IOTA: The $2.7 Billion Cryptocurrency Developers Love to Hate

Cryptocurrency is crawling with ambitious visions for the future.

Indeed, one of the most hyped ways in which the technology could come to proliferate is through its union with a concept called the internet of things (IoT), whereby nearly everything (think watches, refrigerators and automobiles) is connected to the internet and as such, "talks" to each other. For instance, a sensor on your milk carton in the refrigerator might notice that you're down to the last cup and send out an order to the local grocery store.

The project IOTA is garnering quite a bit of attention for adding cryptocurrency-inspired technology to this use case, turning it into a more open market.

Indeed, 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.

Not only is IOTA touted as a way to upend the silos of the current centralized system, streamlining business in terms of time and cost, but also as a way to rid the blockchain industry of all that plagues it - such as the technology's scaling issues, which cause transaction backlogs and high fees and the massive amounts of energy the technology's architecture consumes.

"The obvious thing is that [IOTA] is the first project that went beyond blockchain. Got rid of miners. In the process we solved the main pain points of transactions - no fees," said IOTA co-founder David Sonstebo, in an interview with CoinDesk.

These bold claims appear bolstered by partnerships with large enterprises and agencies, including Volkswagen and the City of Taipei in Taiwan.

Yet, 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.

As such, 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.

"It's pretty horrifying. The horrifying thing is their market cap is so high," said Aviv Zohar, a crypto researcher and senior lecturer at The Hebrew University.

Since researchers have pointed out so many holes in IOTA already, he expects more to come, and the IOTA bashing to continue.