Coin Analysis

  • IOTA

  • IOTA (Literal translation: 9th Greek alphabet standing for 'the smallest possible unit') is a cryptocurrency that facilitates transactions between people to people, people to devices and devices to devices, on the Internet of Things (IoT).

Rating Insights

IOTA is a cryptocurrency that facilitates transactions between devices on the Internet of Things (IoT). The name derives from the 9th letter in the Greek alphabet, and also stands for ‘the smallest possible unit’. IOTA addresses the transaction fees and scalability issues of blockchain technologies by getting rid of the blockchain entirely, instead opting to use DAG technology. In order to submit a transaction to the IOTA ledger, you must verify two other previous transactions. This method of verification means there’s no need for miners to power the network. As the devices on the network randomly verify each other’s transactions, they build consensus through the web of connections between transactions. This network is called ‘Tangle’.

Since computing power in the Tangle grows as the network grows, IOTA is promising free, fast transactions. It’s also designed to process micro-payments and payments between machines, facilitating a whole machine-to-machine micro-economy.

While the technology is very new and exciting, there are critical issues to be resolved, such as replacing the coordinator, and limiting attack vectors. Nonetheless, the team is packed and talented, and IOTA is regarded as a project with game-breaking potential.

Category Rating

Click any score to view its breakdown and category insights
4.4
Product

Product

At 28 pages long, IOTA’s whitepaper is very methodical and technical. It is designed more like a scientific article than a sales pitch, and there is a broad use of technological terminology in describing the mechanisms behind IOTA’s DAG implenetation – the Tangle. There is heavy use of mathematical equations that exceed the layman’s field of knowledge, therefor it is not as readable and accessible as other project’s whitepapers. Nonetheless, the technology IOTA are trying to implement has the possibility to be ground breaking, and their approach shows that this is their main concern. It doesn’t elaborate past the technicalities of the Tangle network, its assumed resistence to attacks, the infrastructure, and the crowdsale IOTA had that raised roughly 1300 BTC is not mentioned. Overall it is a very dry, thorough, technical piece of information that indicates how much thought and analytical work was put into this project.

IOTA is a cryptocurrency that has no transaction fees and requires no miners in order to process transactions. It does, however, require some computational power to submit a transaction, making it perfect for machines to use as a currency and distributed communication protocol for the Internet of Things, or IoT in short. Some of the major issues IOTA is trying to solve are the same problems that plague PoW based blockchains such as Bitcoin – Scalability, security and fees. In IOTA, which implements a Directed Acyclic Graph based design, every user is both submitting and verifying transactions. So every user contributes both to verification, and security. Transactions are verified multiple times by different users, as it keeps getting approvals, the degree of confidence for that transaction increases.

Since we’re dealing with the Internet of Things, the use cases are practically endless, with physical devices, smart vehicles, home appliances and other common items embedded with hardware that can connect to the internet being more and more prominent. Experts currently estimate that the IoT will consist of about 30 billion objects/devices by 2020, and the IoT global market value will be around 7 trilliong USD. Some of the more feasible, short to medium term use cases for IOTA can be named as example: IoT based transportation (Imagine an IoT connection between your smartphone and the train you’re about to miss, that allows to you pay in advance/pay for distance traveled, help you determine whether there are available seats, and more) and IoT based tellecommunication systems (Your smart TV can pay Netflix and HBO directly, your iRobot can clean your neighbor’s apartment while you’re at work).

IOTA’s appeal is massive – the western world is rapidly becoming more interconnected. Smart TVs, smartphones, tablets, smart home appliances – all of these are more prominent than ever. If IOTA can truly implement their vision properly, the target user base is, well, everyone on Earth. Innovation-wise, the Tangle is an impressive feat, with its only weak point, or Achilles’ Heel if you will, is the Coordinator, a centralized point of access that is there to serve as ‘training wheels’ for the infrastructure in its infancy stages.

Competition-wise, there are some competitors in the blockchain scene (Xage, Slock, Exxor and more) but IOTA is by far the most established and trusted one. No DAG based infrastructure that tackles the IoT currently exists out there to the best of this review’s author’s knowledge.

 

Readiness

Is the product ready for use? Is there a working prototype or MVP? How long until it is operational?

3.0
N/A
3 - Prototype / MVP / alpha.
Appeal

How appealing is the product? How good or necessary is it? Does it have a distinct edge?

5.0
N/A
5 - Wow.
Target User Base

Is it mass market or niche?

5.0
N/A
5 - General audience / mass market.
Competition

Are there many other similar solutions or is this one of just a few, or even one of a kind?

4.0
N/A
4 - Few competitors / a leading solution.
Innovation

How innovative or inventive is the product, either conceptually or technologically?

