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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."
It seems like the big problem with Bitcoin is hoarding, which discourages trade. How about a decentralized ledger without a "coin"? If you just had a secure, decentralized record of trades, *and* you could transact in less than a second, *and* you were simply creating a secure record of transaction in pre-existing currency *then* you'd have something that might compete with what the credit card companies and check clearinghouses do. Then you might actually reduce fees for the rest of us, even if we don't use it directly.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
Pretty incredible how calling a DAG a "tangle" and sprinkling in a bunch of other mathy sounding words can net you a 10 billion dollar valuation when your product isn't even functional and there's no evidence to suggest it could ever even work / be viable.
After all, the first thing I think of when someone says IOT device is a device with no power or processing constraints that can afford to validate transactions on a network every time it needs to send data--why have miners running massive server farms when your tiny embedded devices can do all the work!
horribly centralized is a good thing. The reason "cryptocurrency" will never take off is that it can't be easily controlled. Nation states require monetary policy. Also, 1% inflation is "good" for the economy. If the main currency were deflationary, as bitcoin is, the economy would crash. Also, bitcoin burns electricity like a small country. A small country would need 100% of power generation going into a crypto currency to ensure it was stable.
There are thousands of reasons why bitcoin will never be used as a currency replacement. And even more ACs who will complain when any of those massive failures are addressed.
Learn to love Alaska
There is no empirical evidence that 1% inflation is a 'good' thing for the economy - it's just a random target that seems justifiable easily. The ECB has a 2% target, in Australia the RBA officially targets 2 - 3%, but basically there is on science of the 'goodness' behind these figures.
Any inflation mostly benefits investors with debts and basically constitutes a wealth transfer from savers to investors (~ from poorer to richer).
The higher the inflation - the more unfair a society seems to be.
If I had to pick other coins that aren't just stupid gimmicks and have a real function that are worth investing in right now they're:
Lightcoin because it was the 2nd one ever invented and it's simply superior to BTC.
Zec because transactions are NOT public, which is proving to be a problem with BTC
Sia because is is tied to an ownerless encrypted open source dropbox cloud storage system
https://hackernoon.com/why-i-f...
Finally! A year of moderation! Ready for 2019?
IOTA is an interesting concept, but it's silly to say it's not a blockchain. It absolutely is - it just allows parallel versions to exist for undetermined amounts of time, until they happen to merge together.
IOTA also has a fundamental problem that - imho - will prove impossible to resolve. It is possible for contradictory things to happen on parallel branches. On a blockchain, this would be something like double-spending, and one of two transactions would quickly be invalidated. Since IOTA allows parallel branches to exist for indeterminate amounts of time, what happens when conflicting transactions are discovered? Potentially, you would have to roll back a very long chain of other transactions - but that same branch may have already given rise to many, many other branches in the tangle.
As far as I can see, there are only two ways to deal with this. (1) Restrict the branching behavior - making IOTA more like a classic blockchain. (2) Only trust the IOTA ledger in a very limited scope - say, during the segment of the branch that you can see. An unrestricted tangle is fundamentally incompatible with a globally trustworthy ledger.
Enjoy life! This is not a dress rehearsal.