All good stories have tough beginnings, IOTA especially so. It has been the black sheep of cryptocurrency for many years. Many of them rightfully so. However its persistence in innovation and (sometimes delayed) humility in failure have led it on a path that can now resonate to the masses.
Let’s first explain some of the key innovations around IOTA, and where it is going.
Blockchains enable only a single block at a time to be confirmed in linear fashion — lumping all transactions together and processing in a string, however DLT’s such as IOTA use a DAG (Directed acyclic graph), that allows many transactions to be placed at the same time as long as they are all travelling in the same direction. IOTA’s DAG is called the Tangle, it was the first of its kind in DLT.
The current consensus today uses a coordinator, a single node that confirms all transactions. This is has rightfully been a cause of criticism since inception, however it is simply a boot-strapping mechanism that has been put in place to prevent or limit unfortunate incidents, until the final solution is implemented. Although the coordinator has served its purpose (much like bitcoin had its own), it will shortly be a thing of the past — the Nectar implementation will be ready for incentivized testing within the next months.
The consensus that will be implemented for coordicide (removal of the centralized coordinator) will be FPC (fast probablalistic consensus). This consensus mechanism draws many parallels to the physical world, so much so — that the test network is called ‘Shimmer’ after the bees that shimmer when an attack is perceived.
However, I think that the parallels to physics go much deeper.
With the removal of the coordinator, there is a need to add additional control, IOTA has achieved hilariously, and brilliantly by implementing ‘Mana’. Mana being the life-force behind IOTA that grows and dissipates over time (much like video game life force disappears when used a lot). This acts as a spam prevention mechanism, and allows access to those that have gained access to carry out transactions.
Just like water and vapor are different states of the same thing, IOTA can simultaneously act as transactional and consensus mana. If the IOTA is moved too often, the mana behind it will have less strength to flow through the network (i.e it will become more like vapour than water). Larger pools (higher IOTA quantities) of water will be prioritized over others. The consensus mechanism will also filter the water (transactions) so that only clean water comes through.
DLT’s, much like physics, suffer from the double slit problem. Though many, or most, may not have realized it yet. Basically the consensus mechanism should be set up so that it will not allow any double spends, or in other words, the same transaction cannot be confirmed twice, regardless of where and when the transactions take place.
Double-spends could be compared to the double slit experiment, when a photon is travelling without observation, it is not possible to determine which slit it passed through. In the case of DLT this is undesirable behavior, as all participants should agree on a single version of reality with a single transaction confirmation. However, if the photon is observed, then it can be determined which slit it passes through. The consensus mechanism is in place to carry out the observation and ensure only one transaction is confirmed, and that all participants in the network share the same final version of reality.
IOTA tackles this dilemma, by creating alternate, parallel data realities if multiple transactions are received at the same time. The network participants then vote on, and come to a consensus on the version of reality that will be followed. By using a DLT such as IOTA, the resolution of conflicts becomes much easier as the structure of the graph itself can be used to resolve the issues, i.e. by referencing a transaction, it is in-fact voting for it over another, reducing transactional overhead.
This concept is not only unique in the DLT space (as far as I am aware), but it solves some huge problems — and who knows, maybe it will answer many other questions in general.
Similar to the double slit experiment, only the transactions that have been agreed by the rest of reality (nodes that react) will be finalized based on FPC (the Fast Probabilistic Consensus mechanism).
Brilliantly, FPC only needs to act on the realities that have a conflict, and can ignore those that have no issue. This makes the consensus mechanism very economical and reduces overhead significantly.
The ‘go’ based node implementation has been named ‘shimmer’ because bees respond to danger this same, beautiful way.
Note: Eclipse attacks will be prevented by having high mana nodes posting their transactions directly to the ledger. There are plans for IOTA 2.0 to potentially improve this mechanism further.
Question to physicists: If reality were a DLT, could a double spend (i.e. through an eclipse attack) represent a many worlds hypothesis?