COMIT: Bitcoin-Monero Atomic Swaps are Near

this week on monerotalk is sponsored by cakewallet store send receive and exchange your monero and bitcoin safely on ios and android 2. cake wallet is open source and you always control your own keys and seed cake while it is trusted and verified by the monero community monerotalk has also made possible contributions by viewers and listeners like you this week on monerotalk douglas tuman interviews philippinish of comet an open protocol facilitating trustless cross-blockchain applications that will soon be launching an mvp for performing atomic swaps between bitcoin and monero atomic swaps between bitcoin and monero are highly anticipated as a major development in crypto making monero even more unstoppable than it already is with a decentralized method for trustlessly exchanging between bitcoin and monero narrow talk starts now all right phillip thanks for coming on man or phil i'm sorry alright thanks for having me doug so uh how's australia man how you doing over there good good i think we've been quite lucky especially with the current situation everywhere else that's good down here yeah what what is the corona situation over there is it is it similar to everywhere else well how are you guys handling it over there um it's very right now if you go out on the streets you wouldn't even realize that there is quit that court is still a thing like last friday the bars and restaurants they were packed huge lines everywhere and i think we didn't have a case for three four weeks something like that um but okay before that if there's a single case then they lock up everything and everything gets shut down yeah i'm not allowed to leave to stay not allowed to travel uh we were affected by that around christmas there were a couple of cases in the northern beaches of sydney and then yeah christmas was a bit different i would say than usually yeah just staying at home and not doing anything yeah new york yeah you can't complain it's really good okay yeah well you guys are in summer time over there too right so yeah exactly yeah yeah um new york is unrecognizable right now unfortunately it's pretty sad it's pretty sad it is yeah i i think this spring will start to get back to normal i'm hoping what's that i keep my fingers crossed for you yeah you too man i'd love to go to australia by the way um what's the scene like over there what's the what's the crypto scene like in australia what's the bitcoin and in particularly the monero scene like in australia very small i would say um sometimes last year especially bitcoin and ethereum is relatively big and last year the bitcoin community started the socratic seminar series and that's in my opinion became a big thing especially in the crypto space cryptographer space compared to other socratic seminars that one is very very technical and we have a lot of cryptographers there and discuss cryptographic protocols um we used to have quite a few ethereum meetups i lost track of these and especially because you couldn't meet in person right last year i know that there are some happening online but i haven't followed a follow up on these and monero i have to be honest that it's i don't know much about the monero community here in sydney really we gotta get you gotta get that going man well monero community is uh is always pretty secretive right it is it's online right everything's happening online yeah these guys on irc and matrix and yeah it's kind of funny i feel like monero is struggling with that a little bit balancing it's you know uh private nature versus the need to to market uh we're seeing that a little i don't know if you saw um they put out a couple of guys got together in the monero community and they they were trying to reach out to elon musk oh yeah i saw that yesterday years ago yeah exactly i think it's an interesting idea you know to get his attention um basically trying to get elon to offer to accept payments in monero for for tesla and then they threw in this hole we'll give away i think three teslas to uh charities that the community chooses but the monero community you know unlike the bitcoin community or the doge community um like it became controversial almost like why why are we trying to market why are we reaching out to elon i'm personally okay with it i think it's necessary at the end of the day you know you could have the best technology in the world uh you know we could we could build something that's that's perfect digital cash perfect digital gold but at the end of the day you still need to make sure people are aware of it right the market needs to know that that information exists that that product exists what's your take on that i totally agree um i think monero is kind of the underdog it's relatively unknown in the crypto space if i adhere to to non-coiners so my my old friends they're like bitcoin is in the news they immediately call me like should i buy should i buy but if monero they're like i don't know i haven't heard about monero why should i care about privacy so actually yeah i think it starts with the need for privacy and i found a quote some time ago which says some people want privacy but everyone needs privacy that's the that's the kind of thing right you need privacy only if you really need needed right right so monero is kind of filling the niche in the cryptocurrency space and it's relatively unknown for now yeah i feel like uh people just don't realize it until it's too late you know so i think the market at large is going to start to realize that the the intrinsic need for privacy especially in money so are you are you primarily a bitcoin guy are you a monero guy what's what's your um i try yeah we try to be coin agnostic but um i'm more i hold more bitcoin than monero and the first thing i had was bitcoin so i i fell into this rabbit hole with bitcoin which is quite a while ago okay yeah i started as a bitcoin guy and then made my way into monero uh i i won't exhaust the reasons why i say the same thing all the time on this podcast but so you you guys decide you're building atomic swaps