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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."
Now two other posters, please verify me.
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.
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"oh what a tangled web we weave...
when first...."
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.
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.
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
There is empirical evidence that deflation is destructive to a modern economy. So inflation isn't there to cause all the destruction you claim it does, but to be a buffer for swings not landing into "deflation" range.
If you get deflation, Bob will sell his stocks and put the money under his mattress, when he does that, the stock price will drop, so everyone else will see that stocks are worse than selling and putting the cash under their mattress. Repeat until the stock market is $0, then we have a recession that would make the Great Depression look like a stock boom.
But yes, inflation is a tax on those who don't have massive debt. I'm surprised Donnie John hasn't tried to make inflation take off. If you buy a building for $1B, financing 150% of it, you are $500M in the red. If inflation makes that building worth $10B, then you are $8.5B in the black. Since most "rich" people have as much or more debt as assets, inflation does disproportionately benefit them. But it doesn't seem to be a target because not only does it benefit you for past purchases, it eliminates future ones, until the inflation comes back down.
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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.
Blockchain, crypto, mining, consuming electricity, distributed verification... It all don't matter. What matter are a few things :
1) is the value stable (e.g. not wildly fluctuating)
2) can the supply be increased indefinitely (e.g. there are no inherent limit on the maximum amount of currency amount issued).
3) can the supply be controlled by government and bank
4) processing fee cost is essentially near zero for the entity processing it, like banks - and that include processing monetary fee and amount of time
(3) is important because no country or super-national entity like EU would allow currency on which there is no control by central bank. It makes all kind of sense for monetary policies. Like it or not, baring anarchy and exchanging "caps" in a post apocalyptic world, all our economies and governmental monetary policies are based around that. I call that a condition "sina qua non" and all dreamer out there wanting to escape "government grasps" don't get what society is based on and why it is that way. Those who never learn from history...
(1) is important because without it you have no valid currency which can be used for exchange. Wild fluctuation make buyer think twice and maybe push a buy the next day/month, because next day the currency could be worth twice what it is now. Seller refuse for the contrary reason, it could be valued as half the value the next day/month.
(2) like it or not is important because without it you may as well go back to limited monetary policies based on the gold standard... There is a reason all countries switched to a standard which does not limit the amount of monetary supply. You are essentially stringing the economy if you limit the total amount of issuable currency (assuming the amount is something low like 50 millions bitcoins, and not a technical limitation like 2^64-1). Like it or not but current economy are not based on limiting the total supply
(4) is simply a question of adoption. If you have processing fee of 20+$ like today, or take minutes to close and be validated, then there is no way anybody with a sane mind will adopt it as a currency, it will stay niche.
That is why essentially I think ZERO of the crypto currency existing today will be anything but either a scam, a niche commodity, used for money washing, or a speculative bubble.
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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."
https://hackernoon.com/why-i-f...
Finally! A year of moderation! Ready for 2019?
There is another new currency, coined itoa().
Instead of using untrustworthy integers to transmit the coin value, it uses a chain of characters called a characterchain. For example, fifteen-thousand three-hundred and eighty-five would have a characterchain of “15385” and a hexadecimal characterchain of “313533383500”. If any of the bits are changed, it will (probably) become invalid. And the null terminator ensures that any forgery by modifying the value is limited to a factor of ten (because an extra digit cannot be added, without overwriting the next piece of data)..
In this way, it provides a trustworthy, verifiable, tamperproof, untraceable, open-source, non-central-government cryptocurrency with by-design limited supply and potentially infinite value.
Every currency is simply backed by trust. When someone hands you the currency in return for work or goods, you expect to hand the currency back to someone else the next day. As long as that trust exist, there's no need for any other kind of value.
Suppose you do a month's work for me. I offer you a choice of payment in cash or 1 bitcoin. Assuming it will take a few days to sell that bitcoin, what amount of cash would you consider it equivalent to ?
Japan has been printing money like mad since the early 2000s with inflation hovering at right around 0%, going negative as recently as 2016.
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.
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.
There is plenty of evidence and quite a lot of experience. We have centuries of real world data from the effects of various amounts of inflation and deflation on economies and every bit of evidence we have shows that a modest (1-3%) amount of inflation is the least worst option in most circumstances. Grossly oversimplified explanation: Deflation is almost always bad because it dis-incentivizes investment and creates perverse incentives. (why invest if your money will grow in value without the risk?) High amounts of inflation are bad because economic growth and wage growth cannot keep up and it wipes out the value of assets. Modest amounts of inflation force people to take reasonable risks to stay ahead of inflation but its low enough that economic growth can keep pace or get ahead. Maintaining zero inflation is as a practical matter essentially impossible and trying will result in dipping into deflation now and then which is worse for society than a small amount of inflation.
Any inflation mostly benefits investors with debts and basically constitutes a wealth transfer from savers to investors (~ from poorer to richer).
A wildly over simplified analysis if I've ever read one. There is quite a lot more to it than that.