5.0
N/A
5 - Highly specialized, proprietary.
3.8
Use of Blockchain

Use of Blockchain

IOTA is a cryptocurrency that has no transaction fees and requires no miners in order to process transactions. It does, however, require some computational power to submit a transaction, making it perfect for machines to use as a currency and distributed communication protocol for the Internet of Things. The main purpose of IOTA is to solve some of the major problems with blockchain technology, the main one being that the bigger the blockchain, the slower, more expensive, and bigger in terms of blocksize it is. As more and more blocks are added, the longer the blockchain gets, and therefore the less amount of computers are able to mine it (Performing the computational processes required to mine a new block). Right now BTC and ETH are over 150GB big(correct term?) making them relatively centralized in that sense. (the top 2 Bitcoin mining pools own about 56% of hashing power).

Thus the developers has created the Tangle, a DAG (Directed Acyclic Graph) based cryptocurrency. Directed Acylcic Graphs are used to model probabilities, connectivity, and causality. A “graph” in this sense means a structure made from nodes and edges. Nodes are usually denoted by circles or ovals (although technically they can be any shape of your choosing), while edges are the connections between the nodes. An edge connects two nodes. They are usually represented by lines, or lines with arrows.

Lets take the Bitcoin blockchain as an example. As a blockchain network grows, the amount of transactions per second does not, which usually leads to congestion. Another issue is that the more miners (computers) are on the network, the more expensive it is to cover the transaction fees associated to the electricity bill of those miners. This means that if a million people transact BTC or ETH, the network will be able to process only a specific amount of transactions per block, a natural limitation because Bitcoin’s fundamental property is that the difficulty to solve a block has to remain stable at 10 minutes per block. If more computers are added to the system, the algorithm simply makes the problem harder to enable the complete computational power to solve it in 10 minutes. The reason for this is that if the block can be solved too quickly, it is vulnerable to attacks and exploits, if it is solved too slowly then very few transactions are authorized relative to the time that is ‘normal’ for transactions to be transferred. (As more computers mine Bitcoin, it becomes increasingly expensive to transfer funds. Each Bitcoin transaction currently consumes over 250kWh, and as much as 32TWh for the whole network, enough to power the households of over of 5 million people every day.

In IOTA every user is both submitting and verifying transactions, so every user contributes both to verification, and security. Transactions are verified multiple times by different users, as it keeps getting approvals, the degree of confidence for that transaction increases. Another interesting aspect of the Tangle is that, instead of being deterministic like the Blockchain (X amount of transactions per second) it is instead probabilistic meaning that some transactions may be confirmed faster than others, since the network picks two random transactions to be verified.

Currently the IOTA Tangle network is up and running, with low transactions times, and zero fees. However, no cryptocurrency delivers perfectly, especially not at first. IOTA are scrutinized heavily in many aspecs, including:

* Parasitic Chains (an attacker secretly builds a subtangle that occasionally references the main tangle to gain a higher score. Note that the score of honest tips (Tip – unapproved transactions in the tangle graph) is roughly the sum of all own weights in the main tangle, while the score of the attacker’s tips also contains the sum of all own weights in the parasite chain. Since network latency is not an issue for an attacker who builds a subtangle alone they might be able to give more height to the parasite tips if they use a computer that is sufficiently strong)

* Conflict Resolution Vulnerabilities (Vulnerabilities in the resolution of conflicted transactions, as the network is probabilistic and not deterministic.)

* Malicious Subtangle generation: Unfortunately here IOTA falls to the same mitigation issues as a 51% attack on a simple blockchain. If an attacker is successful in deploying a reasonable percentage of computing power to generate a subtangle (for Tange this is 40%), then the entire IOTA network will approve the dishonest transaction.

* Splitting attacks:An attack in which a malicious actor partitions the tangle into two sub-tangles. This happens by injecting many malicious transactions that are unapproved by the tips and then carefully balancing the two subtangles to eventually approve one of their malicious transactions, therefore allowing the attacker to double spend their funds. This too is susceptible to the earlier probability argument, and IOTA has no way to guarantee that such transactions are actually legitimate / illegitimate with 100% certainty.

* The Coordinator: The Coordinator is sort of a masternode ran by the IOTA Foundation, and its purpose is to keep the network (relatively) secure until there is a critical mass of users/devices on the Tangle to make the Coordinator obsolete. Every minute the Coordinator makes a normal transaction with its signature on it, called Milestones. Every transaction (including Milestones) verifies two other transactions. When you want to know if a transaction is verified, you find the newest Milestone and you see if it indirectly verifies your transaction (i.e it verifies your transaction, or if verifies a transaction that verifies your transaction, or if it verifies a transaction that verifies a transaction that verifies your transaction, and so on). The reason that the Milestones exist is because if you just picked any random transaction, there’s the possibility that the node you’re connected to is malicious and is trying to trick you into verifying its transactions. The people who operate nodes can’t fake the signatures on Milestones, so one can trust the Milestones to be legit.

