The month of June 2019 saw two major events in the cryptocurrency space, Bitcoin 2019 and the Monero Konferenco, which looked at the major developments and future outlook for Bitcoin and Monero respectively. In this article, we outline some of the most important takeaways from these two events.
Bitcoin 2019 took place over June 25-26 in San Francisco and was hosted by the popular crypto publication Bitcoin Magazine. Inspired by the early conferences in 2013 and 2014, Bitcoin 2019 delivered a conference with talks accessible to all but also provided content on the more technical side. The conference was packed full of sessions, of which you can find the full list their official site. We will only give some highlights, as there was a lot of content.
The range of speakers was impressive which included billionaire investor Tim Draper, famed whistleblower and privacy advocate Edward Snowden, and financial journalist Max Kesier – just to name a few. Two of the people cited in Satoshi Nakamoto’s white paper were also present to give their thoughts in one talk on the current and future trajectory of bitcoin; Adam Back and Scott Stornetta.
On their thoughts about the future of bitcoin, the panelists disagreed on whether there is plenty of room for multiple cryptocurrencies, with Back stating that it may not be necessary in the long run.
Conversely, Stornetta said he thought that other cryptocurrencies could flourish beside bitcoin, stating “I’m a big fan of the distributed ledger and how that can create the quantization and tokenization of assets. I just think we’re going to see such a broadening and diversification of this.”
“Bitcoin will have a 40-year Impact”
Tim Draper – the investor who won the US government’s auction of the confiscated bitcoins from dark net market Silk Road in 2014 – said that bitcoin is getting “more and more exciting as more and more people are coming up with new ways of transforming the economic systems of the world.”
Source: Collision Conference
Draper added that the potential of Bitcoin, and its associated technologies, is greater than that of the internet explaining that it will have a 40-year impact and stated “Bitcoin opens people’s minds and opens the doors to one big world, where geographic borders are less relevant. I’ve never been so excited by any new technology in my life.”
The famed bitcoin investor also spoke on how bitcoin is threatening certain countries, pointing to China as one example. Draper explained how the popular exchange Binance had moved from China to Singapore to evade the restrictions on bitcoin, and eventually landed in Malta, where the island nation has embraced the cryptocurrency revolution with open arms.
Improvements to the Bitcoin Protocol
Another important and interesting talk revolved around some of the improvements to the Bitcoin protocol that are coming in the near future.
Schnorr signatures and Taproot were a couple of the topics of discussion, highlighted as major protocol changes in Bitcoin in the future that would enable much more efficient multi-signatures, allowing exchanges and businesses to mask their multi-signature policies from the main Bitcoin blockchain.
Schnorr signatures will also make the Lightning Network more private as mentioned by Lightning Labs developer Olaoluwa Osuntokun, as they will enable the randomization of identifiers for every single hop, so that lightning channels look like regular on-chain payments.
On the question of when Schnorr signatures and Taproot will be available on Bitcoin, Matt Corallo of Chaincode labs said anywhere up to two years. He stated that at present it is a strong proposal and has a ‘demo’ implementation but the code is not something that is ready to go and it is undecided how it is going to be activated.
How Enterprises are Adopting Bitcoin
Daniel Buchner from Microsoft also presented a talk called ‘Scaling decentralized identifier on Bitcoin’ and focused on ION, a layer 2 decentralized identifier network built on Bitcoin, which lets users own and control a cryptographically secured identifier. The talk is mostly a detailed explanation of how ION works and how it will enable a decentralized identifier network on a massive scale that is permissionless and cost-efficient.
Buchner concluding by explaining that Microsoft believes a decentralized identifier network on Bitcoin will unlock a lot of new business and act as a compliment to their own centralized identity service Azure active directory.
A panel of senior figures from bitcoin exchanges such as Bitstamp, Kraken, and OKCoin also talked about how exchanges will embrace the Lightning Network. Kraken’s Austin Alexander stated that liquidity management is the biggest issue for exchanges that want to adopt the Lightning Network due to the nature of flows to financial exchanges.
Bitstamp’s Simon Cowell agreed that liquidity would be a challenge as Lightning grows and highlighted the need for testing to ensure it is safe to implement.
Panellists Discuss Bitcoin’s Unstoppable Nature and Ultimate Bull Case
Other highlights included were the ‘Is bitcoin unstoppable?’ and ‘The ultimate bull case for bitcoin’. These two sessions were hosted by financial journalist Max Kesier, an early proponent of Bitcoin who recommended his audience to buy the cryptocurrency when it was just $3 back in 2011.
The first talk looked at how bitcoin is decoupling from the existing financial system and included comments and analysis from Abra’s Bill Barhydt and Morgan Creek Capital founder Anothony Pompliano on the recent Libra announcement from Facebook and how it shows the existence of bitcoin is threatening banks. The talk also discussed the vulnerabilities of Bitcoin, namely the exchanges and on ramps.
In ‘The ultimate bull case for bitcoin’ talk, Keiser mentioned that Edward Snowden stated that privacy is needed for bitcoin for there to be a bull case for the crypto-asset and that Bitcoin is making hard money fashionable again.
However, Bitcoin developer Jimmy Song disagreed that privacy needed for a bull case for bitcoin, saying that transparency of the supply is very important. Song said a bug or break in the math of a private currency may go undetected allowing the supply to be maliciously inflated without anyone knowing. While privacy is important, security and scarcity is more important in Song’s eyes.
