I wanted to take a brief moment and explain in a form that is a bit more detailed than a tweet offers my experience...

I wanted to take a brief moment and explain in a form that is a bit more detailed than a tweet offers my experience with the crytpocurrency called IOTA.

A number of months ago some people I respect in the cryptocurrency community started telling me about this amazing new system called IOTA.

The supporters of IOTA make a number a fabulous claims. As you hear them tell it, IOTA is the holy grail of cryptocurrencies. It solves all of the problems presented by blockchains that we still struggle with today.

Here are the claims about IOTA:

>IOTA is deflationary (has a fixed number of tokens, there will never be any more, and has no inflation at all, no issuance schedule for new tokens). All tokens which will ever exist were created on day one and pre-distributed to people who signed onto the project very early.
>IOTA has zero fees. Period. Forever.
>IOTA has fast confirmation times.
>IOTA is nearly infinitely scalable.
>IOTA has no centralized miners, instead every participant in the system is effectively a 'miner' or more accurately a transaction validator.

This all sounds great, of course. This invention is supposedly possible through the use of something called a 'directed-acyclic-graph' and in IOTA terminology called a 'tangle'. It's a data structure dramatically different than how blockchains function and, supposedly, does not suffer from their scaling problems.

Other urls found in this thread:

trustnodes.com/2017/09/27/iota-bad-actor-says-ethereum-developer
twitter.com/AnonBabble

To evaluate these claims new users are directed to read the 'whitepaper' for IOTA.

Before I bought a single IOTA, I read this whitepaper and it's pretty indecipherable. I'm a pretty technical person myself, but this paper was not written in a way that anyone can easily understand.

After reading the paper, I really didn't feel like I could evaluate whether or not this technology actually works. I just had a general understanding of the basic concepts.

My next step was to go to the GitHub repository and take a brief look at the source code. The IOTA source code is written in JAVA instead of C++ like most professional cryptocurrencies are. That did not instill me with confidence. In my brief review of the source code it seemed written by someone who knows how to code, but it was entirely devoid of useful and relevant documentation.

As you can see, this evaluation of mine did not inspire enough confidence that I felt I should rush out, sell all of my bitcoin, and buy IOTA instead.

What I did do, next, was just try to use it. So, I installed the IOTA wallet on my cell phone. I had one of my friends online send me a single IOTA (worth like a zillionth of a penny) and, sure enough, my single IOTA arrived quickly, showed up as confirmed, and cost nothing to send.

That was certainly a cool experience since fees on the bitcoin network are high and confirmations are slow.

The wallet software was extremely crude and simplistic, with just a 'send' and 'receive' button, but it seemed to work and I assumed they would improve the wallet over time.

So, next I decided to buy a small amount of IOTA as an investment. I did, and I made my original buy of 45,000MI at 21 cents apiece. This was just a speculative bet thinking, hey, maybe this thing really works. I didn't buy the 45,000MI all at once. I bought them over a period of time and, during that period, I was able to move IOTA to and from an exchange without any problems.

At this point, the system actually seemed to work and I had a generally positive attitude about it just based on my initial experience using the network.

After a period of time IOTA increased in price as more people heard about it and began using the network. Once the price rose to a little over 65 cents apiece, I sold all of my IOTA because, as I said in the beginning, I was just making a speculative play and a 3x return on investment in a matter of weeks seemed like a great return for me.

Over time, as IOTA hype continued to rise, eventually the price rose to well over a $1.20.

I decided that maybe this IOTA thing might actually work and I should put a some money back into it. Eventually IOTA saw a price correction down to 85 cents and I decided that was a decent re-entry point. So, I bought back in 26,000MI at 85 cents and figured I would let that ride.

It turns out, that was hardly the best time to 'get back in' to this market. The price went lower and lower as more people began to post criticism of the network online. The network began to have more and more technical problems as well.

The price dropped below 30 cents at one point, and I was thinking I definitely made a pretty bad call going back in.

