Why I find IOTA alarming

>1. There have no vulnerabilities in the past. Please read: https://blog.iota.org/official-iota-foundation-response-to-t....

Let's have a look then. It's in 4 parts, the first two are not about the purported vulnerability but rather complaining that the people behind the discovery didn't disclose it properly and might have a hidden agenda. Fair enough I guess, but it's odd to start with that, it would make a much better point if it came after a strong rebuttal regarding the technical aspects of the vulnerability.

Then we get to the meat of the issue in the middle of page 3:

>2. IOTA Protocol Security and Tangle Reliability

So they start by addressing the "IOTA's coordinator is a single point of failure". Their reply is that... It's true but they never pretended that it was otherwise and that it's temporary:

>IOTA node operators, understanding the importance of the Coordinator’s role in securing the network while it is still young, voluntarily suspended operations during this time.

>The purpose of the Coordinator in the infancy stage of the IOTA network has been transparently communicated throughout the history of IOTA. As the team has explained at length, the Coordinator is a temporary measure to help bootstrap the network and protect it during its infancy. Once there are enough full nodes and transactions to secure and sustain the IOTA network, the Coordinator will be permanently removed from the network. The specific reasons for this are complicated; there is a more detailed explanation on page 19 of the white paper: “...this indicates the need for additional security measures, such as checkpoints, during the early days of a tangle-based system.”

So there's a solution in whitepaper form. As far as the current state of IOTA, they have not debunked any of DCI's claims. But that's still not really the main issue, the one about the broken hash function. They sure do take their time to get there.

Next they talk about whether or not IOTA devs can mess with IOTA accounts. Honestly I don't understand the issue well enough to pass a judgement but if I understand correctly they sort of forked IOTA "ethereum-style" in order to protect the users:

>Ultimately, in order to implement the preventative measures mentioned above, a special snapshot was scheduled wherein all funds vulnerable to theft were tagged with a key reuse marker.

They also say that "Importantly, these protective measures were only possible with the direct and active support of the IOTA community". Except that since they control the coordinator, what would happen if the community hadn't agreed? Can they go their own way without coordinator? Would they have to elect a new one?

Let's skip ahead and get to the vulnerability with the hash function, the last point of the last page in this document. This line stuck out to me:

>The answer is that the Coordinator was specifically designed, in addition to other purposes, to prevent precisely such an attack.

Ah, the coordinator again. Beyond that I don't understand the issue deeply enough to judge whether or not the vulnerability is as bad as DCI said so I can't decide who's right. I do find the justification behind the weakness rather... strange though:

>In summary, Curl-P was indeed deployed in the open-source IOTA protocol code as a copy-protection mechanism to prevent bad actors cloning the protocol and using it for nefarious purposes. Once the practical collisions were uncovered, its purpose as a copy-protection mechanism was of course rendered obsolete (it only works for as long as it remains unknown) and IOTA reverted to the industry standard KECCAK-384 cryptographic function.

So... there's nothing wrong with the function, it's just some kind of protection against people cloning the protocol (why is that a problem?) but even though everything is absolutely fine they decided to replace it anyway? It seems like such a weird decision, and also a bad precedent (you shouldn't have hidden functionality in your open source peer-to-peer cryptocurrency). It reminds me of Intel's "Spectre and Meltdown are the CPU operating exactly as designed" PR stunt.

1. Token Economy is a weekly crypto newsletter run by two crypto VCs (https://tokeneconomy.co/). I think it is extremely good at separating the signal from the noise. Highly recommend.

2. Twitter is unfortunately indeed the easiest place to follow what's going on. Naval Ravikant, the founder of AngelList, recently published a list of the people he follows in the space (https://twitter.com/naval/lists/crypto/members). It has a large overlap with my own list, but neither he nor I endorse everyone's views that are on it. But it probably includes most of the active developers, VCs and thought leaders in the space.