The Internet of Things

IoT stands for “The Internet of Things” and entails everything that is connected to the internet, but more broadly, it also signifies the communication between devices or machine-to-machine interaction.

Early Iterations

Ever since the industrial revolution, humans have largely reduced dependencies on labor-intensive modes of production by the use of machines for the production of goods, and recently, services. Though the concept of IoT or even the “Internet” wasn’t even a thought in the 1800s, the fundamental concept of machine-to-machine communication was a vision shared by many of the pioneers and inventors belonging to that era.

The telegraph, developed in the 1830s and 1840s, is the earliest known example of a direct line of communication between machines. The telephone was a revolutionary device which allowed people to communicate with each other in real-time and was developed in the 1870s with Alexander Graham Bell winning the patent for it in 1876.

The 1900s ushered in the era of wireless communication with the invention of the radio. The first radio voice transmission took place on June 3rd, 1900.

It wasn’t until the 1950s and 60s that humanity started its push towards global communication with the invention of computers and the internet. The internet was started out by DARPA (Defense Advanced Research Projects Agency) and was called ARPANET in 1969. ARPANET allowed for a connection to be established between four university computers. The idea was to communicate and share computer resources among scientific users in the connected universities.

With TCP/IP protocols being developed in the 1970s, the size of the network was expanded, which had by then become a network of networks. Electronic mail was introduced in 1972, motivated by the need of the ARPANET developers for an easy coordination mechanism. The invention and use of “e-mail” formed the basis of a lot of activities that we see in the modern iteration of the “World Wide Web” which corresponds to the growth of all kinds of “people-to-people” traffic.

By 1985, ARPANET was well established as a technology supporting a broad community of researchers and developers, while also being used by other communities for daily computer communications. By this time, commercial supporters also began supporting the public use of ARPANET, which allowed it to evolve into the modern iteration of the internet.

“Global Positioning Satellites” or “GPS” technology became a reality in 1993 with the Department of Defense providing a stable, highly functional system of 24 satellites. Following this, privately owned, commercial satellites were also placed in orbit. With this, satellites and landlines provided much of the basic communications which formed the basis of what we know as the internet today.

IoT as a Concept

As a concept, the Internet of Things was first officially named in 1999. The term has been used to largely define a huge network of devices (with an on/off switch) that are connected to the internet. Basically, any device that can transfer data across the network falls into the category of the IoT. IoT consists of a gigantic network of internet-connected “things” and devices.

By 2013, IoT had evolved into a system using multiple technologies, those ranging from the Internet to wireless communication, and micro-electromechanical systems (MEMS) to embedded systems.

The Internet of Things provides an endless supply of possibilities in terms of connecting our devices.

The industry is set to grow exponentially over the next couple of decades, with IDC speculating 30 billion connected devices by 2020, and IoT revenues hitting $357 billion by the end of 2019. Bain and Company, a management consulting firm, projects IoT revenues hitting $450 billion by the end of 2020.

Concerns regarding Security and Privacy of Data

Privacy

With billions of devices set to be connected to the internet in the near future, it is only natural to be concerned about the privacy and security of one’s data. Surveillance devices and sensors are becoming more commonplace where thoughts, actions, and behaviors are continuously being monitored with the data being collected by government and private entities. Consumers are kept in the dark about such practices with no way of them being able to avoid it.

Customers are forced to continuously give up their privacy as a result of being connected to the Internet of Things, with the only option in sight for them being switching off their devices. In the recent years, there has been a rise in the number of discussions regarding data privacy and how to protect consumer data, particularly with internet tech giants like Google and Facebook coming under fire for their breach of trust regarding data mining.

Security

Security is a major cause for concern when it comes to IoT devices. With billions of devices being connected to the internet, and to each other, it doesn’t take much for a hacker to access a user’s network through one of those devices.

The Internet of Things makes businesses and institutions around the world vulnerable to security threats. It just takes breaching one device to cause havoc in an entire network. So serious is this concern that the Federal Trade Commission has gotten involved, with them exploring the means of guaranteeing privacy and how security safeguards are being installed in new Internet-connected devices.

Hackers can launch DDoS (Distributed Denial of Service) attacks by infiltrating and leveraging IoT devices, where they can cripple infrastructure and shut networks down. They can compromise gateways to reveal and exploit sensitive personal and corporate information.

The Mirai Botnet DDoS attack was the largest DDoS attack ever and was launched on a service provider, Dyn, using an IoT botnet, made possible by a malware called Mirai. Once the network was infected with Mirai, the computers on the network continually searched for IoT devices where they used default usernames and passwords to log in, and infected them with malware. This led to massive shutdowns across huge portions of the internet, resulting in platforms like Twitter, the Guardian, Netflix, Reddit and CNN going down.