Every node looks at the transactions it gets and only tells other nodes about transactions that are valid. The Coordinator is no exception – if the Coordinator starts issuing bad Milestones, nodes will reject them. To validate a transaction without the Coordinator, the same process is to be followed, but instead, numerous times with different transactions to see what percentage of them verify the transaction. The technical term for this is a “Monte-Carlo walk“, and basically makes the chances of you picking enough malicious transactions to skew your results low.
Since currently transactions issued through the coordinator are guaranteed verified and unless a transaction can extend those from the coordinator they are not guaranteed to be verified, this provides a very large attack vector on the entire IOTA network: compromising the coordinator’s private key. Since the coordinator is closed source there is no way to verify how secure its private keys are, and furthermore the above violation of never roll your own crypto leads the staff at best of icos to believe that best practices aren’t very important to the IOTA developers, leading to serious concerns about a bad actor getting a hold of the private keys and being able to take over the entire network without ever having to amass large computing power.

Moreover, there were issues with IOTA’s hashing function. IOTA chose to roll their own cryptographic hashing function called Curl, which was found to have serious vulnerabilities, mainly being vulnerable to ‘differential cryptanalysis’, a general form of cryptanalysis applicable primarily to block ciphers, but also to stream ciphers and cryptographic hash functions. In the broadest sense, it is the study of how differences in information input can affect the resultant difference at the output. In IOTA’s case, this allowed even novice cryptoanalysts to deploy a splitting attack fairly easy. While the IOTA team claims the coordinator could have mitigated this, the general cryptographic community’s consensus is that it could still have caused major damage. IOTA has switched its hashing function from Curl to Kerl since.

IOTA also uses ternary processesing (0, 1, -1 instead of binary 0,1).

The team has announced their desire to reduce the Coordinator’s importance in the network, and to remove it completely, hopefully by the end of 2018. If the Coordinator can be removed without collapsing the entire Tangle or without compromising it to major attack vectors, the IOTA Tangle can be game-changing in the cryptosphere, connecting millions of devices to each other.

Blockchain Development

Is blockchain technology essential? Does it make the solution significantly different and better?

3.0
N/A
3 - Automation; making something easier to do.
Disruptive Blockchain Advantage

How disruptive is the introduction of blockchain technology into the product's market space?

4.0
N/A
4 - Generally disruptive.
Need for a Custom Token (vs. BTC or ETH)

Is the token essential or could it be done just as well or better with fiat or Bitcoin?

5.0
N/A
5 - Real, tangible, utility-based value.
System Decentralization (besides token)

How decentralized is the system architecture other than the token (e.g., data collection, storage, access, and use, or decision making processes, etc.)?

3.0
N/A
3 - Hybrid; decentralized as far as circumstances allow.
Contribution to Blockchain Ecosystem

How compelling is the solution's contribution to the evolution of blockchain infrastructure and economy?

4.0
N/A
4 - Captivating.
3.6
Roadmap

Roadmap

The 2018 roadmap is yet to be published, but David Sønstebø (Founder, Co-Lead, Management) has published that the new 2018 roadmap will be released soon. in 2017, IOTA managed to accomplish a great number of feats: Big partnerships like Bosch, Fujitsu and Tokyo Metropolitan Government Program; IOTA was a founding member of the Trusted IoT Alliance; introduced Flash Network (a protocol layer that functions in parallel with the Tangle and is designed specifically to facilitate the volume of transactions IOTA’s network is designed to handle); introduced Masked Authenticated Messaging (a second layer data communication protocol which adds functionality to emit and access an encrypted data stream, like RSS, over the Tangle), officially registered the IOTA Foundation in Germany; released proofs of Tangle Nash Equilibria and more.
The team is transparent throughout the way, with a constent stream of information about progress through blogposts, the official Telegram channel, the dedicated subreddit  and other channels.
The Tangle is still heavily reliant on the Coordinator, its biggest weak spot at the moment. The developers are aiming to replace/remove the coordinator entirely throughout 2018.

On February 7th, 2018, the IOTA foundation has released a statement announcing the new IOTA Ecosystem. Accoring to the IOTA Foundation, “The IOTA Ecosystem will be a platform to house the community of developers, startups, hobbyists and initiatives all over the world working towards the distributed and decentralized future we all aspire to create.” They continue, “To foster, propel and sustain a great Ecosystem, significant resources are required. Fortunately, the IOTA community had the foresight to appreciate this need and the generosity to do something about it.

The Ecosystem Development Fund was a community initiated effort. Separate and apart from the donations the IOTA community gave to fund the IOTA Foundation itself, some members in the IOTA community believed it would be important to establish a fund to support all the effort it takes to build a truly great Ecosystem. With donations from many community members, over 20 TI — valued at over $200,000 USD at the time — was raised. Now these funds carry a market value in the tens of millions of dollars and thus have incredible potential to power the Ecosystem for years to come. With these resources, the EDF will be the cornerstone of the IOTA Ecosystem. Supporting initiatives and development both large and small, the EDF will power the IOTA Ecosystem to be a long-lasting, formative and powerful hub of education, innovation and development around the IOTA core technology.”