That said, I figured IOTA is a longer term bet and there was no point in selling at a loss, so I just decided to hold the 26,000 and wait it out.

Even though my initial experience with actually trying to use the IOTA network was fairly positive, when I tried to use the network later things changed.

>The IOTA foundation did a tangle reorg multiple times. Every time this happened, if you logged into your IOTA wallet it would show a zero balance. Which was incredibly disconcerting. >This didn't just happen once, but multiple times. To get your balance back you had to keep clicking the 'receive button' to generate a new address, wait a minute, and then do that again and again and again, maybe a 100 times before your money would show up again.
>The IOTA foundation also announced they were going to have to 'recover funds' from some users after the re-org. This is when it became abundantly clear that IOTA is radically centralized. If some foundation could just re-org the database and claim funds for users, that's about as centralized as you can get.
>The ability to send and receive transactions on the mobile wallet pretty much just stopped working for me.

So, as time went on, I was losing confidence in the IOTA network simply because it was no longer working as advertised and the market price reflected that.

The IOTA team dismissed all of the criticisms of their network as organized FUD propaganda (fear-uncertainty-doubt) from detractors who had major investments in blockchain technology and viewed IOTA as a threat. If you were a 'believer' in the IOTA technology, this explanation made perfect sense.

A few weeks ago the IOTA foundation really whipped the public-relations team into high gear and started making announcement after announcement about how major corporations were supporting their technology.

This led to a massive pump cycle in the market and the price of IOTA suddenly rose dramatically; reaching a height of well over $5 for a period of time.

Since I had last bought in at 85 cents, that represented a significant return on investment for me.

I had been 'underwater' for a long time; not only because the price was below 85 cents but, also, because the price of bitcoin was rising dramatically during this period. So, even at 85 cents, while I might have reached USD parity with my initial investment, I was still way underwater relative to the bitcoin cost.

It was my intention to sell enough of my IOTA to at least get my original bitcoin investment back out.

So, I decided to send my IOTA to an exchange to trade for bitcoin.

And, at this point, is when I realized just how bad the IOTA network situation had become.

I first did a very small transfer to my exchange to make sure everything was safe to do. It transferred ok, I exchanged it, and was able to do a withdrawal.

I then tried to send more IOTA and that is when things started going south.

My IOTA never showed up on the exchange as having been confirmed.

So, I started asking around in the IOTA slack channel and was told this was a 'known problem' and 'all I had to do was re-attach' or 'try a different node'.

It turns out that even though IOTA is a live cryptocurrency network with a market cap in the billions of dollars, it doesn't even function as a true peer-to-peer network.

Rather than having thousands and thousands of decentralized nodes worldwide forming a peer-to-peer network, nodes which are discoverable using a dynamic routing system, instead IOTA has a tiny number of hard-coded dedicated nodes that people connect to. Most of these nodes don't work, or are supposedly, allegedly, 'overwhelmed with traffic'.

Instead of an IOTA transaction being confirmed in a matter of minutes, users were unable to get transactions to confirm for days, sometimes weeks at a time.

I did start changing which nodes I connected to. I did keep 're-attaching' my transaction, over, and over again. Some users reported doing this process literally hundreds of times for weeks on end with no success.

Eventually, through this process, I managed to get most of my IOTA to an exchange over a week and sell them. I was never able to sell them anywhere near the price of $5 when I originally sent them but, frankly, at this point I was glad I was able to get any of my money back at all.

Meanwhile, if you went into reddit or twitter the supporters of IOTA were behaving like members of a brainwashed religious cult. Even though the Slack channel was filled with users having the same experience I was having, the IOTA supporters were 'blaming the victim'.

It was all our fault because, apparently I guess, we were not hitting the 'send transaction' button correctly.

Remember, the IOTA wallet is incredibly dumb and simplistic. It has a 'send' and a 'receive' button on the menu. One would expect, and I know this is crazy talk, that hitting 'send' would send money and hitting 'receive' would receive money. Apparently, and I apologize for being so dumb, this doesn't actually work.