Blockchain and IoT

In the Internet of Things, systems are dependent on architecture that is centralized. Centralized systems will have issues of scalability with billions of devices set to join IoT networks. The centralized nature of IoT systems can expose billions of weak points that can compromise network security. Furthermore, this kind of bottleneck will require third parties to constantly check and authenticate each and every micro-transactions between devices — which will result in it being a tedious and time-consuming affair.

Centralized systems also have the inherent problem of a single point of failure which can be exploited by malicious third-parties that can disable the entire network.

Blockchain technology is a distributed ledger that is secured by cryptography. The underlying principle of blockchain is that you don’t need trust in the system for transactions — or data, in this case — to be validated as a result of there being the absence of a centralized, regulatory authority. Data on blockchains are secure and immutable. There is no single point of failure as millions of nodes are distributed all over the network where data can be transferred on a peer-to-peer network sharing protocol.

Smart contracts are a unique feature in blockchains. Smart contracts allow for the creation of certain agreements that will only be executed once the respective conditions are met. This system can be used when buying products and services where payments will only be authorized when the delivery has been made. In case of a lapse in delivery, no payment can be processed. This feature also eliminates any chance of information altering.

Blockchain has a huge potential in terms of revolutionizing IoT. The Internet of Things can be enriched by providing a trusted sharing service via blockchain technology — where information is reliable and can be traceable.

There are, however, a number of challenges in the integration of Blockchain and IoT:

Storage and Scalability

In the IoT, devices can generate gigabytes of data in real-time.

Most blockchains are not designed to store large amounts of data like those produced in an IoT. Some current blockchain implementations can only process a few transactions per second, thereby posing another bottleneck for integration with the IoT.

Security

One of the main challenges in the integration of blockchain and the IoT is in regards to the reliability of the data generated by the IoT. Blockchain ensures the immutability of data, and if the data arriving from the IoT is corrupt, then they stay corrupt in the blockchain. Corrupt data in an IoT can arise from situations apart from malicious ones where the architecture is affected by many factors such as environment, participants, vandalism, and failure of devices.

Apart from those, there are many threats that can affect the IoT such as eavesdropping, denial of service or controlling. IoT devices are more likely to be hacked since their constraints limit firmware updates preventing them from addressing possible bugs or security breaches.

IoT and blockchain integration can also have repercussions on IoT communications. IoT application protocols like CoAP and MQTT make use of other security protocols such as TLS or DTLS to provide secure communications. These security protocols are complex and heavy in addition to requiring centralized management and the governance of key infrastructure.

Anonymity and Data Privacy

Blockchain technology works on the principles of anonymity and transparency where data is public and can be accessed by anyone on the network. Many applications in the IoT work with confidential data. Blockchains can ensure the security of data, but can public and permission-less blockchains solve for the issue of data privacy in the IoT?

Securing IoT devices such that data is stored securely so as not to be accessed by people without permission is a challenge as it requires an integration of security cryptographic software into the device.

What is IOTA?

IOTA is a public distributed ledger that uses an invention called the Tangle at its core. The Tangle is a kind of distributed ledger based on a directed acyclic graph (DAG). There are no blocks, no chain, and no miners.

Approximately $500,000 worth of Bitcoin and other cryptocurrencies were raised through a crowd-sale to fund IOTA in December 2015. None of the tokens were reserved for the founders, developers, or advisors and all the token supply was issued to the crowd-sale participants. The community, however, decided to support the project by donating roughly 5% of all tokens to the non-profit IOTA Foundation.

The principal functions of the IOTA protocol are to enable a “machine economy” that entails feeless machine-to-machine payments and to provide a scaling solution for the upcoming growth of the Internet of Things.

What is a Directed Acyclic Graph (DAG)?

A Directed Acyclic Graph, or DAG, is a complex data structure that moves in one direction without looping back onto itself.

The graph contains a structure of nodes that are connected to each other with edges. The graph only moves in one direction, meaning it will move from “A to B” but not “B to A”, hence “directed”. The graph doesn’t move in a circular direction either, where moving from node to node along the edges means not encountering the same node twice, hence “acyclic”.

The connected nodes are transactional data and consensus is an intrinsic part of the system. Unlike a blockchain, where consensus is decoupled and requires miners, a transaction on the Tangle must confirm two previous transactions, resulting in a self-regulating, peer-to-peer network.

There are no miners on the network, and a person sending a transaction is required to use a small amount of their computing power to confirm the previous two transactions. This means that IOTA transactions are feeless, regardless of how large the network grows.