The IOTA Foundation plans for the IOTA Ecosystem to be ground-zero for permissionless, distributed and decentralized technology striving to build a more inclusive, resilient and prosperous world by bringing together practitioners, developers, hobbyists and enthusiasts building IOTA applications into all aspects of the economy including the for-profit, not-for-profit, academic, and governmental sectors.
You can find additional information here.

Concreteness

Is there a concrete and practical development plan (vs. just a conceptual vision)?

4.0
N/A
4 - Down to earth.
Feasibility

Is the development plan realistic? Is it based on reasonable goals and timelines?

3.0
N/A
3 - Optimistic.
Vision

Is there a larger, long-term vision?

5.0
N/A
5 - Paving the way for the future.
Dependencies (services or capabilities)

How available, operational, or trusted are the other systems or capabilities on which the project relies?

3.0
N/A
3 - Imperfect but available, or using substitutes.
Current Position

Where is the project now, relative to its vision and plans?

3.0
N/A
3 - Getting there.
4.0
Compliance

Compliance

In total, 2,779,530,283,277,761 Iota or roughly 2,800,000 Gigaiota (Gi) exist. In a thorough analysis done by @IngoFiedler_96862 regarding the total distribution of IOTA tokens, he arrived to the conclusion that the number of addresses with more than 1 Gi increased by +48%. Moreover, that the increase in addresses is lower for high value addresses suggesting that new addresses are less often ‘whales’ compared to old addresses. You can find more information here.
Currently it is believed that the IOTA foundation holds roughly 5% of the total tokens, mostly in donations.

The token’s utility comes from its inherent use as a cryptocurrency. The token’s utility and thus its intrinsic value is pegged to the use of the platform. Furthermore, as the Tangle expands, and with the current projected numbers for IoT devices in the near future, the token’s value will increase as it will be an integral and essential part of using the system. To the best of my knowledge, IOTA are working with the IoT Alliance (Which they helped co-found) and other organizations to adhere to compliance regulations and there is a number of people working under the foundation that specifically deal with legalities such as these. (Dr. Julie Maupin for instance)

The Tangle is set and running, currently with the Coordinator. Critics, justifiably point out this major flaw, calling IOTA centralized and unsafe. David and the team addressed the issue numerous times, and they are currently working on a way to replace the coordinator or remove it entirely by the end of 2018.

The IOTA token might be regarded as a security according to the dry definitions set by the United States government, but taking into account the non-profittable nature of the IOTA Foundation, one might disregard the IOTA token as a security, as current regulations stand.

Token Utility (value through usage)

How much use is there for the token itself (regardless of its value as an investment vehicle)?

5.0
N/A
5 - Foundational or varied use cases.
Token as Security (tradable instrument)

How valuable is the token as an investment vehicle or financial instrument?

4.0
N/A
4 - Not as such, or compliance is assured.
Token/Smart-Contract Readiness

Is the blockchain infrastructure of the project ready for use? Is there a working prototype or MVP? How long until it is operational?

3.0
N/A
3 - Prototype / MVP / alpha.
Attention to Compliance Issues

How much attention is given to compliance (via token and ecosystem design, token sale participation, etc.)? Is this issue addressed directly and coherently?

4.0
N/A
4 - Specific, detailed.
Legal Review/Risk Assessment

What kind of legal documentation (reviews or agreements) and risk assessment are provided?

4.0
N/A
4 - Professional.
4.2
Company and Team

Company and Team

IOTA was founded in 2015 by David Sønstebø, Sergey Ivancheglo, Dominik Schiener, and Serguei Popov. Taken 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.” (The IOTA Foundation was registered officially in 2017)

The core members and lead developers are David, Sergey, Dominik and Serguei, with roughly another 40-50 employees under the foundation/IOTA name at the moment, sharing global offices in Berlin, Tel Aviv, Oslo and Chicago. All of the lead members and most of the other personnel working on the IOTA project are known public figures in their respective fields of work, and they all keep an active social media persona, again in their respective relations. (GitHubs, LinkedIn profiles, a Telegram channel, a Slack channel, a dedicated subreddit, Twitter and more)

The team’s skill set is relevent and spread out efficiently. There are numerous developers as well as business oriented positions (Marketing, HR) and the balance seems to be kept well.

Company Stage and Foundation

Is the company already established? Has it raised funds before? Is it mature?

4.0
N/A
4 - Established with some fundraising history.
Background of Lead Team Members

Do we know who they are? Do they have LinkedIn profiles? Do they have solid, relevant backgrounds?

4.0
N/A
4 - Verifiable relevant experience.
Team Assembly and Commitment

Is a solid, fully committed core team in place? Do they have online (e.g. LinkedIn) profiles showing sufficient relevant experience? Is their participation transparent?

5.0
N/A
5 - Skilled and balanced, fully committed.
Team Skill Set Relevance

Does the amount of talent and skill in each area seem to fit the project requirements?

4.0
N/A
4 - Well suited to project requirements.
Team Skill Set Balance

Is the team well-rounded (biz/tech/blockchain)? Is there sufficient talent and skill in all areas of required development?

