Great article, and I'm glad to see privacy being a focus in a cryptocurrency, but I would like to see some other sources that aren't also promoting the token.
That said, I do think it's got the brightest future of any coin besides BTC for the very reason.
Preface this by saying I am not a fan of any cryptocurrency, but I really struggle to understand why Monero has a smaller market cap than BTC. It has to be inertia related right? Monero just seems like a fundamentally better piece of technology.
Are there scaling issues with Monero, similar/worse than BTC?
Yes, it scales much worse:
* node resources scale with the size of the UTXO set (unspent outputs), which in Monero's case balloons to the entire TXO set (all outputs, orders of magnitude larger)
* a typical 2-input 2-output transaction is 4 times larger
* wallets have to track all outputs to choose random decoys for transaction inputs
One can argue that this is the price to pay for significantly better privacy, but the largest benefits come from having no visible amounts or addresses, which can be achieved with significantly better scalability than BTC [1].
[1] https://forum.grin.mw/t/scalability-vs-privacy-chart/8114
>but the largest benefits come from having no visible amounts or addresses
MWEB is certainly an improvement over transparent transactions (and other methods such as coinjoin, coinswap, cashfusion, etc.), and I welcome the litecoin upgrade. I agree that decoy-based privacy is weak.
However, I don't believe that the mimblewimble meets the standard of privacy needed for most users. It's not the visible amounts and addresses, but the links between transactions that are the main problem. CTs on their own are just a "nice-to-have".
The end goal should be a zcash or firo style of privacy. I think you can scale that to a global network with an adjustable block size, payment channels, and atomic swaps between multiple cryptocurrencies. The problem is that zcash and firo have weak tokenomics compared to monero. Grin will have a hard time finding an initial niche that isn't currently satisfied by monero, and if it does take off, its changes could be merged into bitcoin (https://www.truthcoin.info/blog/imex/).
Don’t forget that opaque blockchains can have invisible inflation. Transparent blockchains will always be worth more, as the user can verify that inflation has not occurred. This applies to grin as much as xmr.
Indeed that is one downside of hiding amounts, as shown in row "Fully auditable supply" in [1]. Finding out just one discrete log (log_G(H)) can collapse the whole system with undetectable inflation.
[1] https://phyro.github.io/grinvestigation/why_grin.html
In opaque blockchains, the mechanism that prevents inflation is the same mechanism that prevents double-spending. The user can verify that inflation has not occurred by running a monero node.
Everything considered, I don't think that the risk of a monero inflation bug is greater than a bitcoin inflation bug when you consider the complexity associated with scripting.
wrong
https://www.moneroinflation.com/inflation
Tari uses Mimblewimble (privacy coin developed by previous Monero devs with a focus on privacy), so we're not far from being able to benefit from it.
Mindshare and hype tend to be self reinforcing and create their own gravity. BTC has the largest market share because it has the largest market share. The moment it got derivatives and ETFs listed and traded on major US exchanges (e.g. CME futures), it became the clear winner because if you are a hedge fund and want to get on the crypto bandwagon, it's easily accessible, liquid and doesn't require extra paperwork. So you trade that instead of going on some unregulated exchange where you might end up as a news headline of "Hedge Fund loses money in crypto exchange exit scam".
One important factor is that Monero are printed at a constant rate, unlike BTC that are printed at an exponentially slowing rate.
A constant rate of printing means the supply is uncapped but the inflation rate will approach zero.
Monero's choice is arguably better for actual use as a currency, as the printing will prevent deflation from lost coins. But it makes it less attractive as an investment.
> But it makes it less attractive as an investment.
For me that's a feature not a bug. The investor cryptobros have thoroughly killed the interest in BTC as a real payment method and made it just a vaporware pyramid scheme. They have accumulated a lot of influence.
Also they corrupted the whole idea behind bitcoin which was independence from the old centralised banking system where others control your money. To guarantee their investments they've rebuilt the whole old system in bitcoin with the exchanges and some regulators even demanding you use them to store your BTC.
