IOTA is a peer to peer, decentralized payment and exchange platform for the global network of Internet-connected devices, otherwise known as the Internet of Things (IoT).
To understand what IOTA is trying to accomplish, you first have to understand the potential of the IoT, which is about much more than just devices connecting. Rather, it’s about how they interact, share data, value services offered to the network, and make payments between themselves — potentially without the need for manual human intervention. Examples of the IoT at work include automatic exchanges of computer power, bandwidth, and storage; sharing of storm or tsunami threats between remote weather sensors and communities; a machine that can automatically pay for its own maintenance, parts, insurance, energy, or even its own manufacturing; a fleet of self-driving cars that fuel/charge themselves and automatically pay for the service; or even entire smart cities with traffic sensors capable of coordinating traffic in real time. The potential is enormous.
While the IoT is more science fiction than modern reality, that is expected to change in the near future. In just the last year, the number of Internet-capable devices increased 31 percent to a total of around 8.4 billion devices. It’s predicted that this number will skyrocket to 30 billion devices by 2020 and that the total market value of such devices will reach $7.1 trillion.
IOTA has made some big promises about how they intend to be an early mover in this space, but the truth is that the technology is still relatively new and unproven. As such, IOTA has gotten a lot of criticism from technology and security experts as well as the blockchain community in general.
In this article, we’ll take a closer look at why that is, how IOTA works, and some of the challenges IOTA faces going forward by looking at the following topics:
- What is IOTA?
- The Technology Behind IOTA
- IOTA Advantages
- IOTA Disadvantages
- How to Buy IOTA
- How to Store IOTA
IOTA was launched in June 2016 by a German non-profit organization called the IOTA Foundation, with the goal of being a pioneer in the IoT space. The ultimate vision behind IOTA is to create a semi-automated marketplace for machine to machine transactions.
But IOTA is not alone in this vision. In fact, numerous major companies are also entering the IoT space. Many such companies have formed direct partnerships with IOTA, while others are working with the IOTA Foundation peripherally (e.g. Microsoft) or as co-founders of the Trusted IoT Alliance, an association of companies working in the field.
The IoT vision isn’t necessarily possible with regular blockchain technology. Most blockchains require massive amounts of resources and power just to perform a few dozen transactions per second, while the IoT ecosystem would need to perform potentially millions of transactions per second. What’s IOTA’s proposed solution to this scalability problem? A new piece of tech called the “tangle”.
IOTA’s “tangle” is a network structure which doesn’t rely on dedicated computer nodes (called miners) to validate transactions as blockchains do. Instead, the tangle uses a technology called Directed Acyclic Graph (DAG) to require that each device on the network confirm two transactions for every transaction it performs.
As devices on the network verify each other’s transactions, the network builds a consensus-based ledger that is theoretically immutable and highly secure. In this way, IOTA avoids the high fees and slow transaction speeds of traditional blockchains that would make it impossible for IoT devices to quickly trade resources in real time while logging vast amounts of data.
Suggested Reading : Learn how IOTA compares to Ethereum.
Although IOTA doesn’t require mining, transactions are still securely stored by computer “nodes” using a cryptographic algorithm called SHA-3 Proof of Work (PoW). This operates similar to Bitcoin’s SHA-256 PoW algorithm to create a chain of transaction records that are stored on full network nodes. How these nodes will be rewarded for their services is not yet clear, since they don’t actually receive any of IOTA’s tokens (called MIOTA) for their work. This has resulted in some debate about how IOTA will solve this lack of incentive to run a node.
Early in IOTA’s development it actually used a hashing algorithm called Curl which was custom-built by the IOTA development team. Curl was replaced, however, after an MIT team found a potential vulnerability in the algorithm.
This sparked a huge controversy in which the IOTA development team was widely criticized for handling the situation poorly, and for over-reaching when they tried to create their own algorithm. Many argued that a cryptographic algorithm must be widely available and tested for years prior to being released to verify the algorithm’s security.