4.0
N/A
4 - Good, sufficient for each aspect.

Product

At 28 pages long, IOTA’s whitepaper is very methodical and technical. It is designed more like a scientific article than a sales pitch, and there is a broad use of technological terminology in describing the mechanisms behind IOTA’s DAG implenetation – the Tangle. There is heavy use of mathematical equations that exceed the layman’s field of knowledge, therefor it is not as readable and accessible as other project’s whitepapers. Nonetheless, the technology IOTA are trying to implement has the possibility to be ground breaking, and their approach shows that this is their main concern. It doesn’t elaborate past the technicalities of the Tangle network, its assumed resistence to attacks, the infrastructure, and the crowdsale IOTA had that raised roughly 1300 BTC is not mentioned. Overall it is a very dry, thorough, technical piece of information that indicates how much thought and analytical work was put into this project.

IOTA is a cryptocurrency that has no transaction fees and requires no miners in order to process transactions. It does, however, require some computational power to submit a transaction, making it perfect for machines to use as a currency and distributed communication protocol for the Internet of Things, or IoT in short. Some of the major issues IOTA is trying to solve are the same problems that plague PoW based blockchains such as Bitcoin – Scalability, security and fees. In IOTA, which implements a Directed Acyclic Graph based design, every user is both submitting and verifying transactions. So every user contributes both to verification, and security. Transactions are verified multiple times by different users, as it keeps getting approvals, the degree of confidence for that transaction increases.

Since we’re dealing with the Internet of Things, the use cases are practically endless, with physical devices, smart vehicles, home appliances and other common items embedded with hardware that can connect to the internet being more and more prominent. Experts currently estimate that the IoT will consist of about 30 billion objects/devices by 2020, and the IoT global market value will be around 7 trilliong USD. Some of the more feasible, short to medium term use cases for IOTA can be named as example: IoT based transportation (Imagine an IoT connection between your smartphone and the train you’re about to miss, that allows to you pay in advance/pay for distance traveled, help you determine whether there are available seats, and more) and IoT based tellecommunication systems (Your smart TV can pay Netflix and HBO directly, your iRobot can clean your neighbor’s apartment while you’re at work).

IOTA’s appeal is massive – the western world is rapidly becoming more interconnected. Smart TVs, smartphones, tablets, smart home appliances – all of these are more prominent than ever. If IOTA can truly implement their vision properly, the target user base is, well, everyone on Earth. Innovation-wise, the Tangle is an impressive feat, with its only weak point, or Achilles’ Heel if you will, is the Coordinator, a centralized point of access that is there to serve as ‘training wheels’ for the infrastructure in its infancy stages.

Competition-wise, there are some competitors in the blockchain scene (Xage, Slock, Exxor and more) but IOTA is by far the most established and trusted one. No DAG based infrastructure that tackles the IoT currently exists out there to the best of this review’s author’s knowledge.

 

Readiness

Is the product ready for use? Is there a working prototype or MVP? How long until it is operational?

3.0
N/A
3 - Prototype / MVP / alpha.
Appeal

How appealing is the product? How good or necessary is it? Does it have a distinct edge?

5.0
N/A
5 - Wow.
Target User Base

Is it mass market or niche?

5.0
N/A
5 - General audience / mass market.
Competition

Are there many other similar solutions or is this one of just a few, or even one of a kind?

4.0
N/A
4 - Few competitors / a leading solution.
Innovation

How innovative or inventive is the product, either conceptually or technologically?

5.0
N/A
5 - Highly specialized, proprietary.

Use of Blockchain

IOTA is a cryptocurrency that has no transaction fees and requires no miners in order to process transactions. It does, however, require some computational power to submit a transaction, making it perfect for machines to use as a currency and distributed communication protocol for the Internet of Things. The main purpose of IOTA is to solve some of the major problems with blockchain technology, the main one being that the bigger the blockchain, the slower, more expensive, and bigger in terms of blocksize it is. As more and more blocks are added, the longer the blockchain gets, and therefore the less amount of computers are able to mine it (Performing the computational processes required to mine a new block). Right now BTC and ETH are over 150GB big(correct term?) making them relatively centralized in that sense. (the top 2 Bitcoin mining pools own about 56% of hashing power).

Thus the developers has created the Tangle, a DAG (Directed Acyclic Graph) based cryptocurrency. Directed Acylcic Graphs are used to model probabilities, connectivity, and causality. A “graph” in this sense means a structure made from nodes and edges. Nodes are usually denoted by circles or ovals (although technically they can be any shape of your choosing), while edges are the connections between the nodes. An edge connects two nodes. They are usually represented by lines, or lines with arrows.

