IOTA Responds to MIT

In December, the MIT Media Lab published some devastating criticism of IOTA that included misleading marketing by the foundation and deep security flaws.

Today the IOTA Foundation released their official response to the MIT criticism and the response has some serious inaccuracies.

IOTA Microsoft 'Partnership' Scandal

"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."

This is in response to the 'Microsoft partnership' scandal in which the IOTA Foundation announced in November that they partnered with Microsoft and then clarified weeks later that there was no partnership. Now the IOTA Foundation seems to be denying that they ever announced the partnership.

But as of today IOTA has a promotional video on YouTube that advertises a partnership with Microsoft (at the 3 min 29 sec mark).

"Free" Transactions not so 'free'

"The amount of power consumption is and will remain effectively trivial — and only exists at all due to the laws of thermodynamics, not fees."

MIT Media Lab skewered the IOTA Foundation for promoting IOTA transactions as "free" and without any fee. Like Bitcoin, IOTA uses a Proof of Work scheme to secure transactions which doesn't scale well in terms of global power consumption. IOTA differs from Bitcoin in that it has the participants of each transaction perform the power-consuming calculations instead of a group of miners. This doesn't reduce the overall cost of Proof of Work but instead shifts the cost to whoever is using IOTA, thus making it not "free" for users. Furthermore, the superfluous computational cost is inherent in the protocol's Proof of Work scheme and only exists by design (in contrast to Proof of Stake protocols or memory-intensive mining). IOTA wasn't forced by the "laws of physics" to design a power-hungry protocol that its users must pay for.

I became most skeptical of the IOTA Foundation after the MIT Media Lab report and their response has further tarnished their credibility.

~Mike