Around February 24, 2018, however, leaked emails between the MIT team and IOTA were published on an IOTA enthusiast’s blog called The Tangler that seemed to at least partially exonerate the IOTA developers. The leaked correspondences reveal that the MIT team failed to provide evidence of their claims — which were not confirmed by peers — and ceased communications with the IOTA Foundation developers before useful conclusions were reached. The emails also suggest that the MIT team did not fully understand how IOTA works (as they themselves admitted).
In an official release about the incident from the IOTA Foundation on February 26, the foundation stated:
“To date, the IOTA team has not received any answers to questions posed, code demonstrating the attack, or other documentation elaborating on the vulnerability beyond what was seen in these emails.
We would very much appreciate help finding actual vulnerabilities in the IOTA protocol, and as of November, 2017 we have been working with a team of cryptographers to obtain an accurate and objective assessment of this situation.”
Another point of contention about IOTA in the blockchain community is the technology’s reliance on a central coordinating entity to begin with. Before IOTA’s network is truly decentralized, it must first gain enough users to validate transactions and secure the network, which is theoretically possible to control with only 34% of the computing power of the network as a whole. For now, IOTA has been forced to implement a temporary central entity called the Coordinator to secure the network. There is very little information about the Coordinator in the white paper or elsewhere, but the basic rundown is that the entity (likely one or more powerful computers) validates all transactions by throwing its own transactions into the mix every minute.
These transactions are referred to as milestones and are used as a sort of snapshot that can be verified against all other transactions in the network to validate that a given transaction is untampered with. Even if the Coordinator acts maliciously, every other node in the network would be able to recognize this, because it would start issuing bad milestones.
According to the IOTA Foundation, the Coordinator will be turned off when the network has enough full nodes to ensure a self-validating network.
Since there’s no mining in the network, MIOTA coins — all 2,779,530,283,277,761 of them — were issued all at once at the launch of the DAG chain. IOTA’s currency units are named using metric system prefixes before the word “Iota”. As the official name of the cryptocurrency, MIOTA is also the unit of account used on exchanges. These are the units, in order of size:
|Iota||= 1 iota||= 1i||= 1i|
|KiloIota||= 1 kiota||= 1Ki||= 1,000 i|
|MegaIota||= 1 MIOTA||= 1Mi||= 1,000,000 i|
|GigaIota||= 1 giota||= 1Gi||= 1,000,000,000 i|
|TeraIota||= 1 tiota||= 1Ti||= 1,000,000,000,000 i|
|PetaIota||= 1 Piota||= 1Pi||= 1,000,000,000,000,000 i|
There are a number of advantages that IOTA has over other cryptocurrencies, mostly because of its DAG chain technology.
Fast and Free Transactions: As mentioned, IOTA dispenses with mining, which means no transaction fees. Since the network is entirely user validated in real-time, transactions are also very fast.
Energy and Resource Efficiency: Bitcoin and many other popular cryptocurrencies that use miners consume enormous amounts of energy. Mining computers (called rigs) are also regularly replaced with more powerful computers as mining becomes more difficult, wasting further resources. The tangle eliminates these inefficiencies.
Ternary Computing: IOTA uses ternary logic in its network as opposed to traditional binary logic. Ternary computing is potentially more efficient than binary computing, and is also more effective in artificial neural networks, artificial neurons, artificial intelligence logic, graphical processing, and cryptography. However, some argue that the ternary computing revolution may never come, or if it does, it will be far in the future.
Quantum Proof: Quantum computing is an emerging field of computing that promises unprecedented processing power that could potentially compromise regular cryptography systems, including regular blockchain technologies. IOTA claims to be “quantum proof” by using an “unforgeable” scheme that makes it impossible to hack, even by quantum computers.
Zero Inflation: Since no more IOTA coins will be created, there will be no inflation. This means that the value of the currency will not decrease because of an increase in coins (though it could, of course, decrease for other reasons).
