IOTA: The $2.7 Billion Cryptocurrency Developers Love to Hate

At tech meetups in New York City, it's not uncommon to hear developers remark that IOTA's underpinning technology, the "Blockchainless blockchain," or the so-called "Tangle," is the future of the blockchain space.

The IOTA team of 150 developers, cryptographers and others can't always keep their stories straight, and have other times dealt poorly with criticism, especially as it relates to security holes in its architecture.

Experts question whether many of IOTA's ideas will actually work in practice and if they don't, whether current investors and users, which are supporting a $2.7 billion network by market cap, will be left out of luck.

According to the researchers, IOTA developers used a hash function created in-house to secure data within the system, a huge no-no among cryptographers, who argue it's preferred to use the highly studied and scrutinized functions that already exist today.

IOTA developers say the decision was intentional - designed to prevent anyone from copying their open-source software.

"The IOTA developers haven't been able to explain to me why they think their insecure hash function is safe," tweeted Matthew Green, a cryptography professor at John Hopkins.

While it doesn't appear any IOTA users have lost money because of the custom-made hash function, some IOTA users lost a substantial amount of their cryptocurrency - to the tune of $4 million - in what some industry observers argue is sheer incompetence on behalf of the IOTA team.

IOTA is a bit more centralized - with its development team having more authority over the protocol - than most cryptocurrency enthusiasts might like.

The foundation eventually returned those coins after the vulnerability was patched, but the incident nonetheless left a lasting impression on some that IOTA's developers have too much control.

It's important to note that IOTA isn't the only cryptocurrency that has sought to project a message that change is coming, with time.