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MIT Criticizes IOTA: “Gaping Hole in its Software” and Deceptive Marketing

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MIT Criticizes IOTA: “Gaping Hole in its Software” and Deceptive Marketing

On December 20, MIT Media and the MIT Digital Currency Initiative (DCI) issued a public statement written by DCI Director Joi Ito, refuting an article published by the institution’s own MIT Technology Review about IOTA’s potential to outperform bitcoin.

MIT DCI Criticizes IOTA

On December 14, MIT Technology Review’s Mike Orcutt published an article entitled “A Cryptocurrency Without a Blockchain Has Been Built to Outperform Bitcoin.” In it, Orcutt introduced various works and partnerships IOTA has led throughout 2017 and the technical intricacies of the network.

Specifically, Orcutt’s article delved into the non-blockchain platform of IOTA and how the elimination of the blockchain technology in a cryptocurrency can maximize scaling.

However, within a week of the article’s publication, MIT Media, DCI, and Joi Ito released a column to refute the reporting of MIT Technology Review’s Michael Orcutt. Ito and the rest of the MIT DCI team wrote that the initial article of Orcutt contained a flurry of inaccuracies and misrepresentation of IOTA’s works.

In the beginning, Orcutt noted that the IOTA Foundation had secured strategic partnerships with some of the global technology industry’s largest conglomerates, including Microsoft, Deutsche Telekom, and Fujitsu.

Previously, many news publications and media outlets have reported that IOTA had secured a partnership with Microsoft, which led the price of IOTA’s native token MIOTA to surge by nearly 100 percent.

Researchers at MIT DCI explained that IOTA’s partnerships with top-tier companies were misrepresented. In an interview with The Next Web, IOTA founder Dominik Schiener admitted that IOTA had not secured an alliance with companies participating in testing the IOTA marketplace. Schiener emphasized that they are participants, not partners.

“We have never mentioned that any of the companies which are participating in the marketplace are our ‘partners.’” said Schiener. “We call them participants.”

But, the MIT DCI team noted that the IOTA Foundation corrected their relationship status after the reports were released, not prior to the release of the official press release and media reports:

“After a flurry of media reports making this claim, IOTA corrected their relationship status with top-tier companies like Microsoft, Cisco, and Huawei in a blog post dated December 16. That the MIT Tech Review story links to IOTA’s initial blog post instead of the later version is misleading.”

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More importantly, MIT DCI expressed its concerns over the article of Orcutt describing IOTA as a tamper-proof decentralized ledger. Its researchers explained that the entire IOTA network was temporarily shut down in November and inoperable for three days. No decentralized leading public blockchain network in the market such as Bitcoin, Ethereum, and Litecoin have demonstrated such occurrences in the past.

Emphasizing the significance of decentralization in public blockchain networks, MIT DCI wrote, “that this has never happened in Bitcoin or Ethereum suggests the extent to which the IOTA network relies on the ‘coordinator,’ a single point of failure, and is not truly decentralized. Also troubling, IOTA developers were able to transfer funds out of users’ IOTA accounts.”

Lastly, MIT DCI stated that the claim of Orcutt in that IOTA’s transactions are free of fees is misleading, primarily because the network does not run on a proof-of-work consensus protocol like Bitcoin. On IOTA, users are required to do the proof of work for their own devices and transactions. On the Bitcoin network, hypothetically, users can do the same and essentially process zero-fee transactions. The problem with the process is that it is highly inefficient and impractical:

“Semantics aside, this claim, which appears in IOTA marketing materials, is deceptive; the work required is a fee, whether or not it requires a monetary payment. Restricting the ways in which the fee can be paid, requiring that the work be done on a user’s own device, doesn’t make it go away,” – MIT DCI

IOTA Core Developer Responds

In response to the column released by the MIT DCI, an IOTA core developer revealed on December 20 that the IOTA Foundation had initiated a lawsuit against two MIT DCI employees for conducting academic fraud. The developer wrote, “actually, MIT has nothing to do with that as was found out by lawyers working on a case related to academic fraud conducted by two DCI employees who authored the linked blog post.”

Additionally, the altcoin’s core developer accused the MIT DCI for intentionally and purposefully defaming IOTA and its foundation:

“I find this deeply alarming because inability to provide a proof of their claim supports my suspicions that Neha Narula and Ethan Heilman from Digital Currency Initiative conducted an academic fraud aiming to support their defamations against IOTA community.”

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