As a transaction on the Tangle receives confirmation, and the transactions confirming receive confirmations, the cumulative weight of the initial transaction builds up. As this weight builds, the transaction becomes more reliable, immutable and secure within the Tangle forever.

Advantages of IOTA over Traditional Blockchains

Since IOTA is a graph and doesn’t have chains, blocks, or miners, it supposedly doesn’t have most of the issues associated with traditional blockchains.

Virtually No Transaction Fees

Making an entry on the Tangle requires performing Proof-of-Work (PoW) on two preceding transactions. There is no gas fee, nor the requirement to tip the miners in order to validate transactions.

Minute Transactions Made Possible

The absence of a transaction fee means that users can transact as little as 1 IOTA which is currently worth $0.479770. This is in stark contrast to most blockchains that have high transaction fees associated with them.

Advantage of Scalability

Scalability has been one of the fundamental bottlenecks of most traditional blockchains, where it takes time to achieve consensus by creating new blocks. The Bitcoin blockchain can only handle 4.6 transactions per second, while the Ethereum blockchain can handle 15 transactions per second. By comparison, the Tangle has been seen to handle transaction spikes well into a hundred transactions per second.

Lightweight Computing

With the Tangle, devices with very low computing power can write on to the Tangle by performing PoW in a reasonable amount of time. This is, perhaps, one of the most important features that lies at the core of the Tangle, and hence IOTA, where setting up and running nodes does not consume a lot of resources (electricity) in terms of computing capacity.

Criticisms of IOTA

IOTA has been the subject of debate since the time of its announcement back in 2015. The discourses have ranged from formal debate to all-out attacks on people, from both sides of the spectrum, i.e the people for and against IOTA.

Nick Johnson, one of Ethereum’s core developers, raised certain concerns regarding IOTA in a blog post published in September 2017. His first criticism is in regards to IOTA’s “lack of good technical judgment.”

IOTA uses balanced “ternary” — a numeral with 3 digits, -1, 0 and 1 — as opposed to a “binary” system on which most hardware and communication networks run. Johnson points out that all of IOTA’s internal ternary notation has to be encapsulated in binary, resulting in significant storage and computational overhead.

“Math must either be performed on individual ‘trits’ or first converted from binary-wrapped-ternary encoding into the machine’s native number representation, and back again afterward — in either case imposing a large computational overhead.”, Johnson adds.

Nick also mentions in his article that IOTA “disregards cryptographic best practices.” In regards to IOTA’s numeral system, he says that it requires IOTA to reinvent basic operations such as cryptographic hashing. This, according to Johnson, violates the first rule of cryptography; don’t roll your own crypto.

Nick cited Neha Narula’s article about “Cryptographic Vulnerabilities in IOTA”, where she pointed out the fact that Curl, IOTA’s self-written hash function, produced collisions when different inputs hashed to the same output.

“Once we developed our attack, we could find collisions using commodity hardware within just a few minutes, and forge signatures on IOTA payments.”, Narula added.

She (MIT Media Lab), along with Ethan Heilman (Boston University), Tadge Dryja (MIT Media Lab) and Madars Virza (MIT Media Lab), informed the IOTA developers, who patched the system. However, she also added that the then current version of IOTA did not have any of the vulnerabilities that they had initially found.

Nick Johnson’s third and most controversial opinion about IOTA is in regards to it “being a bad actor in the open source community.”

He references IOTA’s co-founder, Sergey Ivancheglo’s claims about the flaws in Curl’s hash function being deliberate; “that they were inserted as ‘copy protection’, to prevent copycat projects, and to allow the Iota team to compromise those projects if they sprang up.”

He adds, “It honestly astounds me that anyone would think this justification redeems them; it’s an admission of hostile intent towards the open-source community, akin to publishing a recipe but leaving out a critical step, rendering the resulting dish poisonous to anyone who eats it.”

Billionaire, blockchain thought-leader, author, serial entrepreneur and Bitcoin veteran, Richard Heart had some choice words for IOTA in an interview with crypto-Youtuber, Ivan on Tech.

According to Heart, a DAG is a data structure “that has existed for years and is used in Git.” He doesn’t agree that IOTA is a cryptocurrency, citing the fact that cryptocurrencies have ledgers that contain information in regards to “what private key has access to which public funds.”

He stresses on the fact that a user’s wallet is a collection of private keys that accesses those funds, i.e a wallet contains a user’s private keys. While drawing comparisons to blockchains, he asks whether IOTA has a wallet, with the obvious answer being “no”. He highlights the fact that IOTA, instead, has a “node interface” where users “somehow, magically generate their own keys, that’s very long and only has the number ‘9’ in it.”

His basic arguments are about how IOTA is not a cryptocurrency, expressing extreme disdain for the cryptocurrency and its creators.