The first ever Monero Konferenco took place just before Bitcoin 2019 on June 22-23 in Colorado. The event was the first to be funded and organised by the Monero community, for the Monero community. The Konferenco looked at the various exciting developments and new advancements in Monero but was a much more technically focused event than Bitcoin 2019.
One of the most interesting talks was by Monero Research Lab’s Brandon Goodell which was titled ‘Perfect privacy or strong deniability?’, who commented on the current state of privacy coins saying that even as the leading privacy cryptocurrencies are still at a 1/10, while everything else is essentially 0/10.
The talk explains the method of tracking and predicting behaviour in private crypto-networks using what is known as the EAE attack. Basically, the problem goes something like this; Alice buys Monero from an exchange and sends it to another party that colludes with the exchange to learn about Alice. By sending outputs to individuals and tracing their transactions graphs, these colluding parties may perform statistical tests to learn significant information about Alice.
As a result, one of the main points Goodell puts across is that there is no such thing as pure anonymity with privacy currencies, they only provide plausible deniability. Nevertheless, research shows that default privacy is better even with small anonymity sets – which refers to the size of people using the crypto-network – as compared to opt-in privacy with high anonymity sets.
Monero has increased its ring size over time, which is basically related to the number of decoys that are sent with your transaction. And Goodell believes that for a high enough ring size, Monero provides a good enough anonymity set to stop these statistical tracking methods for private currencies.
Tari: A Decentralized Protocol for Digital Assets
Riccardo Spagni, lead maintainer for the Monero project and co-founder Tari, has an interesting vision for Monero by working on a decentralized protocol for digital assets that will be built on top of Monero.
Tari will be focused on digital assets, think in-game items for games like Fortnite, loyalty cards or even tickets to a concert, and the protocol is being built to be merged mined with Monero. Merge mining in simple terms, it makes a cryptocurrency more secure since a miner will contribute hashes to not just Monero but to Tari as well.
Spagni explained that Tari is very much inspired by Counterparty, a digital assets system built on Bitcoin, and revealed that a ticketing business called Big Neon will be based on Tari in the near future. The only things that are certain about Tari now is that it will be a sidechain of Monero that will have atomic swaps, use MimbleWible and be merged mined.
The talk also looked at how Tari will help Monero with one improvement being the user experience. While the development team iterated on Monero wallet design, and there are good mobile wallet apps, ultimately using monero “is a bit clunky.” Spagni then went on to present a demo version of what a validator node on Tari might look like, which would allow you to register on the Tari network, lock up some Tari to participate in the digital asset ecosystem to get paid, and manage your digital assets.
Tari is also working with a large number of businesses that benefit from monero and a certain law firm to develop open source set of guidelines that will help exchange to list monero. The guidelines are meant to help answer the concerns and questions some exchanges have expressed about listing the privacy coin and allow them to abide by their local regulations.
Monero’s Answer to ASIC Resistance: Random X
One of the main contributors to the Monero project and CTO of Symas Corporation – Howard Chu – introduced his talk on Random X with a thrilling fiddle solo. Random X is basically a new mining algorithm that Chu has worked on, along with the developers tevador and sech, that is envisioned to further decentralize the distribution of mining.
The talk highlighted the trend in mining for Bitcoin, which started on PCs and laptops, but has gradually evolved such that a few competitive ASIC mining farms make up a large percentage of the hashrate.
The problem is that these ASIC machines are not as readily available as commodity hardware such as AMD or NVIDIA GPUs. Also, these ASIC designers and producers tend to use their own machines in secret before selling to the general public.
Chu explains how ASICs are so effective and past approaches to keeping mining decentralized, leading up to Random X, a newer method that favors CPU miners. He explained that the dominance of CPUs worldwide as part of the rationale for CPU focused approach as the most egalitarian method for mining.
The shipments of smartphones globally was approximately 100 million in 2017 and smartphone users upgrade more frequently than PC users. On the other hand, the global shipments of GPUs is forecast to be just 67 million units in 2020.
What makes Random X unique compared to other proof of work algorithms that have tired to combat ASIC mining is floating point math as well as including other things such as random code. Chu explains that Random X leverages what CPUs are good at, which is running a wide variety of code. As a result, if you wanted to build an ASIC for Random X, you’d end up building a CPU.
In what is a technical talk, Chu explains the nuts and bolts of the Random X algorithm, outlining how it achieves ASIC resistance. He describes the basic steps of Random X as; firstly, generating a random program for the virtual machine, then translating that into the native machine code of the real CPU, executing the program and finally transforming the program output into a cryptographically secure value. These steps ensure that specialized mining machines cannot be developed (or too inefficient to be worth developing) since the randomness counteracts what ASICs are good at, which is solving a very specific task.
In terms of readiness is that it is ready to run but not across all devices, for instance, AMD GPUs support still needs to be worked. Moreover, security audits have all mostly proven to be positive and feedback has been reportedly sought from Intel and AMD.
Howard Chu also mentioned that the current algorithm Monero runs – Cryptonight/R – is in some ways a hybrid version of CryptoNight and Random X. But Random X looks set to be ready for the Monero network fairly soon, and once activated, it could prove to be one of the most innovative advances in cryptocurrency in recent times.