IOTA cryptocurrency is promising and not like everyone else

Basic moments:

• What is Internet of Things?
• How did the IOTA cryptocurrency appear?
• How does IOTA work?
• What are the prospects for IOTA?
• Disadvantages of IOTA
• How can you make money on IOTA?
• Forecast for IOTA for 2019-2020
• Where to store and trade IOTA cryptocurrency?

The crypto industry continues to develop . Since the winter of 2022, when Bitcoin reached a record high of $20,000 per unit and plummeted, hundreds of ideas are still being created on the blockchain. The number of cryptocurrencies is growing, and with them interesting solutions. At first, everyone copied the functionality of BTC trying to get a piece of the pie. Later, teams began to look for alternative uses for the blockchain and the tokens that functioned within the network. For example, Gram from Pavel Durov. Another attractive option is IOTA, a very promising cryptocurrency . A platform with cryptocurrency created for a specific task - to contribute to the development of the Internet of Things (IoT)

What is Internet of Things?

All devices controlled via the Internet are elements of the IoT. Many provide for automatic interaction between objects without direct human intervention. A simple example is a smart home. In accordance with the specified settings, it maintains the temperature and turns on the boiler for heating using a timer so that the water remains warm when the owners arrive. The value has gone far beyond private housing and private things. Air pollution sensors, traffic analysis and centralized control of traffic lights based on the situation, drones monitoring crops or forest fires. IoT - can lead to another technological revolution , automating many processes and making them more reliable. The technology is promising with attractive growth dynamics for investors. In 2015, the IoT industry numbered up to 20 billion devices and was valued at $1.6 trillion , and by 2022 the number of devices will exceed 50 billion . By 2025, the IoT industry, according to analysts, will grow 4 times. It is not surprising that symbiosis with crypto will ensure stunning success.

MIOTA currency concept

The world of the “Internet of Things” is a multitude of devices and household items equipped with connections to local and global networks, storing data and exchanging them with other devices. Analysts agree that in the medium term, IOT will involve billions of devices communicating via the Internet. But, in addition to the advantages provided by such technology, it also has disadvantages, the main one of which is the need for a reliable security system, since the global network is susceptible to DDOS attacks.

IOTA was developed specifically for the Internet of Things and is based on principles different from Blockchain. The authors set the following tasks at the forefront:

• facilitating micropayments in the system;
• speed of confirmation of transactions on the network;
• minimizing commissions;
• network scalability;
• safety;
• preparing the system to work with any device equipped with a chip and network connection.

How did the IOTA cryptocurrency appear?

The team began development in 2015 and conducted its first fundraising on a crowdfunding platform. We managed to collect 1377 BTC . This was enough for a year of development and testing. In 2016, the developers managed to attract the attention of large investors and such giants as Microsoft, Samsung, and Volkswagen entered into agreements. Later that year, Outlier Ventures invested seven times the startup's valuation. In mid-2017 , IOTA entered the cryptocurrency exchange and quickly gained popularity. Traders and crypto enthusiasts were attracted by several things :

• no commission for transfers;
• the ability to conduct microtransactions;
• manufacturability;
• transaction speed.

Trading on just two crypto exchanges , the coin overtook hundreds of altcoins in terms of capitalization and entered the top 10 . Considering the increased interest that was gaining momentum, analysts predicted that it would soon enter the top 5 , but a number of problems with the implementation caused the price to collapse, and the token flew into the top 20 , where it remains to this day. Considering that market capitalization is not the main indicator influencing prospects, no serious decline in the number of trading participants was noticed. Later, the Norwegian bank DNB ASA became interested, institutional investor RobertBosh VentureCapital provided investments, and in the spring of 2019 , Land Rover and Jaguar entered into an exclusive agreement for the development and testing of smart contracts based on IOTA. Thanks to them, it is planned to create a “smart wallet” for cars. Now this is one of the key projects, which can have a positive impact on the growth of the token price.

Tangle

IOTA uses Tangle, which is a software protocol that is fundamentally different from the blockchain protocol. The brilliance of Tangle is that transactions are processed in parallel. Tangle differs from blockchain in two main ways:

1) The register can achieve high transaction throughput by parallelizing the check. As Tangle grows with more transactions, IOTA becomes faster and more secure as transaction completion occurs faster as the network approaches critical mass.

2) The way blockchain reaches consensus is through a strict mechanism that requires multiple parties to “swing” against each other in an attempt to add the next block and receive a block reward. Since "miners" and "users" are decoupled entities, block rewards paid to miners will ultimately consist primarily of user transaction fees. In Tangle, "miners" and "users" are no longer separated.