Many Competitors: There are many competitors in the IoT space, including large multinational corporations with virtually unlimited resources. Other cryptocurrency competitors include Waltonchain and IoT Chain. Other DAG based cryptocurrencies like Byteball or Nano could also theoretically be used as a means of scalable, fast transactions for the IoT, while other scalable decentralized application (dapp) platforms like EOS could potentially use dapps to provide use cases for the IoT beyond simple transactions.
Unproven Technology: As mentioned, several cryptography experts have shown concerns over IOTA’s stability and security as a platform. Using so many unproven technologies at once certainly opens up the possibility of unforeseen security vulnerabilities or other problems.
More Centralized at First: Regular blockchain networks become vulnerable if one party has 51% of the computing power on the network. If this happens, it may be possible for the controlling entity to verify false transactions and falsify data in their favor. IOTA, by contrast, is vulnerable if only 34% of the network is controlled by a single entity. This vulnerability would theoretically be very difficult to take advantage of once the network scales into an IoT made up of millions or billions of devices, but until then, the Coordinator is required. Some argue that this is a form of centralization and potentially an unfortunate single point of failure. As mentioned, IOTA plans to eliminate the Coordinator after the network scales enough.
Buying MIOTA directly with fiat currency (e.g. USD) is not widely possible yet, but it’s simple enough to purchase another cryptocurrency such as Bitcoin, Ethereum or Litecoin on an exchange like Coinbase or Bitstamp and then transfer that to an exchange where you can buy MIOTA. Exchanges selling MIOTA include Binance, OKEx, Bitfinex, Exrates, and Gate.io.
You can see a step-by-step guide on How to Buy IOTA here.
Storing MIOTA on exchanges is not recommended, nor is it recommended to store a significant amount of any cryptocurrency on an exchange. The best IOTA wallets available today are the Trinity desktop wallet, the Nelium mobile wallet, and the Ledger Nano S hardware wallet. For a comprehensive guide to these wallet options, check out our guide to the best IOTA wallets.
Although many people in the cryptocurrency and digital security industries are skeptical of IOTA, it’s possible that the technology will prove itself valuable with time. If the IOTA Foundation is successful in working out any lingering bugs or unforeseen attack vectors, the tangle and its DAG technology could become increasingly popular over more resource-intensive and expensive blockchain alternatives. IOTA’s success may even help kickstart the forthcoming IoT marketplace, which would launch an exciting new chapter in humanity’s relationship with machines. The potential is unprecedented, but for now, we’ll have to wait and see if IOTA can deliver on its ambitious goals.
Huobi Guide & Exchange Review: How to Trade Options, Futures, and Perpetual Swaps
Founded all the way back in 2013, Huobi Group is one of the leading blockchain companies in the industry.
It’s safe to say that the company has come a long way since then and it’s currently offering a variety of services for its wide user base. Employing people globally, Huobi offers a myriad of crypto-related services, including digital asset trading, wallet, mining pool, incubation, research, proprietary investment, and so forth.
Cryptocurrency trading has surged in interest throughout the past few years and exchanges such as Huobi have worked hard to expand their offerings. Derivatives products, apart from traditional spot trading, have exploded in interest, and Huobi is doing its best to accommodate.
Among its popular trading products are the futures, perpetual swaps, and options platforms. In this guide, we will take a closer look at how these tools operate and provide a step-by-step explanation of how to use them.
How to Register on Huobi?
Before anything else, however, you’d first have to register for an account. The process is fairly simple. There’s no mandatory Know-Your-Customer (KYC) procedure for spot trading, but if you want to start using the derivatives platforms, the ID verification is obligatory.
This is how the registration screen looks like:
All that is needed here is an email address that has to be verified through a verification code later on.