or uh a version of it a way to basically uh seamlessly transfer between monero and bitcoin in a trustless manner and so why did you guys choose monero why why are you working on this project why do you think it's important why not atomic swaps between bitcoin and you know litecoin which i'm sure would be much easier or you know bitcoin and ethereum if that doesn't exist already i love this question let me take one step back so the core blocks we have our companies called koblox develops the combat protocol to achieve our vision which is to have an open financial system which is truly inclusive and censorship resistant and we thought that by connecting all the blockchains with each other we can achieve this exactly this future because all the blockchains they work in an isolated manner and we have different financial ecosystems evolving on different blockchains like ethereum the default world or we can take tron as well and bitcoin completely decoupled and monero completely separated as well so we started in 2018 by connecting ethereum and bitcoin using htlc's like hash time log contracts but this technology has a huge downside and that is that you use the same hash on each chain and then some third-party monitoring both chains can link those two transactions with each other and then follow word and money flows so if you want to change bitcoin to ethereum you lock up some bitcoin and someone knows all right this was your bitcoin wallet now we link the transaction on ethereum and you take your ether out to your new address and now we know where your ether is and that's terrible for privacy and especially censorship resistance and non-discriminating way because now we can make yeah exclude certain people so sometimes last year we then said all right let's make privacy the most important thing of our protocol and we started connecting grin and bitcoin and for that we had to learn more cryptography like because grin had doesn't have script support so we had to use some adapter signature magic and connect it with bitcoin that worked out pretty well and then joel cooker presented at uh 3363c3 and his protocol and we were like cool so you can connect monero as well um we knew about the cryptographic primitives but we didn't figure out the gaming theoretic of game theory of the protocol and yeah then that's when we started last year i think around november to connect monero and bitcoin which was always our main goal monero bitcoin at privacy preserving atomic swaps that's like huge that's really yeah i it's super super excited that you guys are working on this i mean i i kind of see it as you know one of the the major pillars of what crypto will be i mean you guys are creating um a major part of what the future infrastructure will be i hope uh and i think a lot of people a lot of true bitcoiners and monero enthusiasts i think see it that way hopefully what's the difference between commit and some of these other ones that we're seeing now and this is great that we're seeing i don't know if you want to call it competition but we're seeing a lot of different people now trying to work on bitcoin to monero monero to bitcoin atomic swaps what's the difference between what you guys are doing and somebody like farcaster is it essentially the same thing just different methodology what's going on there um it's basically we try to solve the same problem but have a different approach um i really like how the forecaster project tries to solve the problem because that's exactly the same way how we started in 2018 we thought that the comet protocol should be comparable to the ip tcpip protocols it needs to be open source needs to be freely and publicly available for everyone so we started with designing rfcs and specifications for network communication tried to standardize the the contracts the smart contracts on chain and so on and we we heavily focused on the developer our goal was to build developer tools so that other developers take our protocols and our libraries and then integrate it into their products maybe like an exchange who wants to become a trustless exchange um or a wallet to like allow like that monero 2 approach where you seamlessly can send monero to a bitcoin address but unfortunately we realize that none of those developers came maybe the space was too young or it was still too complex so we thought we need to take a different approach and that's where we are right now we think that we need to build mvps to showcase what our protocols can do get users out there using it optimize the protocol to have a good ux and then we think that this will attract developers who then can take our libraries and they will have different requirements of how they would like to use it and yeah so basically that's where we are we build an mvp to put it out there and then hope that developers will jump on this train and think cool hey they guys they they build a cool open source protocol they have users out there they're traders they have uh tools to support market makers and so on we want to build that into our product and then that's the time when we need to turn around and say all right for supporting different use cases we need to have a clear specification of the protocol we need to standardize network communication between different implementations and so on so that's the difference between our approach and for example the forecaster approach they take the bottom up approach where they start with the specification right now and then implement it while we just implement it for the most primitive version and then once this is established and proven we can then go down and define the protocol i actually love that you're taking that approach i mean i feel like that might get us to the you know the finish line faster right that's traditionally how things normally evolve um there's a need you're building an mvp to fulfill that need so what actually let me step back for a second before i i was gonna ask what is the mvp what's it gonna look like um but stepping back what is kind of the business model here what is keeping you guys