IOTA founder talked about why he thinks Bitcoin and Ethereum are not decentralized in a recent interview
IOTA was created to address some of the biggest obstacles that blockchain faces in an attempt to correct some of Bitcoin's perceived flaws. The Bitcoin blockchain has the ability to resolve just seven transactions per second, in addition to increasing costs during periods of peak demand, compared to other blockchains.
IOTA founder David Sønstebø thinks there is a lot of room for improvement.
In a recent interview, Sønstebø commented: “… the blockchain itself was what I would call a prototype. It is what you build a minimum viable product. It works. This proves the different concepts, but it doesn't really work when you want to scale it. "
By using a DAG (Directed Acyclic Graph), IOTA apparently has unlimited scalability and does not charge a transaction fee.
IOTA is a different approach
Bitcoin and Ethereum blockchains operate via mining. In a mining-based blockchain (proof of work), transactions are verified by solving complex mathematical problems. According to the person behind IOTA, this difference leads to the centralization of both cryptocurrencies; sophisticated and expensive equipment is needed.
Sønstebø said that in any proof of work (PoW) ecosystem, if an entity has sufficient resources to explore on a large enough scale, it will have a major influence on the network.
“In reality, there are only five or ten large operators that control the entire network. This is Bitcoin. This is Ethereum. That's how they operate and will always work that way. It is the only way they can operate. "
New ways to create decentralized systems
IOTA uses an architecture that it calls “tangle” to validate transactions on its network. Before a transaction can be made, the entity that wants to make a transaction must approve two previous transactions.
According to Sønstebø, the tangle will allow IOTA to overcome some of the biggest disadvantages of blockchain: “You may experience scaling or decentralization or low cost. And at IOTA, we can solve all three. And that is a really huge and bold promise. "
Despite offering an interesting answer to some of blockchain's biggest challenges, it seems that markets are not yet rewarding IOTA's innovation.
Although it recovered from the sale of cryptocurrency earlier this year, IOTA (MIOTA) is still trading for well under $ 0.30, well below the highs reached in late 2017. In addition, it also appears to be underutilized by developers in the DeFi, who are using the Ethereum blockchain in large numbers.