For a transaction to be confirmed on the blockchain, a certain random amount of time must pass for the block to be created. Tangle allows for asynchronous computation, meaning that there are no external arbitrary time constraints when a transaction is completed.

Tangle is programmed in ternary order, which is a departure from traditional binary code. Ternary is much more efficient than binary code and provides some significant improvements in functionality. Tangle can be run on binary or ternary systems.

How does IOTA work?

The process of forming a network cannot be called a blockchain because it does not involve the usual creation of interconnected blocks, as in Bitcoin. The data structure is presented in the form of a graph, which is based on its own concept Tangle . There is no single chain. The network is formed by adding new transactions, which must be confirmed by the two previous ones (in random order). Thus, there are a number of advantages that decide what is difficult to fix in Bitcoin:

• Lack of centralization on the part of miners. To increase income, the power of individual “miners” is combined into pools, and this can lead to the possibility of implementing a “51% attack.” With the Tangle approach, this is impossible because there is no mining in Iota.
• Microtransactions . Thanks to the huge number of low-cost coins, users can make microtransfers without commissions.
• Transaction speed and scalability . In a classic blockchain, as requests increase, the load increases. Taking into account the Tangle model, an increase in the number of transfers, on the contrary, speeds up the network.
• Reliability. Modern cryptography at its core will prove to be more stable even with the advent of quantum computers. Bitcoin and many cryptocurrencies use older approaches to cryptography.
• No need for large investments in technology, which supports payment processing. The participants who create the translations directly influence the operation.

What are the prospects for IOTA?

Developers are constantly working to expand partnerships and are in search of various areas of application of the technology. Moreover, one of the creators was already working in the field of Internet of Things before the project appeared. Together with the startup Stealth, he launched the production of processors for IoT, where the emphasis is on ultra-low consumption. Now, as part of the current one, new processors have been released and they should further increase the already high transaction speed and mining payback. IOTA Foundation was created in Germany . The main task is to attract investment for development and so far it has been very successful. Of the latest major partnership agreements, in addition to the above-mentioned ones with Jaguar and Land Rover, it is worth canceling the agreement with Avery Dennison Corporation . Global manufacturer of protective films, clothing tags and paper for the medical and food industries. In general, given the originality of the technology, and the connection to a very promising industry, as well as contracts with major brands, the IOTA cryptocurrency has a positive future . But there are a number of things that need to be addressed.

Trinity wallet vulnerability

The IOTA team reported that so far only 10 network accounts are known to have been hacked. The exact amount of damage was not disclosed, but, according to insider information, the hackers withdrew coins worth the equivalent of $1.6 million.

About $1.6 Million USD worth of #iota have been stolen from ~10 high-value accounts. Bug is likely in the (official) desktop wallet. Network completely stopped for nearly 24 hours now.#IOTAstrong just keeps on giving. pic.twitter.com/CMwyRRtYy0

— 00xou (@00xou) February 13, 2020

“About $1.6 million in IOTA coins were stolen from ~10 large accounts.
The vulnerability is most likely in the (official) desktop version of the wallet. The network has been completely stopped for almost 24 hours. The IOTA community must remain strong,” wrote an anonymous Twitter user. From the very first day of the incident, the IOTA team reports in detail on the progress of the incident investigation on status.iota.org. Few details are known yet - the project team emphasizes that they cannot provide technical details due to fears that they will try to exploit the vulnerability again.

According to the IOTA team, hackers (or hacker) took advantage of a flaw in the desktop version of Trinity, the official IOTA wallet released in August 2022. The attack was carried out manually, without the use of scripts. Hackers managed to find out the seed phrases from the wallets, and they selected several of them with the largest balance for hacking. One of the victims used the wallet version on macOS, the rest - on Windows. There were no cases of hacking of the mobile version of the wallet or hardware devices.

The IOTA team emphasizes that the vulnerability was in Trinity - the IOTA protocol was not hacked.

Disadvantages of IOTA

The main and most important is implementation . We encountered problems immediately after the completion of the ICO, when a vulnerability was discovered at the transaction confirmation stage. Although the developers called the found error not critical, it dropped the exchange rate by 15%. The problems didn't end there. In 2022, a wave of negativity appeared around IOTA. Users had problems generating a secret phrase at the stage of wallet registration, which was suggested by the team. This became the reason for using third-party resources to generate a security phrase. After a short period of time, the first complaints about the loss of cryptocurrency arose. The total amount of stolen funds exceeded $4 million . The creators did not agree to the meeting and brushed it aside, saying that it was the personal responsibility of everyone who decided to use third-party resources to generate code. It’s sad, but a full-fledged working wallet has not yet been presented. For a crypto of this level, this is simply not acceptable. This is one of the reasons why many token holders use crypto exchanges . As for the full functionality of the technology, unfortunately, it has not yet been used. But in the summer of 2022, together with the startup +CityChange, IOTA joined the development of “smart cities ” . Seven in the EU have launched the introduction of energy-saving technologies. The duration is 5 years and successful completion should have a positive impact on the development of IOTA.