Once you have your account opened, it’s highly recommended to take a few additional security steps. First, it’s important to enable the Two-Factor Authentication (2FA), using the Google Authenticator app.
In addition, Huobi has taken a few extra steps that protect your account in the event of it being hacked such as email verification codes, phone verification codes, a designated fund password to ensure fiat asset security, and so forth.
If you want to trade on the derivatives platform, you’d have to go through an additional ID verification step which requires you to input your names, a government-issued passport, driving license or ID number, and upload a picture of it.
We’ve completed all the steps and, in our experience, the process was seamless and the KYC took no more than a few minutes to be completed and approved by Huobi’s team.
How to Deposit and Withdraw Funds?
Now that you have your account set up, it’s time to load it with some funds. Depositing is fairly straightforward and users can choose between a myriad of cryptocurrencies, including Bitcoin, ETH, USDT, and many others.
From the top navigation bar, you need to hover over “Balances” and choose the account you wish to fund. Regardless of where you deposit initially, you can easily transfer the funds between the accounts – it’s instant.
After you select the cryptocurrency you want to deposit, all you need to do is click on the “deposit” button, which will pull up this screen. In this case, we’ve deposited the stablecoin USDT.
In any case, regardless of the cryptocurrency you deposit, make sure to correctly select the transaction network (when applicable) – in our case, we used USDT on Ethereum’s ERC-20 standard.
From here, you can make quick, zero-fees transfers between the different internal accounts and fund your derivatives one. All you need to do is open the account, select the currency that you want to transfer, specify the amount, and confirm the operation:
Once this is done, you are ready to begin using the offered derivatives products. Let’s have a look at all of them.
How to Trade Bitcoin Options on Huobi?
Options contracts are one of the most popular derivatives, used constantly in traditional finance. Lately, there’s a huge demand for cryptocurrency options as well. However, keep in mind, derivatives and options are not recommended for beginners as they carry more risk.
Huobi Futures has a dedicated options platform where currently users can trade both Bitcoin and Ethereum options. In this guide, we will focus on Bitcoin.
By definition, an options contract represents an agreement between two parties to facilitate a transaction on the underlying asset (in this case – Bitcoin/USDT index), at a preset price (known as the Strike Price), prior to the expiration date.
Purchasing a CALL option means that the buyer has the right to buy BTC corresponding to the contract face value at the strike price. On the other hand, a PUT option means that the buyer has the right to sell BTC under the same conditions.
In the top left corner is where you select the type of Bitcoin options contract you want to trade with. For this example, we’ve used the Weekly BTC contract with a strike price of $8,500 and expiry on September 18th, and a leverage level of 5x.
Below is the board where you can monitor the prices for the different contracts based on their strike price factor.
As can be seen in this example, our contract costs around $2,400 to buy (bid). Huobi uses a system where traders can open positions based on contracts, where one BTC options contract equals 0.001 BTC or about $10 at current rates, as of writing this guide.
The par-value for a contract of ETH option equals 0.01 ETH, or about $3 at current rates. Unlike other margin exchanges, users can join options trading on Huobi with fairly low entry barriers.
Now, let’s see how to open a CALL position, as we assume the price of Bitcoin will close above the strike price of $8,500 on September 18th.
From the order menu, we’ve selected a price that we want to buy the contract at – it’s $2414 and the number of Contracts that we want to purchase, in this case, it’s the maximum amount of 25 contracts, which is about $250.
As soon as we hit the Buy Call button, our Limit order will be placed and when the Mark price of the contract reaches it, the order will be executed and we will have 25 Contracts ($10 each) giving us the right to buy Bitcoin at $8,500 (strike price) when the contract expires on September 18th.
If the price of Bitcoin is above $8,500, we will realize a profit, if it’s below that, we will lose the options premium.
If you want to close the position, you can specify the price at which you want to close and the overall amount of your position that you want to close.
Now, in this example, we’ve only shown how to buy a CALL option for Bitcoin, but users can also buy PUT options and they can sell contracts as well. For detailed information on how to do those operations, you can check the official guide.
