ) . It is quantum secure. No other XYZ coin has these features.
Misconception 6 : Nobody will run IOTA full nodes as there are no incentives in running it.
Reality : Please go through this post first.
Also please visit #nodesharing channel in iota slack. Everyday lots of new nodesharing requests come in that channel from all over the world. IOTA transactions used to take hours many months back. Now they confirm in less than five minutes. This is because day by day the network is getting stronger because of new nodes being setup.
Misconception 7 : IOTA wallets are not user friendly.
Truth : IOTA technology is in its infancy. The wallets may be a little unfriendly now . But newer and better wallets are getting developed as I write this . For example see this link.
Misconception 8 : Many people have lost IOTA from their wallet. The coins just disappeared.
Reality : Nobody lost their IOTA tokens. There was a recent network upgrade and there was a step called 'transitioning' which had to be done mandatorily . Some people did not do it and thought that their IOTA disappeared. Details about transitioning can be read here
Misconception 9 : IOTA transactions are not fast because withdrawals and deposits take a lot of time on Bitfinex. Sometimes when IOTA is withdrawn from Bitfinex, it doesn’t reach the wallet at all even after multiple reattachments.
Reality : The problem is not with IOTA transactions. Bitfinex has a high load of deposits and withdrawals. The delay is from the exchange’s end and not an inherent problem of IOTA network.
If your Bitfinex withdrawal did not reach your wallet even after multiple reattachments, please open a support ticket with Bitfinex. They will surely sort out your problem. I reiterate, such an issue is a Bitfinex issue and not an IOTA network issue. It’s pointless to blame IOTA for that.
Misconception 10 : IOTA is only on a single exchange (Bitfinex) currently because it’s a shitcoin.
Reality : Most of the exchanges want to list IOTA .Also they are in touch with the developers for help regarding integration.However, IOTA is not another blockchain copy paste nor an ERC 20 token. Integrating IOTA takes a little time because the technology is entirely new. The developers have promised that within a few months, IOTA will be on many more exchanges.
Misconception 11 : IOTA transactions are meant to be machine to machine only. Human to human transactions using IOTA won’t be as good as M2M
Reality : It’s true that the main focus of the IOTA developers is on the Internet of Things (IOT) and M2M transactions. However, this does not mean that IOTA cannot be used for human to human transactions. In fact , IOTA is ideal for H2H transactions also because it has zero transaction fee and also because micro/nano transactions are possible with IOTA.
IOTA is divisible, fungible, durable , portable, uniform and limited in supply. Wait till it becomes acceptable. IOTA will then have all the characteristics of money.
Bitcoin, Ethereum and all other cryptocurrencies with transaction fees are not portable in the true sense of the word. Once you move them from one wallet to another , they decrease in value (due to the transaction fee involved) . Coins like Bitcoin/Ethereum are not relatively constant in supply. Atleast for now. They are all inflating in supply hour after hour.
Bottom-line : If there is any cryptocurrency which can function as money, it is only IOTA.
Misconception 12 : IOTA is centralised because of the 'Coordinator'
Reality : Read the following excerpt from this blog post by the developers.
“IOTA is currently in what should be considered a ‘transition period’ towards large scale deployment and standardization. Like Bitcoin, Ethereum and all other distributed consensus protocols before it, the IOTA network need an onboarding mechanism to provide 34% attack protection in its early days. Due to the unique underlying architecture of IOTA this takes the shape of a ‘Coordinator’. The ‘Coordinator’ or ‘Coo’ for short, is essentially training wheels for the network until the amount of organic activity on the ledger is sufficient to where it can evolve unassisted, at which point the Coo is permanently shut off. This does not mean that the IOTA ledger is currently in any way centralized, the network is 100% decentralized, every node verifies that the Coo is is not breaking consensus rules by creating iotas out of thin air or approving double-spendings. In fact any talented programmer could replace Coo logic in IRI with Random Walk Monte Carlo logic and go without its milestones right now, so technically even at present the Coo is entirely optional. The only role the Coordinator serves is to protect against attacks in this temporary infancy stage of the Tangle ledger, if we shut the Coo down the network would continue to evolve as it will in the future when it is unassisted by these ‘training wheels’.”
Misconception 13 : IOTA costs almost one dollar each. Then how can it be used for micro and nano transactions ?
Reality : One dollar each (at the time of writing this article ) is the cost of one Mi ( Mega iota ) ie , 1000,000 iota .
IOTA has total fixed supply of 2 779 530 283 277 761 units with zero inflation.
This makes micro /nano transactions possible. Also the developers might introduce decimals in IOTA in the future (There were discussions regarding this) . That will make nano transactions even more convenient.
Misconception 14 : IOTA network is not secure. Everyday, I hear terms like 'Double spending attack' , ‘ 51% attack' , ‘ 34 % attack' etc. One of these may destroy the network one fine morning and all my money will be lost forever.
