IOTA is Centralized, Single Point of Failure Exists

An early-age IOTA investor has claimed that the project is centralized and is exposed to a single point of failure.

Limo, who runs an IOTA-specific blog called TangleBlog.com, identified issues related to how IOTA’s data structure operates. The project uses Tangle, a Directed Acyclic Graph, known as a DAG, whose primary purpose is to hold transactions. Unlike a Proof of Work (PoW) blockchain, which enables an entire network to confirm blocks carrying transactions, IOTA’s Tangle does the same via appointing two previous transactions to establish the new transaction. Here is a brief illustration:

In the chart above, transaction number 5 approves transaction number 2 and 3. At the same time, transaction number 6 is unconfirmed and is called a tip. Each incoming transaction will choose tips to approve.

The relatively simple and unique process, however, could lead one serious security lapse. Hypothetically, if an attacker amasses 33% of the hashpower of the IOTA network, he can very well change the underlying algorithm followed by the Tangle nodes. It is possible because hashing happens as instantly as new transactions join the tree. They also get confirmed immediately using a regular laptop.

IOTA has proposed to solve the security issue with Milestones. They are particular transactions issued by a unique node called Coordinator. It is centrally controlled by the IOTA Foundation, which means the responsibility to protect the network solely belongs to the person or organization that has control over the coordinator node.

Limo, in his public outcry, discussed the same problem.

“A consensus was never centralized, but there was and is a single practical point of failure because the coordinator(COO) is a mechanism that, under these conditions, can actively stop the confirmation-rate on the tangle,” he wrote. “Part of that is that no one ever developed a random walk implementation that could circumvent the COO, although they could have.”

Related Reading: Bosch Boosts IOTA with New Device Connectivity for IoT Data Collection

A Solution on the Way

Limo claimed that he spoke to two members of the IOTA Foundation, confirming a solution was on its way to improve the platform’s decentralization aspects.

“The IOTA foundation has solutions for the coordicide,” he wrote. “They are neither approved nor tested, but they are promising concepts that can withstand the first and second logical hurdle.”

Limo explained the foundation is close to launching a much more economical version of their IOTA Reference Implementation. They would carry out the coordicide soon after the launch – tentatively by mid-2019.

“To that day, IOTA will have accomplished its mission. The largest, most uncertain milestone: COO-less decentralization will be reached,” adeed Limo.

The mettle of achieving a true, full-fledged decentralization would likely boost IOTA’s adoption across the entire digital ledger space. It has already attracted partners from all around the world, with its Tangle-concept getting adopted by big companies like Fujitsu, VW, Bosch, and DXC Dach.

Until then, as Limo predicted, the project will continue to function under a centrally controlled environment.

Featured image from Shutterstock.