Dialogue | Paying for the match: Who is better than the anonymous and stable coins?

One of the most interesting things in the industry this year is that Facebook officially announced the launch of the cryptocurrency Libra. Libra and its members of the alliance chain, with their own massive user and payment scenarios, make people pay attention to the possibility of blockchain technology landing in the payment field.

In fact, becoming decentralized e-cash was the original vision of the Bitcoin white paper. After Bitcoin finally moved to the position of “electronic gold”, many cryptocurrencies decided to pay cash, such as Ripple (XRP). Dash, and a series of stable coins that are looking for offline use scenarios.

Is cryptocurrency likely to be a payment currency? What qualities do you need to become a payment currency? In the current wide variety of encrypted worlds, which types of cryptocurrencies are closer to the payment currency? PANews interviewed Gary Yu, who has always been committed to developing e-cash, Gary is the core developer of the anonymous coin project Grin, and recently created the Gotts Stabilizer project.

Grin's Anonymous Coin feature perfectly matches cash

In January of this year, under the hot discussion of the media and Daxie, the anonymous coin Grin developed based on the MimbleWimble agreement became the first “beautiful chicken” in the 2019 currency circle. Grin's popularity has also brought heat to the entire anonymous currency sector.

Gary said that Grin's original intention was to realize Nakamoto's decentralized electronic cash dream. Grin not only conceals transaction data, but also uses an infinite release mechanism to simulate cash. From the perspective of anonymity and distribution mechanism, Grin is perfectly equivalent to real-life cash.

But Grin also has some problems that he doesn't have to talk about, that is, the expansion of trading capacity and the instability of prices. In fact, most of the decentralized cryptocurrencies have these two problems. The fact that the transaction capacity and price stability are large enough is an important feature of the payment currency.

In Gary's view, relying on the scalability of the MimbleWimble protocol, a decentralized price stabilization mechanism was designed to create a cryptocurrency that is closer to electronic cash.

Grin's popularity has also brought heat to the anonymous coin sector.

According to CoinMarketCap data, as of September 23, there are 6 kinds of anonymous currency in the top 100 cryptocurrency, of which Monero (XMR) has a market value of 12.33 US dollars, ranking 12, ranking the highest among all anonymous coins. Dash (DASH) and Zcash (ZEC) also entered the top 30 market capitalization rankings, reaching $814 million and $343 million, respectively.

Because of the short release time, Beam and Grin based on the MimbleWimble protocol are still relatively low in market capitalization.

Gary believes that "the existence of anonymous currency has its inevitability, because cash has been used for thousands of years, and the natural privacy of cash is a characteristic that all cryptocurrencies should have. " For example, in the past, people paid for cash to buy goods, except for transactions. The parties do not know anything else, so the flow of cash is largely anonymous. However, the development of new technologies, especially the popularity of mobile payment, has erased the anonymity of payment currency. Gary believes that this is unreasonable. Social progress and technological development will inevitably give people the opportunity to pay more and more attention to protecting personal privacy, instead of the opposite. . The emergence of blockchain technology and the development of privacy protection technologies have made it possible.

In fact, several mainstream anime coins are now advocated as tokens for the payment field. For example, Monero and Zcash claim to be "digital currency" on the official website, Dash claims to be "digital cash" on the official website, and Grin's goal is to become decentralized payment cash.

In Gary's view, the value of money has three main points: the trading medium, the accounting unit, and the stored value tool. For trading media functions, circulation is a basic need. The above six kinds of anonymous coins are better in circulation on the exchange, especially Dash and Zcash. According to CoinMarketCap data, 115 and 94 exchanges have been placed respectively, and 257 and 211 transaction pairs have been opened. These two anonymous coins are already comparable to Bitcoin, Ethereum and EOS in terms of the number of exchanges on the shelves, and even better than the mainstream stables. Even Grin, who has been on the line for 8 months, has already placed 30 exchanges and opened 57 trading pairs.

Although there is news recently that OKEx Korea will release all anonymous coins on October 10, including XMR, DASH, ZEC, etc. In June of this year, the FATF issued the Cryptographic Monetary Regulation Act, which requires the transaction to collect and transmit customer information including the name, account number and address information of the transaction initiator, as well as the recipient's name and account information during the transaction. This may be a big hit for anonymous coins.