Lets take the Bitcoin blockchain as an example. As a blockchain network grows, the amount of transactions per second does not, which usually leads to congestion. Another issue is that the more miners (computers) are on the network, the more expensive it is to cover the transaction fees associated to the electricity bill of those miners. This means that if a million people transact BTC or ETH, the network will be able to process only a specific amount of transactions per block, a natural limitation because Bitcoin’s fundamental property is that the difficulty to solve a block has to remain stable at 10 minutes per block. If more computers are added to the system, the algorithm simply makes the problem harder to enable the complete computational power to solve it in 10 minutes. The reason for this is that if the block can be solved too quickly, it is vulnerable to attacks and exploits, if it is solved too slowly then very few transactions are authorized relative to the time that is ‘normal’ for transactions to be transferred. (As more computers mine Bitcoin, it becomes increasingly expensive to transfer funds. Each Bitcoin transaction currently consumes over 250kWh, and as much as 32TWh for the whole network, enough to power the households of over of 5 million people every day.

In IOTA every user is both submitting and verifying transactions, so every user contributes both to verification, and security. Transactions are verified multiple times by different users, as it keeps getting approvals, the degree of confidence for that transaction increases. Another interesting aspect of the Tangle is that, instead of being deterministic like the Blockchain (X amount of transactions per second) it is instead probabilistic meaning that some transactions may be confirmed faster than others, since the network picks two random transactions to be verified.

Currently the IOTA Tangle network is up and running, with low transactions times, and zero fees. However, no cryptocurrency delivers perfectly, especially not at first. IOTA are scrutinized heavily in many aspecs, including:

* Parasitic Chains (an attacker secretly builds a subtangle that occasionally references the main tangle to gain a higher score. Note that the score of honest tips (Tip – unapproved transactions in the tangle graph) is roughly the sum of all own weights in the main tangle, while the score of the attacker’s tips also contains the sum of all own weights in the parasite chain. Since network latency is not an issue for an attacker who builds a subtangle alone they might be able to give more height to the parasite tips if they use a computer that is sufficiently strong)

* Conflict Resolution Vulnerabilities (Vulnerabilities in the resolution of conflicted transactions, as the network is probabilistic and not deterministic.)

* Malicious Subtangle generation: Unfortunately here IOTA falls to the same mitigation issues as a 51% attack on a simple blockchain. If an attacker is successful in deploying a reasonable percentage of computing power to generate a subtangle (for Tange this is 40%), then the entire IOTA network will approve the dishonest transaction.

* Splitting attacks:An attack in which a malicious actor partitions the tangle into two sub-tangles. This happens by injecting many malicious transactions that are unapproved by the tips and then carefully balancing the two subtangles to eventually approve one of their malicious transactions, therefore allowing the attacker to double spend their funds. This too is susceptible to the earlier probability argument, and IOTA has no way to guarantee that such transactions are actually legitimate / illegitimate with 100% certainty.

* The Coordinator: The Coordinator is sort of a masternode ran by the IOTA Foundation, and its purpose is to keep the network (relatively) secure until there is a critical mass of users/devices on the Tangle to make the Coordinator obsolete. Every minute the Coordinator makes a normal transaction with its signature on it, called Milestones. Every transaction (including Milestones) verifies two other transactions. When you want to know if a transaction is verified, you find the newest Milestone and you see if it indirectly verifies your transaction (i.e it verifies your transaction, or if verifies a transaction that verifies your transaction, or if it verifies a transaction that verifies a transaction that verifies your transaction, and so on). The reason that the Milestones exist is because if you just picked any random transaction, there’s the possibility that the node you’re connected to is malicious and is trying to trick you into verifying its transactions. The people who operate nodes can’t fake the signatures on Milestones, so one can trust the Milestones to be legit.

Every node looks at the transactions it gets and only tells other nodes about transactions that are valid. The Coordinator is no exception – if the Coordinator starts issuing bad Milestones, nodes will reject them. To validate a transaction without the Coordinator, the same process is to be followed, but instead, numerous times with different transactions to see what percentage of them verify the transaction. The technical term for this is a “Monte-Carlo walk“, and basically makes the chances of you picking enough malicious transactions to skew your results low.
Since currently transactions issued through the coordinator are guaranteed verified and unless a transaction can extend those from the coordinator they are not guaranteed to be verified, this provides a very large attack vector on the entire IOTA network: compromising the coordinator’s private key. Since the coordinator is closed source there is no way to verify how secure its private keys are, and furthermore the above violation of never roll your own crypto leads the staff at best of icos to believe that best practices aren’t very important to the IOTA developers, leading to serious concerns about a bad actor getting a hold of the private keys and being able to take over the entire network without ever having to amass large computing power.

Moreover, there were issues with IOTA’s hashing function. IOTA chose to roll their own cryptographic hashing function called Curl, which was found to have serious vulnerabilities, mainly being vulnerable to ‘differential cryptanalysis’, a general form of cryptanalysis applicable primarily to block ciphers, but also to stream ciphers and cryptographic hash functions. In the broadest sense, it is the study of how differences in information input can affect the resultant difference at the output. In IOTA’s case, this allowed even novice cryptoanalysts to deploy a splitting attack fairly easy. While the IOTA team claims the coordinator could have mitigated this, the general cryptographic community’s consensus is that it could still have caused major damage. IOTA has switched its hashing function from Curl to Kerl since.