Trinity Wallet Vulnerability Fix

Let's give credit to the IOTA team - they acted quickly. So, on February 17, IOTA released updates to the desktop Trinity - version 1.4.1. According to the developers, the new version of the wallet is safe - they have successfully fixed the vulnerability.

However, Coordinator is still not working - users cannot make payment transactions. But they can check their balance and transaction history. The new version can be downloaded from GitHub, installed instead of the old one and changed the password. There is no updated mobile and hardware version yet, but users are still asked not to use the mobile wallet until the corresponding update is released. Ledger Nano hardware wallet users are not required to update, but are also advised to change their password.

The team is developing a network restoration plan, which will be published a little later. The wallet update presented is temporary. The final one will be published after the network returns to full operation.

If the user discovers missing funds or unconfirmed outgoing transactions, he should contact the project team in the Discord messenger or members of the IOTA Foundation. IOTA also warned about the existence of scammers on Discord - they pretend to be IOTA Foundation staff and write to users on behalf of the organization. Therefore, it is all the better to write to the project team yourself and directly to their official accounts.

How can you make money on IOTA?

Unfortunately, for miners , mining cryptocurrencies like Bitcoin or using alternative approaches described in the article is impossible. The issue of coins was made in the amount of 2.8 billion , of which 1 billion is held by users. Considering that each participant, when making a transaction, checks the two previous ones, he performs a function that in altcoins is assigned to miners. Thanks to this, the commission on the network is zero. Perhaps there will be the possibility of alternative sub-mining , but at the moment this is not provided. The only way to make money on this cryptocurrency is through short-term trading or purchases in the medium or long term. In 2022, during the greatest growth of the crypto market, the token reached $5 per unit. Now it is trading below the price it was at the ICO – $0.25. This allows you to open positions with small amounts and take profits. Especially considering the fact that moderate volatility favors this approach.

Accusations of excessive centralization of the project

A number of users accuse IOTA of being unreliable - its security has raised questions in the past. Thus, at the beginning of 2022, a hacker stole coins worth $11.4 million from 85 IOTA users using a phishing attack. The hacker was arrested in January 2022 - most of the stolen funds were returned to users. At the end of December 2019, users were unable to confirm transactions within 24 hours due to a main network failure. The problem was caused by an unusual set of transactions that the system perceived as an attack. The developers quickly fixed the vulnerability and released an update. According to them, these were purely technical difficulties - nothing threatened the security of the network.

The shutdown of Coordinator and the actual freezing of the IOTA network once again demonstrated the excessive centralization of the project, which was discussed earlier. The incident showed that the company had too much control over the network. Crypto exchanges have been repeatedly hacked for tens of millions of dollars, but not a single project has ever shut down the network - most developers of decentralized projects simply cannot do this.

IOTA (#MIOTA) is so decentralized and distributed that they can literally turn it off.

— Suprateek Bose (@SupraBo_) February 13, 2020

“IOTA (#MIOTA) is so decentralized and distributed that they could literally shut it down,” one user tweeted ironically.

Forecast for IOTA for 2019-2020

The cryptocurrency reached its peak price in 2022, like most altcoins. After a number of security problems and vulnerabilities found, the price dropped to 25 cents. Considering the fact that the entire crypto market is in relative calm in anticipation of the explosive growth of alts, the iota may be among the first to grow . It is also worth considering the many projects with famous brands that are at an active stage. Successful demonstration of results within any framework will have a positive impact on the price. The Internet of Things, of which iota can become an important part, is developing very quickly . Already, complex smart home systems are commonplace. Car sharing companies, rental of electric scooters and any devices connected to a single network, all this can be combined into a system using the IOTA cryptocurrency and its platform. For full implementation, at least a year is needed. For this reason, you should not expect an explosive rise in prices . Only if the entire crypto market goes up following Bitcoin. Now iota coin is popular among traders who practice day trading . Another part of the tokens is in medium-term storage. A full implementation of the system has not yet been presented, so the second option should be assessed as a high-risk investment.