Crypto-writer, Andy Octavian, apart from his “10 Reasons why IOTA is a scam”, had this to say about IOTA:

“I have invested a small amount but there is no way of getting it out of the wallet as it’s impossible to connect to the wallet due to “CONNECTION REFUSED”. There are some rumours that this bug is intentionally created by IOTA developers so that they can keep hyping IOTA and the value can’t significantly drop as people can’t withdraw their investments from IOTA wallet. Free transactions, but it took more than 48h before my transaction was confirmed. The reasons why I see people investing in this crypto is that it’s overhyped and no research has been done before investing.”

Legion of Defenders

The crypto-sphere has a vast array of different cryptocurrencies, all designed to solve for specific needs and use-cases and are tied to their respective blockchains. The cryptocurrencies, themselves, each have a dedicated group of followers and proponents that endorse and defend the coins of their choice with communities across all spectrums of the world of social media; on Twitter, Reddit, Facebook, YouTube, DTube, Steemit, Medium, and the likes.

The IOTA community, in particular, is infamous for outing detractors of the cryptocurrency, as well as for getting into public spats with critics and doubters on social media.

A blog website called “Facts About IOTA” has described the IOTA community as being “special” since “they have organized themselves into ‘Evangelist’ networks, as well as ‘anti-FUD’ teams and ‘Counter-intelligence’ accounts.”

The website also created a list of tactics and traits used by IOTA supporters when debating critics. Some of the more severe actions include; threats of doxing/ identity revelation/ gaslighting, attempts at silencing critics by reporting their accounts, and legal threats from the founders. Other concerns have been highlighted in regards to IOTA supporters focusing on the identity of the messenger rather than the contents of their messages, avoiding criticisms, dismissing them outright as irrelevant, justifying their actions as profit-driven, avoiding points being discussed, impersonating accounts to discredit the messenger, sending insults, hate-mail, and personal attacks, among other less savory things.

The bottom of the “Community” landing page on “Facts About IOTA” reads:

“Faced with all these traits and tactics, it is extremely unlikely that someone with legitimate concerns is taken seriously by the IOTA community and their developers since everything is perceived as an attack. While we are sure that cherrypicking, concern trolling, and similar traits shown above are also displayed by those hating the IOTA project, it is not a good sign when the whole community and the Founders themselves engage in the same type of tactics and condone others that do so.”

Avi Mizrahi, writer for Bitcoin.com’s new portal writes, in a post, that though a lot of the startup world is headed by young people bringing a fresh perspective and attitude, “a few appear to completely lack the maturity needed to run a public business.”

“In the case of IOTA, this is exacerbated by sycophants who enable this situation and rather attack critics than have an adult discussion.”, the blog reads.

Mizrahi points out the behavior of the promoters of IOTA, where rather than reflect on the behavior that got them into hot water, they seem to have doubled-down on their efforts to vehemently defend their supported crypto by “embracing an ‘Us vs Them’ mentality. Reporters asking questions, developers objecting to their non-blockchain solution, and former investors with complaints about their funds being stolen; all are perceived only as enemies attacking the group.

Conclusion

The concept behind IOTA seems novel and innovative, especially when considering the shortcomings of traditional blockchains. The raging debates between supporters and detractors show the power and magnitude of a concept such as this. Creating a cryptocurrency that works devoid of a blockchain is truly novel, but how scalable and efficient is such an innovation as of today?

Bitcoin and blockchain technology have been around for a solid 10 years now, and will only continue to grow to a point of mass adoption. The blockchain works on the internet, that is a key fundamental. The Internet of Things is poised to grow massively in scale, where blockchain and IoT are bound to cross paths at some point. The question we need to ask is, “Is IOTA that missing link between blockchain and IoT?”

For all it is worth, we cannot simply ignore IOTA or write it off as another scam. We also cannot afford to stop asking questions as that forms the basis of any kind of progress that might lead to further innovation. The reason that it is so hotly debated in the crypto-sphere, is because it might hold some significance as a concept, even if that concept requires time to come into fruition. However, given that the crypto space is still in the nascent stages of development, the communities within this ecosystem must remain vigilant at all times as such a young and rapidly growing industry can also be home to bad actors that seek to exploit the system for personal gain and leverage.

We may see significant developments in the coming months and years in regard to IOTA. In May 2019, IOTA released “Coordicide”, a tool that will manage transaction security, ensuring that the transactions process and that the same funds are not spent twice (double-spending). This will remove the need for a centralized coordinator in the system, and can be seen as IOTA’s push towards decentralization.

What will the future hold for IOTA? Only time will tell.

This article was written and edited by Rahil Ahmed, Head of Content at the Bank of Hodlers.