IOTA also uses ternary processesing (0, 1, -1 instead of binary 0,1).

The team has announced their desire to reduce the Coordinator’s importance in the network, and to remove it completely, hopefully by the end of 2018. If the Coordinator can be removed without collapsing the entire Tangle or without compromising it to major attack vectors, the IOTA Tangle can be game-changing in the cryptosphere, connecting millions of devices to each other.

Blockchain Development

Is blockchain technology essential? Does it make the solution significantly different and better?

3.0
N/A
3 - Automation; making something easier to do.
Disruptive Blockchain Advantage

How disruptive is the introduction of blockchain technology into the product's market space?

4.0
N/A
4 - Generally disruptive.
Need for a Custom Token (vs. BTC or ETH)

Is the token essential or could it be done just as well or better with fiat or Bitcoin?

5.0
N/A
5 - Real, tangible, utility-based value.
System Decentralization (besides token)

How decentralized is the system architecture other than the token (e.g., data collection, storage, access, and use, or decision making processes, etc.)?

3.0
N/A
3 - Hybrid; decentralized as far as circumstances allow.
Contribution to Blockchain Ecosystem

How compelling is the solution's contribution to the evolution of blockchain infrastructure and economy?

4.0
N/A
4 - Captivating.

Whitepaper

Comprehensiveness

Does it cover the full scope of the problem and solution?

N.0
N/A
N/A
Readability

Is it easy enough to understand?

N.0
N/A
N/A
Transparency

Does it candidly describe and disclose where the project now stands, how much exists and how much still needs to be done, etc.?

N.0
N/A
N/A
Business Plan Presentation

Does it contain a viable, comprehensive business plan?

N.0
N/A
N/A
Technology Presentation

Does it present a well thought out technological architecture? Does it address implementational challenges?

N.0
N/A
N/A

Roadmap

The 2018 roadmap is yet to be published, but David Sønstebø (Founder, Co-Lead, Management) has published that the new 2018 roadmap will be released soon. in 2017, IOTA managed to accomplish a great number of feats: Big partnerships like Bosch, Fujitsu and Tokyo Metropolitan Government Program; IOTA was a founding member of the Trusted IoT Alliance; introduced Flash Network (a protocol layer that functions in parallel with the Tangle and is designed specifically to facilitate the volume of transactions IOTA’s network is designed to handle); introduced Masked Authenticated Messaging (a second layer data communication protocol which adds functionality to emit and access an encrypted data stream, like RSS, over the Tangle), officially registered the IOTA Foundation in Germany; released proofs of Tangle Nash Equilibria and more.
The team is transparent throughout the way, with a constent stream of information about progress through blogposts, the official Telegram channel, the dedicated subreddit  and other channels.
The Tangle is still heavily reliant on the Coordinator, its biggest weak spot at the moment. The developers are aiming to replace/remove the coordinator entirely throughout 2018.

On February 7th, 2018, the IOTA foundation has released a statement announcing the new IOTA Ecosystem. Accoring to the IOTA Foundation, “The IOTA Ecosystem will be a platform to house the community of developers, startups, hobbyists and initiatives all over the world working towards the distributed and decentralized future we all aspire to create.” They continue, “To foster, propel and sustain a great Ecosystem, significant resources are required. Fortunately, the IOTA community had the foresight to appreciate this need and the generosity to do something about it.

The Ecosystem Development Fund was a community initiated effort. Separate and apart from the donations the IOTA community gave to fund the IOTA Foundation itself, some members in the IOTA community believed it would be important to establish a fund to support all the effort it takes to build a truly great Ecosystem. With donations from many community members, over 20 TI — valued at over $200,000 USD at the time — was raised. Now these funds carry a market value in the tens of millions of dollars and thus have incredible potential to power the Ecosystem for years to come. With these resources, the EDF will be the cornerstone of the IOTA Ecosystem. Supporting initiatives and development both large and small, the EDF will power the IOTA Ecosystem to be a long-lasting, formative and powerful hub of education, innovation and development around the IOTA core technology.”

The IOTA Foundation plans for the IOTA Ecosystem to be ground-zero for permissionless, distributed and decentralized technology striving to build a more inclusive, resilient and prosperous world by bringing together practitioners, developers, hobbyists and enthusiasts building IOTA applications into all aspects of the economy including the for-profit, not-for-profit, academic, and governmental sectors.
You can find additional information here.

Concreteness

Is there a concrete and practical development plan (vs. just a conceptual vision)?

4.0
N/A
4 - Down to earth.
Feasibility

Is the development plan realistic? Is it based on reasonable goals and timelines?

3.0
N/A
3 - Optimistic.
Vision

Is there a larger, long-term vision?

5.0
N/A
5 - Paving the way for the future.
Dependencies (services or capabilities)

How available, operational, or trusted are the other systems or capabilities on which the project relies?

3.0
N/A
3 - Imperfect but available, or using substitutes.
Current Position

Where is the project now, relative to its vision and plans?