How to Trade Bitcoin Futures on Huobi?
Moving on, Bitcoin futures are also available on Huobi. Here, users can buy these contracts and speculate on whether or not the price of Bitcoin will be above or below the current price on a pre-set date.
From the left pane, users can choose from a verity of the over 60 cryptocurrencies and the available futures contracts. For Bitcoin, Huobi offers weekly, bi-weekly, quarterly, and bi-quarterly contracts, and supports leverage up to 125x.
Basically, if you believe that the price of Bitcoin will be higher than the current price at the expiration date of a given contract, you should open a long (buy) position. If you think it’s going to be lower, you should open a short (sell) position.
How to Trade Bitcoin Perpetual Swaps
Perpetual swaps are probably the most popular cryptocurrency derivative instrument. They are like traditional futures with the exception that they don’t have an expiry date. In other words, traders can open and close them whenever they want to.
It’s worth noting that Huobi even offers USDT/USD perpetual swaps with leverage of 1X -1000X, becoming the industry pioneer in USDT derivatives.
Besides, for the non-stablecoins, traders can use perpetual swaps with extremely high leverage of up to 125X for BTC swaps and 75X for other swaps. In other words, you can open a position worth 125 times the amount you have in your account.
Huobi Futures offers different leverages such as 1x, 3x,5x,20x, 125x, and even 1000x. Users can choose freely according to their needs.
While this brings opportunities for big profits, please be aware that it’s also extremely risky as the slightest movement in the opposite direction of your position can liquidate your position, causing you to lose your capital. Using high leverage is definitely not recommended for inexperienced traders.
Huobi’s overall customer support is very satisfying. From our test experience, the team is very responsive and easy to communicate with.
Elsewhere, the KYC verification process is particularly quick. After we submitted the documents needed for the identity verification, the team took no more than a few minutes to have them checked and approved the account for trading.
Security: Is it Safe to Trade on Huobi Futures?
Huobi is one of the largest cryptocurrency exchanges in the world. It’s an established company with thousands of employees. While it’s never recommended to keep a large amount of crypto in an exchange, Huobi is regarded as being very safe to use.
The team has also added a myriad of additional security features that users can opt in to further protect their accounts. Of course, you should also beware of scam artists and phishing attacks.
Trading Fees on Huobi
When it comes to the trading fees, Huobi has various fees on its platforms, so let’s have a look at a detailed breakdown for individual traders:
- Futures Trading Fees
- Huobi Perpetual Swaps Trading Fees
- Huobi Options Trading Fees
It’s also worth mentioning that Huobi Futures also provides VIP Sharing Program and Market Maker Program to lower big user’s switching costs to Huobi. For example, Huobi options maker fee rebate is as high as 0.003 USDT per contract.
In general, Huobi is one of the most reputable exchanges out there and they live up to the statements. The customer support is quick and easy to communicate with, the exchange offers a range of different tools to accommodate the needs of various traders.
Their Bitcoin Options trading platform is convenient, rather intuitive, and easy to work with. There’s a range of different contracts with various leverage options and expiration dates.
Was This The 3rd Largest Hack In Crypto History? Data Shows $280 Million Drained From KuCoin
Newly aggregated data suggests that the hackers that recently compromised KuCoin’s hot wallets may have taken more than the estimated $150 million, as per the exchange’s report. Considering the updated numbers, the KuCoin hack would be the third-largest in history, with approximately $280 million stolen.
The KuCoin Hack: $280M Taken Instead Of $150M?
As CryptoPotato reported over the weekend, an unknown group of hackers exploited the hot wallets of the popular cryptocurrency exchange KuCoin. The platform quickly issued an official statement informing that the total amount stolen equaled $150 million worth of various digital assets.
Furthermore, KuCoin guaranteed that the exchange’s insurance fund will fully reimburse users.
