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A Cryptocurrency Without a Blockchain Has Been Built To Outperform Bitcoin (technologyreview.com)
An anonymous reader quotes a report from MIT Technology Review: Bitcoin isn't the only cryptocurrency on a hot streak -- plenty of alternative currencies have enjoyed rallies alongside the Epic Bitcoin Bull Run of 2017. One of the most intriguing examples is also among the most obscure in the cryptocurrency world. Called IOTA, it has jumped in total value from just over $4 billion to more than $10 billion in a little over two weeks. But that isn't what makes it interesting. What makes it interesting is that it isn't based on a blockchain at all; it's something else entirely. The rally began in late November, after the IOTA Foundation, the German nonprofit behind the novel cryptocurrency, announced that it was teaming up with several major technology firms to develop a "decentralized data marketplace."
Though IOTA tokens can be used like any other cryptocurrency, the protocol was designed specifically for use on connected devices, says cofounder David Sonstebo. Organizations collect huge amounts of data from these gadgets, from weather tracking systems to sensors that monitor the performance of industrial machinery (a.k.a. the Internet of things). But nearly all of that information is wasted, sitting in siloed databases and not making money for its owners, says Sonstebo. IOTA's system can address this in two ways, he says. First, it can assure the integrity of this data by securing it in a tamper-proof decentralized ledger. Second, it enables fee-less transactions between the owners of the data and anyone who wants to buy it -- and there are plenty of companies that want to get their hands on data. The report goes on to note that instead of using a blockchain, "IOTA uses a 'tangle,' which is based on a mathematical concept called a directed acyclic graph." The team decided to research this new alternative after deciding that blockchains are too costly. "Part of Sonstebo's issue with Bitcoin and other blockchain systems is that they rely on a distributed network of 'miners' to verify transactions," reports MIT Technology Review. "When a user issues a transaction [with IOTA], that individual also validates two randomly selected previous transactions, each of which refer to two other previous transactions, and so on. As new transactions mount, a 'tangled web of confirmation' grows, says Sonstebo."
Though IOTA tokens can be used like any other cryptocurrency, the protocol was designed specifically for use on connected devices, says cofounder David Sonstebo. Organizations collect huge amounts of data from these gadgets, from weather tracking systems to sensors that monitor the performance of industrial machinery (a.k.a. the Internet of things). But nearly all of that information is wasted, sitting in siloed databases and not making money for its owners, says Sonstebo. IOTA's system can address this in two ways, he says. First, it can assure the integrity of this data by securing it in a tamper-proof decentralized ledger. Second, it enables fee-less transactions between the owners of the data and anyone who wants to buy it -- and there are plenty of companies that want to get their hands on data. The report goes on to note that instead of using a blockchain, "IOTA uses a 'tangle,' which is based on a mathematical concept called a directed acyclic graph." The team decided to research this new alternative after deciding that blockchains are too costly. "Part of Sonstebo's issue with Bitcoin and other blockchain systems is that they rely on a distributed network of 'miners' to verify transactions," reports MIT Technology Review. "When a user issues a transaction [with IOTA], that individual also validates two randomly selected previous transactions, each of which refer to two other previous transactions, and so on. As new transactions mount, a 'tangled web of confirmation' grows, says Sonstebo."
"oh what a tangled web we weave...
when first...."
The concept of tangles is great, but it's designed for IoT devices. It has no concept of mining. It is funded by an initial issue (meaning any future funds come from the developers printing money.) It has the flaw that if they ever add a mining concept it will end up with a flaw where people can take 10+ machines offline, have them validate each other, then come back online.
I think these Electric Monopoly Money Scams are not even speculation. They all operate like a Ponzi Pyramid Scheme, where purchases of latecomers are used to inflate the value of the holdings of early entrants.
Increase in money supply != price inflation.
Bitcoin blockchain is also based on DAG. This is how all Bitcoin transactions are linked with one another. in bitcoin, the transactions are stored in blocks whereas in IOTA they are not. Thus Bitcoin is predictably consistent, whereas IOTA is eventually consistent, and partial double spending is extremely common with IOTA. this is why IOTA needs centralization to enforce consistency. The infamous accumulator.
A centralized unregulated pre-mined currency is a terrible idea.
From the start IOTA makes conscious use of hype inflation to boost its value without offering actual value. There is a technique of associating yourself with well-known names to boost credibility, there is name dropping on Medium and history of fighting criticism without actual technical merits.
It is a scam.
Also, 1% inflation is "good" for the economy. If the main currency were deflationary, as bitcoin is, the economy would crash
Please note that the economy would only crash because expectations of inflation are already built in (ie, loans and bonds are sold with the expectation of inflation). If there were enough time to adjust, then it wouldn't be a problem. One of the longest periods of deflation in the US was also a period of strong growth (although it caused problems for people who had borrowed money).
"First they came for the slanderers and i said nothing."