“Technological innovation and government regulation have always evolved simultaneously. Gary believes that there is no need to over-interpret the case of anonymous currency under the Korean exchange. “The entire cryptocurrency industry and regulation are inherently a contradictory community, with their respective developments. There is a balance point."

Privacy protection should be one of the core connotations of blockchain

Privacy protection is one of the most important features of anonymous currency, and it is also an aspect of anonymous currency that is most similar to cash. In fact, other major cryptocurrencies are expected to add anonymity. At present, with the development of the blockchain industry, analysts have been able to make more and more intensive transactions on blockchain networks such as Bitcoin, linking transactions to specific people, institutions and organizations. This is obviously not The original intention of decentralized cryptocurrency development.

Today, more and more people in the industry believe that privacy protection is important for the development of blockchain technology. Gary believes that "privacy protection is obviously very important, not just the blockchain, it is a trend in the development of the entire Internet. " From a technology development perspective, mobile Internet technology has revolutionized the way money is used, and people no longer have to face to face. Trading, micropayments and change are easy, and trading time is faster. But these conveniences also completely sacrifice privacy. On the basis of preserving the convenience brought by Internet technology, the blockchain can make up for the lack of privacy protection through technical means, which is undoubtedly a new technological revolution.

Gary further explained, “In China, where the two mobile payment systems are highly popular, everyone can buy food on the street and scan the code. All the transaction data covering more than one billion people in life is completely in the pole. In the hands of a few companies, there may be huge social risks. Although in real life, protecting data privacy is not so urgent, he stressed that this is not a worrying thing. At some point in the future, passing an event will make everyone realize the importance of privacy protection."

Currently recognized blockchain technology tags mainly include decentralized, peer-to-peer autonomous distributed systems, tamper-proof traceability, smart contracts, trust mechanisms, etc., but Gary agrees that data privacy protection should also be used as blockchain technology. The core connotation.

Capacity scalability is critical to payment scenarios

The emergence of Grin and Beam not only brought the Anonymous currency, but also the MimbleWimble protocol, an agreement that emphasizes absolute privacy and anonymity, mainly through elliptic curve cryptography, zero-sum verification, zero-knowledge proof, and dandelion protocol. Implement privacy protection.

The high anonymity of MimbleWimble limits the expansion of transaction capacity. Grin's trading capacity can reach up to about 15 per second, and the expansion is very limited compared to 3-5 transactions per bitcoin. This is mainly because Grin conceals the transaction amount, and the 64-bit amount is encoded using a 675-byte atomic range proof to prove that the value is a number greater than zero and less than 2 to the 64th power without exposing the specific value. . This range proves to be the main body of MimbleWimble transaction data, accounting for about 85% of the total data.


Is it really necessary to hide the transaction amount?

Gary's point of view is, “The focus on technology is different in different application scenarios. He believes that all data elements should be protected from the perspective of the privacy protection of anonymous coins, even Grin currently does. Not enough, in fact, we need to further improve the privacy protection of the transaction address. Because Grin's transfer still requires an address, either IP or domain name, it is likely to cause the address to be snooped or spoofed. But if it is from the application of payment to the payment currency, then the scalability of capacity is a more important consideration. To know that the amount of daily economic activity is very large, the average trading volume of Visa in 2018 is about 4,000 per second.

"If the (cryptocurrency) payment is popular, then the capacity is very important. If you say that decentralized cryptocurrency payment is very good, everyone can use it. As a result, everyone uses it, but you said that the network is blocked. That's not enough, so scalability is very important.” Gary believes that in the payment scenario, the first thing to do is to ensure the transaction capacity. The expansion can be exchanged for some of the privacy, such as the public transaction amount. "Removing the amount is equivalent to removing the maximum load of MimbleWimble. The entire transaction capacity can be expanded many times immediately. Then with some other improvements, you can achieve at least ten times the capacity increase. The ultimate goal is to make The trading capacity of the stable currency assets on the chain is even greater.” Gary's new project, Gotts, made such trade-offs and improvements in order to achieve the goal of becoming an electronic cash.

