IOTA went through the wringer last week, experiencing a hack that forced them to take the unprecedented step of taking their entire blockchain offline. This has left the IOTA community in uproar and those not associated with the platform reacting with everything from shock to schadenfreude at a project that has been subject to debate for some time.
IOTA Takes Blockchain Offline
IOTA’s week from Hell began on Wednesday when reports of users losing funds from the main IOTA wallet started filtering through. IOTA quickly issued a warning for users to “not open or use Trinity Desktop”, the Windows-based official IOTA wallet, and shortly after took the unprecedented step of turning off the ‘Coordinator’, a node that essentially rubber stamps all IOTA transactions. This took the blockchain offline, resulting in some acute observations on where the project currently stands:
24 hours now. As a reminder iota was originally offered as a decentralized network. Realizing that was fraud they pivoted to the idea that the co-ordinator was purely “training wheels” and had no impact on network operation. Now it’s a “security measure”.https://t.co/hMngFLUCaf
— Sarah Jamie Lewis (@SarahJamieLewis) February 13, 2020
The most recent advice from IOTA is to wait for their wallet update before checking balances and transactions to see how much has been stolen in total. An update posted Saturday states that they have located and patched the vulnerability and have a “remediation plan” in place.
Where now for IOTA?
So where does IOTA go from here? In the short term it will lose a significant amount of trust from its community, with many of those that have lost money in this attack likely to abandon the project for good.
This is not the first hack to befall IOTA – in January 2018 it was discovered that malicious seed generators were allowing hackers to access the funds of new wallets. This hack raised the issue of security, or lack thereof, within the Tangle DAG on which IOTA operates, and this second hack will once again raise those concerns.
IOTA Has Made its Bed
Outside of that however is a wider issue of decentralization. As a partially centralized entity, IOTA has always been more susceptible to attacks, as well as acting as a lightning rod for those who claim that only truly 100% decentralized entities can call themselves cryptocurrencies. While it remains partially centralized, IOTA will continue to face a statistically higher likelihood of attack than something that is 100% decentralized like Bitcoin.
Clients and partners like Bosch and Jaguar Land Rover will not be pleased to see that the network has suffered an attack so severe that it has required a pausing of the blockchain, but, perversely, they will be relieved that such an option exists.
What will please the corporate clients will not please the masses, and it seems that IOTA has chosen its side, and must expect the resultant backlash when incidents of this nature occur.