However, the stolen amount could be significantly higher, according to the popular cryptocurrency researcher Larry Cermak. By examining wallets “very likely” associated with KuCoin, he estimated that the amount is actually $280 million, instead of $150 million.
He admitted that some of the tokens have been “frozen, forked, and blacklisted,” but the numbers he came up “don’t reflect that.” Consequently, Cermak questioned KuCoin’s ability to indeed cover the stolen funds from its insurance fund.
Cermak also offered a list of the coins “likely” to be recovered – Velo ($76 million), Tether ($22 million), Orion ($10 million), KardiaChain ($10 million), Ocean Protocol ($9 million), VIDT Datalink ($7 million), NOIA Network ($5 million), and Covesting ($600,000). This equals about 50% of all stolen funds.
Was This The Third-Largest Crypto Hack Ever?
If Cermak’s data is accurate, the KuCoin hack would be the third-largest to date in the cryptocurrency field.
The most significant one came in early January 2018. The victim was the Japanese digital asset exchange Coincheck.
After announcing that the platform has seized all NEM deposits, Coincheck later froze all NEM sales, purchases, and withdrawals. Later on, the exchange confirmed that perpetrators had swiped about $535 million worth of NEM. Interestingly, all stolen funds were grabbed again from the exchange’s hot wallets.
The second-largest hack occurred on maybe the most famous Bitcoin Japanese exchange – MT.GOX. In early 2014, the platform suspended all transactions, closed the site, and declared bankruptcy. A few months down the road, it became clear that MT.GOX was drained for about 850,000 Bitcoins – worth about $460 million at the time, and a lot more as of today’s BTC values.
According to a Tokyo-based security company that presented evidence in 2015, “most or all of the missing bitcoins were stolen straight out of the MT.GOX hot wallet over time.”
BTC Price Analysis: Is Bitcoin Ready To Break $11,000 As Crypto Market Cap Reclaims $350B?
Bitcoin price has finally broken bullish out of a 3-day channel (orange) and making good progress towards the psychological $11,000 level above.
The return of $9 billion to the global crypto market today has allowed BTC to return above $10,900 for the first time in 7 days and caused over $9 million worth of short liquidations on BitMEX – according to Datamish figures.
Avast majority of altcoins are also enjoying positive returns as Bitcoin lifts the rest of the market.
Despite the breakout, bearish traders are still putting up a strong fight right now. The $10,900 price point is seeing a lot of selling pressure bear down on the uptrend and is hindering Bitcoin’s current throwback rally attempt.
Price Levels to Watch in the Short-term
On the weekly BTC/USD, we can see that bulls are battling to break above the previous weekly open at $10,920. This is the first major resistance standing in the way of bitcoin’s progress towards $11K. Above this price point, we also have the $10,970 level which should create some friction in the uptrend.
Looking at the price action more closely on the 4-hour timeframe, we can see that bulls are trying to launch off from the 0.382 Fibonacci level at $10,832, which recently flipped from resistance to support. This is our first major support as BTC tries to reclaim $11K. If bears succeed in overcoming this key level, then we should expect to see prices fall back on the former channel resistance at around $10,810, and potentially dip back inside on to the 200 EMA (red) at $10,780.
Beneath that, we have the channel median line (dashed line) at $10,730 and the 50 EMA (blue) at $10,695 as additional supports.
Should bulls manage to break the $11,000 mark and maintain momentum, then the next test will be to conquer the 0.5 Fibonacci level at $11,150. With BTC already at 63 on the 4-hour RSI indicator, it’s possible that reaching this area will push the leading crypto into the overbought region and cause a sharp correction – be aware.
Total market capital: $353 billion
Bitcoin market capital: $201 billion
Bitcoin dominance: 57.0%
*Data by Coingecko
Bitstamp BTC/USD Weekly Chart
Bitstamp BTC/USD 4-Hour Chart
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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.
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