Reaching an agreement on the best consensus mechanism, the most appropriate block size or the best path to scalability is borderline impossible. Some of these arguments have been raging for more than ten years now. This is because blockchain and Distributed Ledger Technology (DLT) fanatics are extremely opinionated.
There is one thing that everyone can agree on, however. When it comes to DLT, decentralization is completely necessary. Or, more specifically, the lack of centralized control is absolutely paramount.
This entire space sprung from the desire to break free from the reigns of nosey governments and greedy corporations that have undue control over our lives. Fiat currency can be subject to hyper-inflation if a government wishes. Your data can be sold if a company desires. One push of a button by a centralized entity can shut everything down.
Distributed ledgers allow the power to be spread out between a network of contributors that work together to reach consensus. This takes the centralized power away and ensures that no single entity can be responsible for bad action or damaging a network. Part of the assumption is that DLT therefore boasts a superior level of security compared to centralized systems.
It’s not all as it seems
IOTA is an open source cryptocurrency that claims on its website to be based on Distributed Ledger Technology. The IOTA distributed ledger uses Directed Acyclic Graph (DAG) and boasts the benefits of this technology.
Recently the top 30 cryptocurrency IOTA has been in the spotlight – and not for good reasons. In essence, the entire decentralized nature of IOTA has been compromised of late, which begs questions for the long term future of the project.
On February 12th the IOTA network was completely shut down, preventing anyone that holds IOTA from sending or receiving transactions. The network has been offline for more than two weeks at this point.
The network was switched off by the IOTA foundation because $2 million USD was stolen from the IOTA Trinity wallet allegedly due to a third party integration with Moon Pay. But that’s not an excuse and merely exposuses lackluster and quite frankly worrying security procedures. Furthermore, absolutely no decentralized network should have the capability for a centralized organisation to switch it off.
Shutting down the network was scarily easy. To do so the IOTA foundation turned off the IOTA coordinator node which prevents all transactions and effectively leaves the network offline. Not only does this illustrate a damning single point of failure, it also implies that IOTA’s purported decentralized consensus mechanism has in all actuality been controlled by a centralized entity.
Meanwhile, trading on exchanges is still online because it doesn’t require the network to operate. Exchanges merely need to change numbers on the backend, not complete network transactions. This absurdity means that individuals can trade IOTA but not withdraw it because the network has been shut off by a single point of failure.
Admittedly, the IOTA developer community is keen to eradicate the coordinator node. This has been promised by the IOTA foundation for years now, but still hasn’t happened.
On February 29th the official IOTA Twitter account shared the following:
All users of the IOTA Trinity wallet are being strongly encouraged to use the seed migration tool. They were given just seven days notice.
We strongly encourage every Trinity user to use the tool within the seven-day window. Note that manual transfer to a new seed (without the official tool) after the seven day period is still possible, but there is a risk that tokens associated with your Seed could be stolen once the coordinator is reenabled.Source: IOTA Blog
You can also explore a write up by Nick Johnson, Lead developer of ENS & Ethereum Foundation alumni about IOTA. It delves into some potential deep problems with IOTA’s tech, including a built in hostility that directly goes against their open source mantra. In other words, the IOTA team deliberately built faults into the code, using the excuse that they are able to use these faults to prevent copies of their technology. The community views it more as an act of malice against the open source community and rightly so.
Trouble in paradise
IOTA co-founders have also been airing personal disputes in public recently, which raises more red flags about IOTA. Co-founder Sergey Invancheglo took to Twitter to threaten legal action against Co-founder David Sønstebø, based on an alleged embezzlement dispute worth nearly $8 million USD.
It is thought that the co-founders are in disagreement about a large sum of IOTA left over from the ICO that was never claimed by investors. This is deeply troubling for a multitude of reasons.
It is unclear what will happen with the token price once the larger community realizes that their dreams might have already evaporated. The token price has dropped dramatically since the start of February and is in steady decline. The chart looks like a degenerator coin chart as defined by Willy Woo which does not bode well for the future of the project.
Moving past IOTA to the future of Directed Acyclic Graph tech
The recent IOTA drama is alarming and paints an unnecessary bad light on DAG cryptocurrencies. In all actuality, DAG appears to be an extremely powerful technology that we are only beginning to unearth.
We would like to take this opportunity to draw your attention to some DAG projects that are sticking to the true ethos of cryptocurrency and presenting a strong decentralized project.
Constellation Network ($DAG)
Constellation is a cryptocurrency project that is designed to handle Big Data with extreme scalability, low transaction costs, easy integration and top tier security. $DAG is the native token that fuels the ecosystem.
Companies can leverage Constellation to handle massive datasets in a secure, efficient and cost-effective manner. Constellation already has a number of impressive partnerships including The US Air Force, Chainlink and Quant Network and the team is making impressive improvements on their technology.
Constellation will be launching their Mainnet in late March to early April with a completely decentralized Mainnet operated by the community with no central point of failure. They were able to solve one of the biggest problems for DAG technologies: A non-proof of work consensus that is truly horizontally scalable and not dependant on a coordinator node.
COTI is a payment focussed cryptocurrency that leverage DAG to achieve high scalability and low transaction costs. The COTI network is controlled by a proprietary consensus algorithm known as the Trustchain which lies on a multi-DAG data structure, working in tandem to drive up scalability.
COTI is making powerful moves in the payment space by stepping into territories that no payment currency has before. COTI has built a payment solution that aims to bridge the worlds of traditional payments and cryptocurrency by building upon the strengths of cryptocurrency and combining them with what current cryptocurrencies lack and traditional payment systems offer. For example, COTI is able to offer buyer-seller protection, fast & cheap transactions and introduces trust-based transactions – a first in the cryptocurrency world.
Fanton is a DAG based smart contract problem that aims to improve upon the scalability troubles and slow confirmation times of blockchain smart contract platforms.
The vision is to disrupt existing financial and supply chain networks by facilitating instant transactions and payments.
Nano is a DAG based cryptocurrency with a simple cause – extremely fast, feeless payments that are also economically friendly. This is only possible because of DAG technology – blockchains have been unable to match Nano in this regard.
Nano is designed to be used in everyday transactions. There is no waiting while your transaction gets confirmed and there are no fees that eat into your account balance. It’s simple, free and easy to use.