After successfully managing to dump most of my IOTA, even though I lost many, many, thousands of dollars because I had to sell at a much lower price than I wanted to, I finally reached an impasse with my remaining 5,600mi.

I posted on Twitter a statement of fact, that the IOTA network was not functioning for most users. I might as well have stuck my hand in a hornets nest.

Rather than a guy trying to use a cryptocurrency network and finding that it simply does not work, an army of IOTA cult followers began to attack me. To such an extent, and I kid you not, that one guy actually wrote an article for PyschologyToday about how 'organized FUD' manipulates markets.

The irony that a guy who has been brainwashed to believe the IOTA network actually functions as advertised would attack people simply stating facts was just too much.

Rather than a guy who invested in the technology and found that it is not, at this time, in a functioning state, instead I was running an organized psychological operations campaign against the holy IOTA network.

So, that's where we are today. I still maybe, or maybe not, I really don't know, own 5,600mi. I can't sell them because the network will no longer process my transactions. I'm just going to hold onto them until some point in the future when, maybe, they reorganize their database again, maybe they fix their software and maybe I can sell them.

On the one hand, I'm happy I got my original investment back out. On the other hand, at the $5 price I wanted to sell at, 5,600 MI is $28,000USD and, last I checked, that's still a lot of money to a lot of people, including myself.

I do want to close with this. Some people on reddit and Twitter, rather than attacking me or my motives, actually tried to help. And they were sincere, and I really do appreciate it.

However, I must leave you with this.

To help explain why I am having problems with IOTA, and I kid you not, this is the link that was forwarded to me. Here is a link to the article explaining how to use IOTA.

This is one of the craziest things I have ever seen in cryptocurrency. The absurdity of this is mindboggling and truly represents the sheer denial that IOTA supporters are in if they think, in any way, this is acceptable.

It states:

RULE 1: NEVER re-use an address. NEVER. NO exceptions.
RULE 2: ALWAYS attach a new receive address to the Tangle.
RULE 3: ALWAYS wait for a transaction to be confirmed before sending anything else.
So, rule #1 is an admission that the network is fundamentally broken. A cryptocurrency that doesn't let you send funds to the same public key more than once, because a hacker could derive your private key, is just about the single most insane thing I have ever heard.

And, of course, there is nothing to prevent an end user from doing this by accident. In fact, one of the popular exchanges says that if you accidentally send funds to the same deposit address twice you will *lose your money*. I kid you not. This is real.

Screenshot of binance exchange deposit page. Note warning not to send funds to the same public key twice. Note that you cannot withdraw purchased IOTA because the network is currently in a broken state.

So, rule #2. Get this, says that before you can send money, you must first generate an empty receive address. Why? Who the fuck knows. This is just more insanity.

Rule #3 is just another admission of a broken network. Really not much else to say.

During conversations online, not only was I accused of engaging in an organized and orchestrated propaganda campaign I was also victim blamed. I'm the one who lost tens of thousands of dollars because the network is in a broken state but, clearly that is all my fault because, oh, I don't know, because I didn't hit the send button correctly? Or find a functioning node to attach to? Or because I didn't generate a receive address before I tried to send to a new address and, dear lord, don't ever, ever, ever, send funds to the same public key.

I cannot believe I even have to explain how completely and utterly insane this is.

However, it gets worse. The other narrative online from IOTA supporters, people who can see no wrong with any of these issues; those who believe all fault lies with the people trying to use the network rather than those who created it, is as follows.

The supporters will constantly make statements like 'IOTA is in alpha', 'you should expect bugs'. As if this was a JavaScript some 12 year old was writing for his homebrew website.

Look, let's be very clear. IOTA is a live cryptocurrency with a market cap in the billions of dollars. Real people have large amounts of value tied up on that network.

I remember looking into this coin 3 months ago and concluding its a scam

Ofc normies will norm, and at this point its better to read market sentiment than coin technicals

FUD

JK, Did you write this OP? Good article.