3.0
N/A
3 - Getting there.

Compliance

In total, 2,779,530,283,277,761 Iota or roughly 2,800,000 Gigaiota (Gi) exist. In a thorough analysis done by @IngoFiedler_96862 regarding the total distribution of IOTA tokens, he arrived to the conclusion that the number of addresses with more than 1 Gi increased by +48%. Moreover, that the increase in addresses is lower for high value addresses suggesting that new addresses are less often ‘whales’ compared to old addresses. You can find more information here.
Currently it is believed that the IOTA foundation holds roughly 5% of the total tokens, mostly in donations.

The token’s utility comes from its inherent use as a cryptocurrency. The token’s utility and thus its intrinsic value is pegged to the use of the platform. Furthermore, as the Tangle expands, and with the current projected numbers for IoT devices in the near future, the token’s value will increase as it will be an integral and essential part of using the system. To the best of my knowledge, IOTA are working with the IoT Alliance (Which they helped co-found) and other organizations to adhere to compliance regulations and there is a number of people working under the foundation that specifically deal with legalities such as these. (Dr. Julie Maupin for instance)

The Tangle is set and running, currently with the Coordinator. Critics, justifiably point out this major flaw, calling IOTA centralized and unsafe. David and the team addressed the issue numerous times, and they are currently working on a way to replace the coordinator or remove it entirely by the end of 2018.

The IOTA token might be regarded as a security according to the dry definitions set by the United States government, but taking into account the non-profittable nature of the IOTA Foundation, one might disregard the IOTA token as a security, as current regulations stand.

Token Utility (value through usage)

How much use is there for the token itself (regardless of its value as an investment vehicle)?

5.0
N/A
5 - Foundational or varied use cases.
Token as Security (tradable instrument)

How valuable is the token as an investment vehicle or financial instrument?

4.0
N/A
4 - Not as such, or compliance is assured.
Token/Smart-Contract Readiness

Is the blockchain infrastructure of the project ready for use? Is there a working prototype or MVP? How long until it is operational?

3.0
N/A
3 - Prototype / MVP / alpha.
Attention to Compliance Issues

How much attention is given to compliance (via token and ecosystem design, token sale participation, etc.)? Is this issue addressed directly and coherently?

4.0
N/A
4 - Specific, detailed.
Legal Review/Risk Assessment

What kind of legal documentation (reviews or agreements) and risk assessment are provided?

4.0
N/A
4 - Professional.

Company and Team

IOTA was founded in 2015 by David Sønstebø, Sergey Ivancheglo, Dominik Schiener, and Serguei Popov. Taken 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.” (The IOTA Foundation was registered officially in 2017)

The core members and lead developers are David, Sergey, Dominik and Serguei, with roughly another 40-50 employees under the foundation/IOTA name at the moment, sharing global offices in Berlin, Tel Aviv, Oslo and Chicago. All of the lead members and most of the other personnel working on the IOTA project are known public figures in their respective fields of work, and they all keep an active social media persona, again in their respective relations. (GitHubs, LinkedIn profiles, a Telegram channel, a Slack channel, a dedicated subreddit, Twitter and more)

The team’s skill set is relevent and spread out efficiently. There are numerous developers as well as business oriented positions (Marketing, HR) and the balance seems to be kept well.

Company Stage and Foundation

Is the company already established? Has it raised funds before? Is it mature?

4.0
N/A
4 - Established with some fundraising history.
Background of Lead Team Members

Do we know who they are? Do they have LinkedIn profiles? Do they have solid, relevant backgrounds?

4.0
N/A
4 - Verifiable relevant experience.
Team Assembly and Commitment

Is a solid, fully committed core team in place? Do they have online (e.g. LinkedIn) profiles showing sufficient relevant experience? Is their participation transparent?

5.0
N/A
5 - Skilled and balanced, fully committed.
Team Skill Set Relevance

Does the amount of talent and skill in each area seem to fit the project requirements?

4.0
N/A
4 - Well suited to project requirements.
Team Skill Set Balance

Is the team well-rounded (biz/tech/blockchain)? Is there sufficient talent and skill in all areas of required development?

4.0
N/A
4 - Good, sufficient for each aspect.

Token Sale

Raise Amount Max

Is there a clear cap? Is the maximum raise amount modestly sufficient (as opposed to either greedy or insufficient)?

N.0
N/A
N/A
Raise Amount Min

Is the minimum raise reasonable considering the development plan? Are there raise-amount dependent milestones?

N.0
N/A
N/A
Fund Allocation

Is fund distribution and allocation reasonable and justified?

N.0
N/A
N/A
Token Allocation

Is the ratio of tokens sold to those kept reasonable? Does it prevent the company from having too much control?

N.0
N/A
N/A
Media Presence and Following

Is the sale being talked about in Reddit, Bitcointalk, Social Media, Medium, etc.? Is information available and accessible? Is there interest?

N.0
N/A
N/A

Leave a Reply

Your email address will not be published.

Most Read Reviews