The IOTA Foundation still wants to introduce smart contracts and native assets under IOTA 1.5. In this surprise, observers recognize a postponement of decentralized IOTA 2.0 indefinitely.
Via Twitter, the IOTA Foundation announced news over the weekend that provoked a divided response. Out of the blue, technological development goals are briefly and succinctly repositioned: Native assets (formerly: colored coins) and smart contracts are to be launched under IOTA 1.5 aka Chrysalis and later implemented in a decentralized IOTA 2.0. What may have its appeal at first glance is questionable upon closer inspection, however. In order to understand the issue from an investor’s perspective as well, one has to dive a bit deeper into the concept and history of IOTA:
- Smart contracts are automated contracts whose compliance and settlement is guaranteed by code and not by middlemen. The use of smart contracts was pioneered in the Ethereum (ETH) ecosystem and without them, Decentralised Finance (DeFi) would be impossible. IOTA doesn’t want to miss out on this growth area of the crypto industry, and multiple uses for smart contracts are envisioned in the Internet of Things (IoT). The IOTA Foundation presented its own protocol for smart contracts in the spring and promised a launch under IOTA 2.0 for the end of 2021. So now smart contracts are still to come under IOTA 1.5 and there are two catches hidden underneath: Firstly, IOTA 1.5 is a centralized, blockchain-like solution in which a central coordinator can intervene in processes under the command of the foundation. This means that under IOTA 1.5, the plus point of smart contracts cannot be achieved, namely that they can be organized detached from third-party influences. Second, a decentralized IOTA 2.0 will be so technologically different from IOTA 1.5 that development work will have to be duplicated internally and externally.
- Regarding Native Assets, which used to be called “colored coins” in IOTA, there was a strategy paper of the foundation only a few days ago. In this, decentralized IOTA 2.0 aka Coordicide was also mentioned as a basis. This is logical, because native assets at OTA are supposed to be able to represent digital assets that develop their full appeal in a variety of scenarios – especially in interaction with smart contracts. But again, a central IOTA 1.5 raises the fundamental question of trust in the incorruptibility of the coordinator.
Smart contracts and native assets under IOTA 1.5 – a dubious undertaking
In IOTA’s official discussion channels on Discord and Twitter, reactions to the recent about-face in the roadmap are mixed. Among IOTA’s followers, who are known to be loyal to the Nibelung, the announcement of native assets and smart contracts is being celebrated and some are already recalling the old price targets of 5 US dollars. However, there are also voices that put their finger in the wound: Smart Contracts and Native Assets are to be classified as buzzwords for a central IOTA 1.5 and the professional application of these possibilities remains pointless for them without decentralization. Further still, with the IOTA Foundation once again failing to provide timelines, they see IOTA 2.0 postponed indefinitely. Most recently, the IOTA Foundation admitted to massive problems with the development of Coordicide.
Conclusion: IOTA Foundation gets caught up in announcements
Even in the discussion about our IOTA coverage, the killer argument likes to fall: “Better to develop quietly and thoroughly than to put half-baked projects live.” But this falls short. Smart Contracts and Native Assets are fundamental modules to expand the IOTA ecosystem and uncover opportunities for monetization. This is true even in the Internet of Dingo (IoT), IOTA’s original focus. But the new news on Smart Contracts and Native Assets at IOTA doesn’t just stamp out original plans. It is not coherent in itself, as the principle of decentralization is not fulfilled and technological development work has to be rolled up again. Anyone who has been involved with IOTA for a longer period of time and in more detail knows: announcements by the IOTA Foundation should be taken with a grain of salt. Despite all the demonstrative optimism, the latest announcement – about which the IOTA Foundation does not answer detailed questions – hides an activism whose deeper purpose may be to distract from the sheer endless difficulties with IOTA 2.0.
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