Stabilizing currency is one of the ultimate landing scenes of cryptocurrency

At present, the decentralized cryptocurrency actually has two of the three major functions of the currency, namely the transaction medium and the stored value tool, but none of them can become a unit of account . As a unit of account, the monetary value is required to be stable. Gary believes that this is a big problem that hinders the application of cryptocurrency payment. "Because the currency is unstable, how to toss the currency circle is only a small circle, because the general public cannot use it in daily economic life, or it is impossible to use cryptocurrency on a large scale.

Stabilizing coins have a huge application market. One year after another, emerging stable currencies emerged, and stable coins were recognized as one of the market infrastructures. From the data of CoinMarketCap, the stable currency is indeed the closest type of cryptocurrency with stable currency value. In other words, its currency price has the lowest volatility, especially the legal currency stable currency. USDT, USDC and TUSD have an average daily volatility of less than 1.5% since the beginning of this year. In the mainstream currency, the price of BTC has the smallest average daily volatility, but it also reaches 4.25%, ETH is about 5.36%, and EOS is 6.46% higher. The price of anonymous currency fluctuated more daily, with the smallest DASH also 5.37%, the highest BEAM reached 13.07%, and Grin also reached 10.92%.

Gary believes that the discussion of stable currency must first be seen as an application scenario, and it is the ultimate application scenario of cryptocurrency, and then to analyze various technologies. “The stable currency in the market is either 1:1 illicit legal currency or mortgaged by other cryptocurrencies. The collateralized stable currency has a series of problems, such as centralization risk, liquidation when the collateral assets change price. Risk, asset utilization efficiency, etc.. So until now, all stable currencies are mortgage-type stable coins, and the exploration of unsecured stable coins is still very limited. In addition to a failed attempt by Basis earlier, there has not been a successful project yet.

"This is also why I want to try and break through in paying for this most important application scenario. I hope to create an ultra-lightweight chain based on MimbleWimble that supports the distribution of a series of decentralized non-pledge stable currency assets. Conveniently expand and maintain some privacy features." This is the goal of the new project Gotts.

In Gotts, any user can convert the equivalent of the stable currency in the real-time price of Gotts's local currency assets at any time. Through the "transaction issuance" mechanism, the free economic behavior of the free market determines the circulation of stable coins. There is no systematic mandatory inflation or deflation. The whole process does not require mortgage. It is completely the user's free "transaction" behavior. Gary revealed that this year should be online test network.

Pure community-driven model is not conducive to winning in modern technology competition

Grin is driven by a full community, especially in the currency circle. Gary, one of the main development contributors and a member of the former Grin committee, believes that the pure community-driven model has many advantages, but it is not easy.

The advantages of pure community-driven are mainly reflected in community construction. The most respected part of the blockchain is decentralization and community governance. The higher the community's popularity, the higher the participation, the better the governance and promotion of a chain. For open source projects, Github's followers and total number of developers are an important dimension in measuring community sentiment.

As of September 24, according to Github's statistics, although Grin is the latest one, it is the most popular among the six mainstream anonymous coins, with a total of 4,401 people, followed by Zcash and Monero, with 4,071 people respectively. And 4013 people are concerned. But based on the MimbleWimble agreement, only 456 people are concerned about the competition project based on corporate operation. Pure community-driven Grin is popular.

In terms of the number of developers, pure community-driven Grin has 136 people involved in the development, although significantly less than the old projects such as Monero, Zcash and Dash, but has more participants than Beam and Zcoin.

Although in the long run, pure community-driven projects are not problematic in attracting developers, development efficiency is insufficient. As of September 24th, from the number of historical code submissions on Github, only 22 developers had 6111 submissions, and 136 developers had only 2145 submissions.

According to the latest data from the Github codebase in the past month, although Grin has a large number of developers, it is far lower than Beam in terms of submitted updates. As of September 24th, the Beam development team has submitted more than 40,000 new and 10,000 cuts in the most recent month, and the code update is very active.

"From a competitive point of view, the power of relying entirely on the community is not enough. " Gary said, "although I wanted to attract more developers to join through propaganda and appeals, I have not received too much. Feedback, because Grin doesn't have a foundation, no money, people work for the community, you can't give any return.” Now Grin's development mainly depends on donations, the donation is not large, and it is only used to give two full-time developers. Pay wages.

So Gary believes that purely community-driven projects have many advantages, but they are not easy to come by. If possible, at least one development foundation can support development and the rapid advancement of ecology can obviously develop better.

Reference: Gotts Github