Russian mathematician Serguei Popov, professor at the Institute of Mathematics, Statistics and Scientific Computing (Imecc) at Unicamp, is one of the creators of Iota, a cryptocurrency launched in 2015 with the aim of introducing innovations in this segment. One of the differences of digital currency is that it does not require fees to make transactions possible, in addition to being designed to be applied to the Internet of Things (IoT). In the interview that follows, the professor talks about his experience in developing the system, which he classified as “fascinating”, the concept involved in the project and people's distrust regarding the use of cryptocurrencies. “Distrust is natural. But we need to consider: the future always arrives, and what we can do is participate a little in it. Little by little, distrust will be overcome,” he predicts.
How did the idea of creating Iota come about?
Well, the idea for the project wasn't mine. It emerged three and a half years ago with David Sonstebo, Sergey Ivancheglo and Dominik Schieer, who thought about creating a cryptocurrency that could be applied to the Internet of Things and that was suitable for microtransactions, that is, very low value transactions. To make this possible, it could not charge fees like other digital currencies do. Some currently charge between US$3 and US$4 per transaction, but in December 2017 this fee was as high as US$30. If you are purchasing a helicopter, it is ok to pay this fee. However, if you are paying for a cup of coffee, it is completely unfeasible. As we imagined that, with IoT, we would have many small value transactions, we looked for a way to get rid of the transaction fee.
How did the opportunity to work on the Iota creation project arise?
I'm a mathematician. I became interested in cryptocurrencies at the end of 2013, as a hobby. I spoke to several people involved with the topic. Then, I did some calculations about what the process of building a blockchain [accounting recording system used by Bitcoin] is like, what is the probability of success for an attack against this system, etc. I wrote a text with some formulas and posted it on the internet, in a discussion forum on the topic. The forum participants really liked it and encouraged me to continue producing. When David Sonstebo and Sergey Ivancheglo started creating Iota, they called me to be the project's mathematician, based on these works produced.
What was your contribution to the project?
My task was specifically to write the whitepaper, that is, the document that conceptually describes the currency. So, my work was very conceptual. I did not participate in the programming work.
How long did it take to build the project?
The project required approximately nine months of work. The launch of Iota took place in October 2015.
What was the biggest challenge you faced?
The biggest challenge was coming up with a model that would eliminate the need for fees and the presence of miners. In traditional currencies, you have miners, who are those who have more computational resources and who create the blocks that contain transactions. Everyone can issue a transaction. However, for the transaction to be considered valid, it has to be included in a block by a miner. This miner has very powerful hardware. In the beginning, it was possible to mine a Bitcoin with a home computer. Nowadays, you need to use powerful hardware, designed to perform this task specifically. To give you an idea, a Bitcoin mining company is a huge warehouse. There are several shelves arranged on it, each with several pieces of hardware that do their own thing to mine Bitcoin, at speeds that are tens of thousands of times faster than that of a home computer. Energy consumption by these mining companies is very high. It is estimated that the current electricity consumption of the Bitcoin network is the equivalent of twice that of Denmark.
How are transactions with Iota processed?
On Iota, you also need to process transactions, but a normal computer can do this in ten seconds. However, to achieve this it was necessary to deal with economic incentives. In Bitcoin, miners have an incentive to mine blocks. Nowadays, the Bitcoin network pays out US$100 to miners every ten minutes. If you take away this incentive, obviously no one will want to mine. In the case of Iota, the incentive is the following: help others, and others will help you. If you are behaving well in making your transactions in a way that helps others, the system will help you. If, on the other hand, you are a freeloader, if you are only interested in taking advantage, the system will not collaborate with you. It took a lot of thought to make the rules so that things worked.
What is the role of the Iota Foundation?
The Iota Foundation is a non-profit foundation, registered in Germany. It has a certain amount of capital that usurers donated so that it could operate, but its role is to promote research and development of the Iota network.
Speaking of research and development, cryptosystems need to be constantly improved, don't they?
All cryptosystems are constantly improving. There is a concern about the issue of security, but there is also a concern that transactions are carried out faster, which we call scalability. The system has to continue to be efficient, even when thousands of transactions occur simultaneously. There's always a new challenge looming on the horizon. Furthermore, no software is error-free. One of the Foundation's jobs is to monitor the system and propose solutions for possible failures. This applies not only to Iota, but to all cryptocurrencies.
With the advancement of the Internet of Things, it is said that our refrigerator will be able to identify a missing food, purchase that item and pay for it with a cryptocurrency. Are we far from this scenario?
This is already at our doors. There is already an experiment in the Netherlands, through which the owner of an electric car plugs the vehicle's cable into a totem to supply it and pays for the energy consumption with Iota. The Iota Foundation has cooperation with several large industries with the aim of expanding this type of application. Today you can now pay for your coffee with Iota, using your smartphone, as long as the coffee shop accepts the cryptocurrency. There are still few establishments that use it, as it is a nascent technology, but I believe there will be exponential growth in its acceptance.
Since the subject is acceptance, many people are suspicious of cryptocurrencies...
Distrust is natural. I even share it, because I don't really like the idea of my refrigerator having its own opinion (laughs). But we need to consider: the future always arrives, and what we can do is participate a little in it. Little by little, distrust will be overcome.
Do you use the topic 'cryptocurrency' in your classroom activities?
When students want to know about this, I always tell them. Currently, I have one scientific initiation student and two doctoral students who work specifically with applied research on the topic of cryptocurrency. I don't introduce this in everyday classes, but when students come to me, I don't refuse to address the subject.
How do you describe the experience of having contributed to the creation of Iota?
It was fascinating working on the project. There are many beautiful things associated with this work.
