IOTA & the difficulty of testing blockchain apps

Over the weekend Andreas Brekken published a lengthy post denouncing IOTA, which had previously received a lot of hype as a cryptocurrency for Internet of Things (IoT). Brekken, who named his blog Shitcoin, concluded that “IOTA cannot be used for Internet-of-Things devices. Or anything.” Damn.

I’ll comment on Brekken’s analysis, but I also want to use this post to highlight how difficult it is to judge new blockchain projects. Many of them, and particularly ICOs hoping to raise tens of millions of dollars, either do not have a functioning product to test OR the product they do have is very difficult to use. IOTA falls into the second category, as Brekken’s long and tortuous journey to test-drive IOTA shows.

Indeed, IOTA is even more difficult to comprehend than the typical altcoin or ICO. For example this is how the company describes its main feature, something called a “Tangle”:

The main innovation behind IOTA is the Tangle, a revolutionary new blockless distributed ledger which is scalable, lightweight and for the first time ever makes it possible to transfer value without any fees. Contrary to today’s Blockchains, consensus is no-longer decoupled but instead an intrinsic part of the system, leading to decentralized and self-regulating peer-to-peer network.

If you have no idea what that paragraph meant, join the club. The reader is referred to IOTA’s white paper for further information, so I opened that up. It starts out by stating that Tangle is the “next evolutionary step” of blockchain technology. The rest of the white paper is a series of complex mathematical equations and diagrams which ostensibly proves that assertion.

Only of course it doesn’t prove anything to the vast majority of us, who aren’t mathematicians.

Regardless, the proof should always be in the pudding when evaluating an Internet startup. My primary modus operandi when I started ReadWriteWeb fifteen years ago was to play with the products, and see what they could (and couldn’t) do. That was part of the beauty of what came to be known as Web 2.0: anyone, anywhere, could fire up their web browser and test out a new product.

When mobile apps came along in 2008, it was still easy to test out products – provided you had the right operating system. But even then, there were only two popular platforms (Apple iOS and Android), so most of the time it was a cinch to test out a newly launched app.

This isn’t the case, yet, in the blockchain era. There is no common browser for blockchain apps, so typically you’ll have to install one or more things to test out a product. Even with a relatively well established cryptocurrency, like Augur, on their test site you have to create an Ethereum account using one of two apps: Airbitz or uPort. When Augur eventually goes live, there will be at least three other options: MetaMask, Keystore and Ledger. All five products work in different ways, but basically each will allow you to make secure transactions (using ETH or REP) on the Augur prediction market.

When Augur’s partnership with Airbitz was announced in June 2016, Augur Core Developer Jack Peterson said the reason why they chose Airbitz was that “we want Augur to be just like using a regular website from the user’s point of view.” By that he means Augur wants its users to “have the option to use a more traditional accounts system, instead of having to manage their cryptographic keys manually.”

But using Airbitz is not like using a regular website at all; it’s more like using a digital wallet app. And while those can be reasonably simple to get used to, if you’re familiar with how cryptocurrencies work, they’re still far from easy to use for the average website user.

My point is: when testing out blockchain products, it isn’t as simple as opening a new tab on your browser or downloading a new app. It’s often a complicated process involving new types of products that most of us aren’t familiar with yet.

Even worse when those new types of products don’t work at all, or are funky. Which was the case when Andreas Brekken tried to use IOTA.

Brekken’s goal with the review included compiling and running source code, so it wasn’t quite an end-user test. But essentially he wanted to achieve the following regular user task: buy IOTA and send it to his digital wallet. It turned out that was the main problem.

Incidentally, sometimes I see digital wallets being compared to web browsers – in terms of how ordinary users (i.e. non-developers) will interact with blockchain data. I’m not sure I’m fully on board with that comparison yet, but regardless the wallet is a key UI at this point in blockchain’s evolution.

In order to purchase the IOTA token on Binance, Brekken had to firstly set up the official IOTA wallet and transfer his coins there. But after waiting three hours, he still had no confirmation. After a lot of what sounds like stressful re-starting of the IOTA wallet and trying various options, eventually his tokens were confirmed. He then tried to send his IOTA to his Android phone, using the official IOTA mobile wallet. He also tried to send some coins to Bitfinex, to check if he could use an external system. Although he managed to do the latter, he couldn’t use the mobile wallet. His conclusion:

Installing the IOTA wallet was a pain. Receiving and sending IOTA tokens is technically challenging and time consuming. Address reuse can lead to loss of funds. There is no functional IOTA mobile wallet. There is no IOTA hardware wallet support.

Brekken concluded by claiming that IOTA cannot work for the problem it set out to solve: Internet of Things. “How can a smart lightbulb or drone stay in sync with a “tangle” that requires vast amounts of CPU cores, RAM, and network bandwidth to stay in sync with?” he asked.

To be fair, I didn’t see much evidence in Brekken’s article that IOTA won’t work with IOT. Most of what he wrote was regarding the poor user experience of buying and transferring the tokens.

However, others have also pointed out IOTA’s technical problems. John Ratcliff wrote a detailed article on his issues with IOTA. And Kay Kurokawa, a software engineer, wrote a post claiming that IOTA doesn’t scale. He summed up the article in a tweet:

TLDR; IOTA whitepaper has no scaling solution to the fact that Tangle can grow out of control through spam tx's. IOTA devs solved this with a centralized coordinator. IOTA devs have no plan to deprecate the centralized coordinator in their roadmap.

— K Kurokawa (@kaykurokawa) February 10, 2018

I always try to be balanced when writing these articles, so I looked at some of the defences of IOTA. This quote from IOTA co-founder Dominik Schiener, in a recent interview with Business Insider, sums up the case for the defence:

What we always say is everything is a proof of concept and we have been very blunt about this since the beginning of IOTA. We always say that IOTA is a beta product right now. In 2018, we want to make it production ready.

The network being slow is really also us figuring out: how can we make the IOTA network very reliable? For us, the problem now is to close the gap between what research does – we have more than 10 mathematicians on board right now – and what engineering does. That’s exactly what we’re doing right now.

In a nutshell, that’s the problem: there’s a disconnect between the awfully complex mathematics of what IOTA promises, and the cold reality of what its code delivers right now.

Yet IOTA is currently the 10th ranked cryptocurrency according to CoinMarketCap, and has a market capitalisation of nearly $5 billion. I don’t see how a “proof of concept” company can possibly be worth that much.

In conclusion, clearly I don’t have the technical expertise to know conclusively whether IOTA works or not. Very few people do – you’d have to be a mathematician or a very smart blockchain developer. So until IOTA comes out with a product that the rest of us can easily test, or it shows us proof that the products work for IoT as promised, I’m inclined to steer clear of this cryptocurrency.