IoT Chain: China's new IOTA? An easy investment or should we set off the alarm bells? Let's do our homework!

Recently a new coin called IoT Chain made some headlines in the Huffington Post coining the phrase "IOTA of China". Besides drowning the reader in buzzwords, the authors claim that IoT Chain is a new Chinese technology combining Blockchain (like Bitcoin or Dash) and a Tangle (like IOTA or Byteballs) that allows fast payments among IoT devices and facilitates IoT data security. For the less technically inclined reader: IoT is short for the Internet of Terror. This means your toaster is hooked up to the internet and refuses to toast your slice of bread until you pay a ransom of some Bitcoin to the guys who just hacked it. But I digress.

Meme thankfully borrowed from this steemit post.

Of course, IoT Chain making it into the Huffington Post left its mark on the coin's market capitalization. According to CoinMarketCap, by the time of writing, it has surpassed 250 million USD and keeps on growing.

I have to admit, seeing this monstrous rise, I got interested. Did I miss a good opportunity for an investment? Or is there a chance that IoT Chain will further climb to the top Cryptcurrencies, much like NEO, that (rightfully) has been termed the Ethereum of China?

As many Crypto investors I like the thrill of finding lesser known coins, assets, or technologies that have the potential to grow big and yield massive returns. I was lucky enough to invest early on into IOTA and bought RaiBlocks when it was still in the lower single digits. However, I try not to blindly throw money at various projects. I rather do some research first, that is skim whitepapers (or if it's mind blowing dive really deep into it), look at the developing team and the community (mostly BitcoinTalk), try out wallets, and, since I am a coder myself, check-out the git repository. So let us do that!

The Whitepaper

Let's start with the positive aspect(s). Well, at least they do have a whitepaper and it is available online. Unfortunately, that's about it. The paper itself is only staggering 27 pages long! Sure, there are genius publications of as similar order of magnitude. For example, Claude Shannon's Master thesis (which is more famous than his Ph.D.) is also only 27 pages long, but laid the groundwork to linking Boolean algebra and circuit design. To do just that the paper is scattered with tons of equations. The IoT Chain whitepaper, on the other hand, lists not even a single equation!

Of course, quantity of math may not always be a good metric for judging tech publications. Maybe the whitepaper can convey their genius setup even without any rigorous math and, no kidding, double line spacing. Yet, they start off wasting 8 of their 27 precious pages on describing how big the market of IoT devices will most likely grow in the coming years and a very, very broad sketch of Bitcoin and Blockchains.

Next, they give a very rough overview of their systems' potential layout. They want to combine the practical Byzantine fault tolerance algorithm, of which variants are applied by renowned coins such as Stellar or Ripple, with a directed acyclic graph (DAG) structure as utilized by IOTA. The details of the combination of the technologies, however, are apparently left as an exercise to the reader.

The Team and Community

Following the LinkedIn profiles listed on their website is not the most insightful endeavor either. The profiles of the CEO as well as CTO are rather dim. At least their CFO has some skill endorsements. Hence, most likely cash flow won't be a problem for them.

Moreover, the community on BitcoinTalk resembles an abandoned desert ghost town. It lists only 3 pages for the IOTA of China?!

The Wallet

If somebody would be so kind to point out to me where exactly I can find the wallet? The website's Download Center only lists the whitepaper.

Oh wait, the Roadmap says the wallet won't be available until the end of May. But how come that their coin is traded on exchanges like OKEx? Please, do not tell me it is just this simple ERC20 Ethereum token. Shouldn't they offer their own new Cryptocurrency instead of being an Ethereum free-rider?

The Github Profile

Just to be clear and as a reminder, we are talking here about a project that has a market capitalization of more than 250 million USD. So why does their Github repository not even contain a proper README file, almost no documentation, and comprises of only a single contributor with, brace yourself, 25 (in words twenty-five!) commits? Just to put this into perspective the Ethereum C++ client has accumulated more than 30,000 commits, for instance.

Oh Boy

The Cryptocurrency community should teak a break, followed by a deep breath, and we should ask ourselves: How did we end up here?

I know, everyone is sick of hearing the evil B-word, but I have to say it: I do smell a bubble here. Hopefully, I am wrong. Maybe I just caught them in a very early stage and IoT Chain will deliver an amazing new Blockchain or DAG solution in the far future. However, I would always be skeptical if a project offers a super flashy website, but everything beyond that fails to live up to the promises made.

Maybe you can take this as a friendly reminder to do your homework before investing, especially for high risk options such as Cryptocurrencies. Have a nice day and happy HODLing (probably not IoT Chain, though)!

DISCLOSURE: I hold a variety of Cryptocurrencies and tokens, IoT Chain is not among them. Moreover, this article should not be considered as an investment advice. Oh, and before I forget, I also wrote a little Python Blockfolio, I made 9 commits on Github, so it should be worth round about 70 - 100 million USD ;-)

Addendum / Edit

Another strange thing happened. Their Twitter account recently wrote the following: "Can @CoinMarketCap correct the circulating supply of ITC? It's supposed to be 50,000,000"

This ERC20 Ethereum token is indeed the official one. However, if you check it out on Etherscan and interact with the contract the total Supply is 100000000000000000000000000. Discounting the 18 decimals of the token, this leaves us with 100 million coins and not 50 million. Did they make a mistake in their Ethereum smart contract and added the wrong amount of tokens? Or did they burn (roughly) half of the tokens? According to Etherscan the two biggest token holders own together about 45.8% of all tokens. Are they referring to these as being lost?

It is impossible to say because the contract is not open sourced, at least not on their Github profile nor on Etherscan directly. Moreover, I could not find any explanation on the usage of their Ethereum tokens in the future. Are holders simply rewarded with new coins own their own Blockchain or DAG later on? What is the purpose of the Ethereum token except providing cash flow to their company? IoT Chain remains mysterious...