IOTA - more questions than answers.
Iota is a newcomer into the top of the crypto market cap. I first learned about it from the twit of Joshua Scigala - founder of Vaultoro. So I went and read the white paper. I was sure there's a trick somewhere - you can't send transactions without fees, right? Cause who will secure the network?
First of all - not everything is rosy. Iota needs bootstrapping as mentioned in the twit by Dominik Schiener in order to avoid Sybil attacks. There are more questions - in order to transact - one needs to access Iota to get some other transactions to validate - who this will happen? Does it mean you need to run full validating node? Will you need to receive all transactions just in case to be able to transmit yours?
If the dev team will have control over the tangle for bootstrapping - when will they release this control? What will happen if they release the control too early? The white paper is full of math - I have some formal math education - but this was not enough. I 'll have to look more - but what is clear - there are a lot of assumptions and then mathematical calculations based on these assumptions. But those assumptions will not hold always - will the system be 100% failure proof or only 99.9%? Also, any consensus system is defined by incentives. Is Iota system of incentives sound? I am not that sure.
I bet there will be specialized nodes to validate the tangle that will do it efficiently and everybody else will pay fees to send transactions via those nodes. because - PoW is still proof of work - if you sent a million micro transactions - you will need to validate two million other transactions and that might result in heavy electricity bill especially if done on ineffective hardware.
I ll continue to look into Iota - in the meantime - feel free to refer me to resources with more information.
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So IOTA uses a completely different structure called the "Tangle" as you know but it isn't a "blockchain" it is only inspired by Bitcoin's technology. The network is secured by people running nodes. Your transactions are confirmed by teamwork on the network- you have to verify two other transactions before yours get transacted. The incentive to run these full nodes is that you are creating a completely new infrastructure and being a part of history, that's enough for some people to participate. For the greater good I guess you could say.
If you have any other questions about crypto, I study them all day everyday- also do BTC price forecasting here :)
HAPPY TRADING!
Thanks for the comment. Yes, I know what Iota is - I read the whitepaper. It is just there are many questions regarding the design and the inner structure of incentives.
Imagine how certain ants help each other out by forming living bridges over obstacles such as water or gaps in the path. The people who support the network are doing so in the hopes of helping accomplish a bigger goal. In the future IOTA will save companies BILLIONS in revenues each year.
Maybe, but those are just words - did you read my questions?
So, if someone is sending a million transactions isn't the 'work' conducted by that entity? Also, that entity would be required to transact 2 million other transactions as well. So, that entity if making such grand transactions is likely a corporation with resources available to work out such transactions. As far as I'm aware this is what I have been told.
So, the more big players that use the currency the more computing power it will have, simply by those that use it...
No, you can create the transactions but let someone else transmit these to the network and do the PoW. This someone else is in effect a miner, who specializes in efficient PoW processing and charges fees for the electricity and the service. Still, this miner will burn less electricity than someone else that uses non-specialized hardware.
This specialization makes sense, as not everyone who wants to make a million or more transactions per day would want to also become a miner in order to perform the PoW required in an efficient way.
Yes, the more big player would use the IOTA - the more computing power will it attract - but this computing power will be centralized just like in Bitcoin or even more.