Iota and the FUD That Comes With It

One thing is for sure - cryptocurrency has its controversies. Most of us involved in crypto accept that and some even relish it. Iota, which was designed for the Internet of Things revolution we're all anticipating (still), has been no stranger to controversy since its founding in 2015.

At the heart of the controversy surrounding Iota lies the fact that it isn't a blockchain. What? A cryptocurrency that isn't a blockchain!? Yes, there are a few, and it's something that really irks Bitcoin champions and blockchain purists. Iota's cryptographically secured technology is actually a Directed Acyclic Graph, or DAG, and has the primary selling points of a blockchain but uses a different scheme to accomplish them. Iota calls its DAG the 'Tangle.' Other projects that use a DAG or other non-blockchain solution include Oyster (PRL), Byteball (GBYTE), NANO (formerly known as Raiblocks), and IoT Chain (ITC) as well as Dagcoin, Hashgraph, Holochain and others.

The problem is that DAG's are untested. Blockchains have been through the ringer, peer-reviewed, probed by every hacker in the world, and battle-tested since 2009. We can't say the same for DAG's. Even the claim of being peer-reviewed by developers and cryptographers is debatable, as you'll see. One particular event which began in July of last year really stoked the fires of controversy.

In this corner - Neha Narula, director of the MIT Digital Currency Initiative (DCI), along with Tadge Dryja, Madars Virza, and Ethan Heilman of Boston University.

In the opposing corner - Iota co-founders Dominik Schiener and David Sønstebø, along with co-founder and developer Sergey Ivancheglo.

Let's get ready to rumble.

Publicly, what appeared to happen was that DCI discovered a vulnerability in Iota's code and published its finding in a blog post – Cryptographic Vulnerabilities in Iota.

This caused the Iota team to defensively backtrack and claim there was no real vulnerability and that a flaw in the code was actually put there intentionally to protect from copycat developers. Of course, this looked really bad for Iota, and it set off a chain reaction of bad press. Half a year after the incident and it's still being talked about.

But of course, nothing is ever that clear and simple. Recently, the email chain between DCI and the Iota team was released showing the communications between them as the episode unfolded. But this only muddies the water considerably and probably exacerbates the bad blood between the players.

The thread shows that DCI contacted Iota with its finding and announced that it would publish at a certain date. In the meantime, it would work with them on how to deal with the vulnerability and coordinate communication with the public. This seems academically sound, but the plan slowly unraveled.

In general, Iota's willingness to work with DCI was pretty clear initially. Despite maintaining that there wasn't really a vulnerability, Iota agreed to remove the offending code until it could be peer-reviewed and vetted. Then it made the necessary updates.

Iota was obviously motivated to fix any problems and at least appear to be making the right moves as quickly as possible to mitigate any potentially negative PR. Iota made repeated requests to work with DCI via Slack so that the code and cryptography arguments could be worked out more or less in real time, but DCI refused citing 'Slack fatigue' and offered to respond to email faster. But things quickly got worse.

At points, the disagreement devolved into insults. DCI’s admonishing of Iota not to 'roll their own crypto' early in the chain (and more than once) didn't help. But Iota's not-so-subtle digs at DCI's lack of knowledge and professionalism were a bad idea, with David Sønstebø even asking Neha Narula "Are you sober?" He deserves some credit for not lashing out in one of the insult-laden tirades that he is known for. He had plenty of opportunity in this episode.

But when a well-connected and respected academic group announced it is going to publish a damaging report, it is best to play along and refrain from any negative comments or insults. The deck was stacked against Iota, as Neha Narula essentially shut down communication between the two groups and published DCI’s findings without following up on many of the issues that were yet unanswered. That left the door open for Iota to claim academic dishonesty on the part of DCI. You have to be a developer and cryptographer to understand most of their disagreements, but anyone can see that DCI didn't appear to be in a hurry to clear up the misunderstandings, despite giving Iota only a two-week deadline before DCI publicized its findings.

Everyone has an agenda. Obviously, the founders and developers of Iota want to protect and defend their creation. Understood. We won't go into what DCI's agenda may be here but suffice it to say that both sides had valid points, and both sides missed opportunities to play this out fairly and productively.

And this all feeds the FUD machine, which Cryptoland loves. In fact, David Sønstebø called it “the largest FUD campaign in crypto history.”

The issue for us is that, if Iota was just some experiment, there wouldn't be a problem other than some academics disagreeing on a peer-review process and some cryptographic proofs. But Iota is not just a technological curiosity, it's a cryptocurrency with a $4.4 billion market capitalization. That's a lot of curiosity at stake.

Meanwhile, there are other projects waiting in the wings to take the Internet of Things by storm. It would be a shame if Iota doesn’t reach its full potential because of burned egos, unspoken agendas, and childishness. It would also be a shame if Iota is everything it is supposed to be but gets passed over because someone just can't STFU.

Satoshi Nakamoto rolled his own crypto once. It was preceded by years of work by many people. And we shouldn't put his work on a pedestal without mentioning that Bitcoin itself had plenty of vulnerabilities and bugs that have been worked out over the years. That work continues today.

Iota is an innovation. Other DAG projects and other cryptocurrencies built with non-blockchain technology are also projects worthy of development. We shouldn't seek to squash innovation for any reason. But innovation needs to be vetted, peer-reviewed, and properly tested.

There's a lot at stake in cryptocurrencies right now. Let’s get this right.

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