This article is a translation of the German IOTA Beginner’s Guide by Schmucklos.

Why not simply encrypt data, sign it and send it via TCP?

There are people in the crypto space and on YouTube who do not understand what IOTA is developing and building. One of their pointless arguments is:

I can already encrypt, sign and send data transactions via TCP, I don’t need IOTA DLT for that.

For the explanation I have to go a bit further. IOTA enables a fast, tamper-proof and decentralized transfer of values and data over many nodes. Thereby value and data transactions are basically handled differently. While value transactions have to be validated by fullnodes, data transactions are confirmed directly and are notarized. Now, some may ask, why do I need the IOTA distributed ledger technology for a pure data transaction. I can simply encrypt the data, sign it and send it via TCP.

Well, aside from the fact that “Man in the Middle” attacks would be possible, signed data only proves that the data came from you. It does not allow me to prove when you sent it, nor whether you sent the same data to everyone. You could send a certain piece of information to one person and another piece of information to another person. Signatures alone will not protect anyone from such things.

“Notarization” can be used to prove that an electronic document existed in a certain form at a certain time and has not been changed since it was created. When a notarization is created, a unique hash (fingerprint) of a document is calculated and stored together with a timestamp in the IOTA ledger (Tangle) in an unalterable way. If at a later time it is to be verified that the document in question existed at the claimed time and / or has not been altered, the data is retrieved from the Tangle and compared with the available information.

If the IOTA Tangle is used as a transport medium, then these types of attacks are not possible and there are many use cases where it is critical that all parties involved can be sure that everyone is working on or with the same information (e.g., supply chains, oracles, synchronized remote control systems, …). It is therefore primarily about use cases that cannot simply be transferred via TCP. Otherwise one might as well use BitTorrent for this. Sender and receiver need a transparent form of transmission between multiple parties or organizational units.

The bottom line is that it is not about nobody manipulating the data during transmission, but about the receiver not manipulating this data. Example: A sensor (with IDoT chip) has gathered some values and sends this data via the IOTA tangle, which stores the hash of this data. If this data is to be sold later, this hash can be presented as proof and prove to the buyer by means of the Tangle that the data from the sensor has not been changed afterwards. The IOTA technology (Tangle) thus acts like a kind of fingerprint. With it all sent data can be verified.

Note: In order to prevent misuse scenarios and in an efficient way to enable machine economy, nodes and devices will receive a unique identifier (ID) in the future, see also Identity of Things (IDoT).

Conclusion: In the future, fast and tamper-proof protocols such as IOTA will be needed for trustworthy transactions.

Original source

Last Updated on 16. February 2021