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> Are there scaling issues with Monero, similar/worse than BTC?
While there are scaling issues with BTC it's severely worsened by the fact that BTC had refused to scale on-chain.
Monero is technically much harder to scale but since it doesn't have the same self-imposed restriction it can handle more transactions than Bitcoin can.
> better piece of technology
Technology quality is uncorrelated with market cap. This would be like saying Frontier Airlines should have a higher market cap than United because one uses Linux and the other is still on mainframes..
Isn't BTC privacy achievable these days with coinjoin, lightning network etc.? In that case no much reason for monero.
It still seems fantastical to me that lightning network is presented as "something running on BTC", when it is "something running completely separately, instead of BTC". Transactions on Lightning network are not transactions on BTC, and have none of the guarantees of BTC (and in fact have no reliable guarantees of no double spending).
The only way to get BTC-like guarantees of no double-spending for Lightning network transactions is to put every transaction on the BTC block chain ("close the channel" after every transaction). And then, of course, you get back all of the problems of BTC (minuscule TPS not enough for a small village, 0 privacy, huge energy costs).
If what tsimionescu says about Lightning is wrong, can somebody kindly reply to them explaining why rather than just downvoting which doesn't help anyone. (Maybe there's a reason they were downvoted that isn't their being wrong, but I don't see what that would be.)
(And sorry for going against the guidelines and talking about downvotes, but I'm really just asking for someone to either confirm what they said is right or explain why it isn't, I'm not caring about the votes themselves.)
See https://blog.breez.technology/lightning-btc-iou-62e3a712c913 for instance.
As that post makes clear at the end, if you don't monitor the BTC block chain actively (with an app or by paying a third party you trust to hopefully do it for you), you can be cheated out of your BTC with Lightning.
not a downvoter, but a criticism is yhat BTC doesnt actually offer defenses agaisnt double spend, at least when you use it to buy something.
if the chain swaps a month from now and drops my bbq purchase, the bbq shop isnt getting their bbq back, even though i get my BTC back on the new chain. the ethereum fork for ethereum classic also doubled everyone's wallets, which i'd consider to be a double spend
The double spend protection is quite limited, so whats the big loss from lightning?
First, if people didn't believe that BTC protects from double spend, then it would not be used by anybody. Secondly, the whole point of the proof of work scheme is that it's impossible, or at least extraordinarily costly, for anyone to outrun the main chain enough to publish a new block that replaces blocks from a week ago. It's in fact considered impossible for blocks from an hour or so ago.
So, assuming the BBQ supplier waited about an hour for confirmation, the chance that the money would be lost is minuscule with BTC transactions. With Lightning transactions, the same is not true at all - the customer could close their channel abruptly two months later when the BBQ joint is on vacation, and the money would suddenly vanish forever (assuming they don't catch the fraud in the time window before it becomes permanent).
Of course, in both cases, if you're the person who sent the money and the BBQ never arrived, you're out of luck entirely. Which is why the claim that BTC or Lightning enable trustless monetary transactions is mostly bogus, even with a no-double-spend guarantee. And waiting one hour for a payment to a BBQ joint to clear is basically unworkable (and the reality is more like two hours - one hour for the transaction to make it to be mined, and the other hour to confirm the block where it was included remains permanent).
It doesn't need a lot of speculative value in order to be useful. It just needs enough value to make the transactions meaningful. And that means people are a lot less likely to drive up the price via speculation.
BTC is not about usefulness. The Bitcoin community has abandoned all of the original principles that made them. It is now just about line goes up and make money.
The Monero community is the one that at least tries to emulate to Satoshi's Bitcoin.
>It has to be inertia related right?
Consider that a lot of Bitcoin is assumed to be locked up.
If an old satoshi wallet started moving funds, the price would probably halve.
> That said, I do think it's got the brightest future of any coin besides BTC for the very reason.
Brightest future in terms of what? Traction? Market cap? This is what I thought 7 years ago, and I beefed up my XMR position as a result. Meanwhile, Bitcoin an objectively inferior technology, has 25x since then.