Reality : IOTA network is very secure. Read this article carefully and all your fears will be gone. Here is the most relevant excerpt from the above article
“In blockchains, as we all know, the most well-known attack vector is the “51% attack”. Research has been done in the years since that theoretical attack was postulated, and it was actually found that it would only take 34% of network hashing power to carry out the attack. So right off the bat, there is a fundamental public misunderstanding of this attack vector (people think that it requires having the majority of the network hash rate when it actually only requires 34% of it). But the exact percentage is semantics anyway — let’s move to how this attack applies to IOTA. As you continue in this article, you’ll notice that “34% attack” is not actually “34%* attack”.
The most crucial first step to understanding all of this is that IOTA mesh net topology. This differs greatly from all other blockchain protocols. Mutual tethering and the future of IoT connectivity are the factors that make IOTA a mesh net, which has some very implications for network security, the most important of which is how this topology strengthens network resiliency against the 34%* attack.
IOTA mesh net: Each full node only sees one tiny part of the Tangle — through their handful of neighbors. No one has a list of all IPs of all nodes. Now, let’s address the 34%* attack in IOTA.
Because blockchains are not in mesh nets, the 34% attack in blockchains just means that if you get enough hash power, you can successfully conduct the attack. Percentage of network hash rate is the only variable in the blockchain 34% attack.However, in IOTA, there are THREE variables required for this attack.
a) X percentage of network hash rate : A sufficiently large portion of the network hashing rate (“X%” [any number]. We’ll establish the multivariate “gradient” concept later in this writeup): Just like in Bitcoin, the attacker would have to achieve a certain very large amount of network hashing power in order to overtake the network. But this is NOT the only variable in IOTA as you can see. There also isn’t an “all or nothing” network takeover in IOTA. This idea probably requires an entire article in and of itself, but suffice to say that 34%* attacks only take down layers of the Tangle, requiring an exponentially stronger 3 variable attack to propagate deeper and deeper into the Tangle.
b) Omnipresence : Seeing the entire network topology at once. “Having an overview of the network” To deploy attack resources properly and efficiently, an attack would need to get a broad overview of every full node connection in the Tangle. This is obviously impossible since every connection is kept private, and no entity is able to map the network.
c) Y percentage of omnipotence : Being paired with a certain % of all full nodes in the network. Neighboring with a sufficiently large portion of the network (Y% omnipotence): The attacker must be able to push their massive amount of hashing power (X% of the network’s hash power) through the tangle suddenly (a non-sudden attack is not an attack, so suddenness *is a sub-category of this 3rd requirement).
For example: An attacker needs X% of network hashing rate and is paired with Y% of all neighbors in the Tangle. It would greatly help to be able to have an overview of every connection in the network in order to optimize the attacker’s attack propagation, but this is impossible so it can be ignored henceforth. Failing to have omnipresence puts a substantial burden on any potential attacker by requiring a massive increase in resources necessary in X and Y.”
Misconception 15 : People usually run full nodes for fun and this won’t help the network.
People who say this are totally ignorant about how an IOTA full node can be setup.
Full nodes require neighbours. For you to add a neighbour, mutual tethering has to happen. Mutual tethering requires two interested parties to share their ip addresses to each other privately. If you are installing an iota full node for fun and not keeping it on 24*7 , your neighbours will promptly throw you off and find another healthy neighbour. That means your chances of running a full node which is not connected to the network 24*7 are very low.
Misconception 16 : IOTA has a huge supply. Therefore it’s price won’t increase.
Reality : This misconception is due to a lack of understanding of the very basic principles of market dynamics. Read this article from investopedia illustrating the principle behind stock splits. After reading this, you will be very well aware that what matters is the market capitalisation and not the number of shares/tokens initially issued.
Misconception 17 : IOTA has an insanely high market cap. This means IOTA is overvalued right now . The price will only go down.
Reality : Given how groundbreaking the technology is , I should say the current market cap of IOTA is insanely low. IOTA solves the major drawbacks that all blockchains (including Bitcoin and Ethereum) have , ie limited scalability, transaction fees (which prevents micro/nano transactions) and quantum susceptibility. Ideally IOTA should be on top of Bitcoin in market cap (It will be, as adoption of the technology gradually increases ) If you haven’t realised this till now, you really haven’t understood what IOTA is.
Misconception 18 : There is no proof that IOTA can work without coordinator
Reality : IOTA developers have said multiple times that Random Walk Monte Carlo logic can be applied anytime to IRI . Think of it this way. Random walk Monte Carlo logic is the natural process inherent in the network. For the initial phase , when the network isnt big enough, they have removed it and replaced it with a coordinator logic with milestones. Now don’t tell me that Monte Carlo logic is not proven. Its a well proven basic principle in computational mathematics. Just google it if you are in doubt.
Misconception 19 : Assumptions on the strengths and the security of IOTA network are all theoretical because such attacks have not happened till now. All this could be overconfidence and blind support by IOTA fan boys. No one can say what will happen to the network if such attacks happen.
Reality : Well, here is a surprise for you. Such attacks have happened and IOTA network has withstood those. Listen to this relevant segment of an audio clip where David Sønstebø( one of the co-founders of IOTA) talks about this.
If you are interested in joining the IOTA community , click here to join the IOTA slack, which is currently the biggest slack community in the world.
Tail piece : A silent revolution in distributed ledger technology is happening. Dont miss the chance to be a part of it.
If you appreciate my work , send some IOTA to