Official IOTA Foundation Response to the Digital Currency Initiative at the MIT Media Lab — Part 2…

The full article was originally published by IOTA Foundation on Medium. Read the full article here.

Concerted Attacks Against IOTA

Given that many of the claims leveled against IOTA are at best unintentionally misleading, and at worst, purposefully so, we are compelled to ask why, given the hundreds of projects in the DLT space making all sorts of questionable design decisions and even perpetrating outright frauds, there has been so much concerted effort on discrediting our particular project. While our primary focus is and always will be on the technology behind IOTA, we would be negligent if we did not at least do our “due diligence” in the form of opposition research. We offer three possibilities that we feel are worth consideration:

  1. IOTA is unique in that there are no fees for miners of any kind. This fact threatens the business model of companies that have made significant capital investments into, for example, mining farms which cannot be easily repurposed to other valuable uses outside of mining PoW DLT protocols.
  2. Many DLT protocols have specific-use, utility style tokens. Our goals for IOTA — to be a truly distributed, permissionless, fee-free, and near-instant protocol for general value and data transfer — threaten some of the most successful tokens currently on the market.
  3. In addition to the general disruptiveness IOTA may bring to the DLT space as a whole, many of the people behind the articles and criticisms discussed above would be personally affected by the success of the IOTA project.

There are some apparent Conflicts of Interest (COI) regarding the Media Lab as an institution, as can be seen here and here.

More specifically, many of the people at DCI who were directly responsible for much of the controversy surrounding IOTA in the last few months have significant, personal COI due to their involvement in competing technologies. Given that DCI falls under the MIT umbrella (even if only on its periphery), their opinions have been given significant weight and as such, their COIs should be subject to equally significant scrutiny, which we lay out in detail below.

Neha Narula & Tadge Dryja

Neha Narula, DCI Director, is playing an active role supporting Bitcoin’s development of the Lightning Network, a proposed / experimental solution for fast and inexpensive off-chain transactions to solve Bitcoin’s problem of slow and costly on-chain transactions.

Tadge Dryja, co-author of the Lightning Network white paper, was recently hired by DCI. Neha and Tadge appear to be heavily involved in the development of a competing technology which hopes to offer fast and near-free transactions and are also both co-authors of the “Cryptographic Vulnerabilities in IOTA” blog post.

Madars Virza

Madars Virza, DCI researcher and co-author of the IOTA vulnerability report, is also a co-author of the Zerocash white paper, and is part of the leadership behind the cryptocurrency protocol Zcash, a cryptocurrency with a $1.5 Billion market cap at the time of this writing. Zcash, through zero-knowledge proofs, claims to solve problems of true anonymity in Bitcoin. Recall that Neha’s blog post criticizing IOTA’s cryptography said:

The golden rule of cryptographic systems is “don’t roll your own crypto.” If asked, any security researcher will tell you to only use well-understood and well-tested cryptographic primitives when building a system.

So when we noticed that the IOTA developers had written their own hash function, it was a huge red flag. It should probably have been a huge red flag for anyone involved with IOTA.

Yet, Zcash also “rolled their own crypto”, a fact which was well-covered in DLT media. Oddly, this hasn’t raised any red flags or comprehensive investigations into Zcash’s own cryptography, or blog posts from DCI with statements such as, “Please don’t roll your own crypto” and, “Large organizations and well-known individuals should not lend their names and reputation to technology they have not vetted.”

Ethan Heilman

Ethan Heilman, Partner at DCI and lead author of the IOTA vulnerability report, is also part of the leadership at DAGLabs, a for-profit company based in California that is working to build their own DAG-based protocol based on the SPECTRE white paper. As IOTA is the current de facto leader in DAG-based DLT protocols, comparisons are often drawn between the two protocol designs because SPECTRE also claims to enable unlimited transaction scalability. Around the time when this vulnerability report was published, DAGLabs was in the middle of a Series-A financing round. At the very least, the vulnerability report was published at a very convenient time for DAGLabs.

The IOTA team has been aware of Ethan’s expertise in the space for some time, and reached out to him personally as far back as May 2017 to ask for a technical audit of IOTA’s code. At that time he disclosed that he was undertaking similar research, which may result in a conflict of interest. From our point of view, this brings up a serious question. If there was a potential conflict of interest then, how is it possible that he could objectively review IOTA’s code soon after while being a member of the leadership team at a direct competitor going through a major round of fundraising?

Joichi Ito

Joichi Ito’s disclosure page — before article publication

Joichi Ito’s disclosure page — after article publication (position of removed items marked with arrows)

Joichi Ito, Director of the MIT Media Lab, authored the most recent critical article on IOTA published by DCI. Curiously, Joichi’s personal COI disclosure page was updated immediately following publication of his article (published on December 20th, COI disclosure page updated on December 21st. Before / After). Using the Wayback Machine, we can see that with this update, Joichi removed two privately held for-profit board positions, Helium Systems and thesixtyone, Inc. thesixtyone does not appear to be relevant. Helium Systems, however, according to their website, “provides robust and secure IoT device connectivity for a fraction of the cost of our competitors.” As the IOTA Data Marketplace blog post explains, IOTA aims to displace exactly such business models where data is siloed into proprietary cloud databases. The success of IOTA would be at the very least disrupting to a company like Helium.

We do not know whether there is any connection between the publishing of this critical article on IOTA and the update to Joichi’s COI disclosure page just one day later. Helium Systems, for its part, still lists Joichi as the company’s board director at the time of this writing. Regardless, Joichi, according to his disclosure page, still holds Helium Systems stock and/or options.

In addition, Joichi asserts at the bottom of this critical article, “He doesn’t add [sic] a material amount of any crypto currency or shares in any crypto currency companies.” To his credit, Joichi links to his COI page, but what it reveals is that he still holds stock in Digital Garage, a company which he founded and which is very much a “crypto currency company” having made an investment in Blockstream, the self described “leader in blockchain technologies and financial cryptography” in November of 2017. Digital Garage has a market cap of over $1 Billion at the time of this writing. While Joichi claims to own less than 0.1%, this allows him to own up to $1 Million worth — an amount which most reasonable people would consider to be a very material investment.

So even though Joichi seems to be professing impartiality in his article, the evidence above suggests this may not be the case. One would think that with such obvious COIs, he should make these financial interests in competing technologies manifestly apparent to the reader, as required of faculty and staff at MIT (see MIT Policies & Procedures Section 4.4).

The full article was originally published by IOTA Foundation on Medium, where people are continuing the conversation by highlighting and responding to this story. Read the full article here.

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