The IOTA Foundation no longer supports or endorses this article. We have however kept it available for transparency purposes.

The IOTA Foundation was established in Germany in 2017 to support the development of the IOTA platform and related technologies. The aim of the foundation has always been to operate in a collaborative manner with other parties. Over the last few months, however, the IOTA platform has been the subject of ongoing criticism by the Digital Currency Initiative (DCI) team at the MIT Media Lab. This document serves as the IOTA Foundation’s official and comprehensive response to these criticisms.  

Editor’s Note:
All of the information and links contained in this multi-part document were publicly available prior to publication. None of the information contained herein is new or revelatory.

This is a collective effort by many members of the IOTA Foundation and IOTA Core team. The purpose of this aggregation is to add color and context to these complicated and multi-faceted issues, so that the entire Distributed Ledger Technology (DLT) community can decide the relevance of this information for themselves.

  • There are pertinent questions regarding the disclosure process and the conflicts of interest within the DCI team.
  • At no point did the IOTA Foundation imply either directly or indirectly that the Foundation had signed a formal corporate partnership with any of the Data Marketplace participants, and to date no such formal corporate partnerships exist. Clarity in communication is of great importance to the IOTA Foundation. As we are always striving to improve, we will review our internal press release policies and put clearer guidelines in place as to avoid such confusion in the future.
  • In October, the Coordinator, a special node currently securing the network during its infancy, was taken offline temporarily after a potential security vulnerability was identified. Once the issue was resolved the network resumed normal operations. This incident was openly communicated to the community and involved the full support and active participation of the IOTA node operators. Other well-known DLTs such as Bitcoin and Ethereum have faced similar issues in their history.
  • Due to the unique mathematical complexities of implementing a quantum-proof tokenized protocol, IOTA private keys must not be used more than once to create a digital signature. Despite the IOTA team’s best efforts to educate the community on safe practices, a substantial number of people misused their private keys and became potential victims of token theft. This left the IOTA team and community with a difficult ethical choice. Ultimately, we decided together with the full support and active participation of the community and IOTA node operators to effectively “freeze” funds that were susceptible to theft before such theft took place. Without this “freeze,” these users would have inevitably lost their tokens to bad actors with no means of getting them back. The Foundation has maintained ongoing communication with the community, and frozen funds may be reclaimed by their original owners upon proof of ownership.
  • To say that IOTA transactions are not fee-free is purely semantic. IOTA transactions are fee-free in that value sent is exactly equal to value received, with no transaction fees paid either to the network or to miners. The amount of power consumption is and will remain effectively trivial — and only exists at all due to the laws of thermodynamics, not fees.
  • The IOTA hash function, Curl-P, was designed to allow for practical collisions. The IOTA protocol’s security depends solely upon the one-wayness of the function, not its collision resistance. The rationale behind the design of Curl-P is a much more complicated question which we explain in detail.

We wholeheartedly support and welcome debate and discussion with the entire DLT community, but we must emphasize our position that this discussion should be constructive and collaborative, not accusatory, and certainly not with the intention to mislead others.

In the following articles, we will discuss in detail each of the points raised in the DCI’s reports and examine the deeper, underlying issues. However, it is pertinent to first expand on the history between DCI and IOTA.

This is a multi-part post. Links to the other parts can be found below:
Part 1 (this article)
Part 2
Part 3
Part 4

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