going other than you know uh this dream of you know cypherpunk dream of connecting bitcoin and monero or is it just that or is there is there how are you guys running are you guys just running on hopes and dreams here or is there is there a business model number go up it's not a business model no it is tell me is that what what's keeping you guys going um what's the incentive well the incentive is that the dreams of building the open financial system that's for sure but obviously that dream won't feed you right it won't pay your salary so similar to the tcp protocol we think that the monetization needs to happen on top of what we built um our expertise is in is in building decentralized applications and protocols and the money can then be made with a product on top of it so let's take the atomic swap protocol between monero and bitcoin and we could just build trader software like taker and the maker tool and put it out there and then run our own maker and that could get us some profit back into yeah into our own business so you guys will be in the best position to to be the first ones to do that as opposed and it's going to be open source anybody will be able to come in and do that but you guys yes yeah and the ones that are creating the actual protocol will be in the best position to do that that's great we have a small advantage over others because we have the expertise of building it we built it but everyone should be able to just run it and if i think there's it's similar how the stock market started initially the electronical one and where the experts they built the infrastructure and then they just split up all over the world became experts and started all of those different companies and they had this little edge always there's little edge and that's how they kept profitable we think we can run a similar approach but it's a bit further away amazing um so what is the mvp what will the minimal viable product look like the for this first version of of commit the the use case follows more a otc trading style so right now we have a single maker single market maker and you can you can compare it to like um a shape-shift approach you have a nice website you see a single rate and you can then take it or leave it right now we don't support traders to um we don't allow traders to create their own orders that's always the market maker so it's like you have one maker we call them service provider for example just service provider and he offers to their customers trading more narrow to bitcoin and that is that the more the smallest use case we can achieve but eventually we want to get into the pure peer-to-peer trading where you don't have to connect one single market maker um because that's still not fully censorship resistant right that market maker can still decide on who can connect to them or not so yeah it's an otc style trading solution for bitcoin and monero and are you teaming up who's that market maker going to be are you guys teaming up with somebody who's already in the market are you guys gonna you're you guys are gonna be that um we as cool blocks won't probably one not will not run it as a market maker um but every one of us individually might or might not there are certain legal restrictions attached to running such a service i would say so as a business itself it might be it's not our business model to run it ourselves but yeah we put the software out there and our current status is that we can swap on public stage nets stay on the monero stagenet and the bitcoin test net so everyone can just try it out and once we are happy and it's stable enough we can just put it on mainnet and then anyone can run it so i'm a i'm a hardcore monero guy in that you know i love monero i understand you know the the overall architecture of it but i'm not a very technical guy so you know i i'm pretty i use cake wallet you know i i don't i don't i don't even run a full node those in the monero community are probably you know shocked by that but i just don't and uh i think there's a lot of people like me that aren't really super technical when does this get to the point where a guy like me is using this in my everyday life to swap between bitcoin and monero are is that uh you know months away years away what is that going to look like it's going to be like potentially integrated into something like cake wallet or local bitcoins what what is it going to look like and when can we expect to see it i don't want to make any falls promises false hope there just generally it's it's months i would say not weeks so it's gonna be a while um right now we focus on crypto native crypto experts and we require people to use the monemera rpc wallet like the default wallet which comes with your node but you don't have to run a full note yourself the thing is that from due to technical limitations we use some features which is only available by this wallet and in order to be more open with other wallets like cake wallet we would need to change something in our protocol i didn't want to go too deep into the technical so just leave it as high level as that okay you could get into it a little bit more you want to get into a little bit more i'm sure we have some pretty uh high-level listeners here i may not grasp it all but uh maybe give it a go a little bit sure sure so the the atomic swap is when it's finalized the party on the monero side learns an additional private key and this is a multi-sig private key so one party you have one part of the key first and then he learned another key from the other party through the face of the atomic smoke and these need to be combined and then you need to create a new wallet and that is the tricky part so right now the monero rpc wallet has this functionality to create a new wallet from secret key and that's basically all you need we could easily get around this with an additional transaction so let's but let's take one step back because that much is all these cheaper-ish you need to understand the whole atomic swap protocol so that it makes sense so you have uh two parties right one on monero one on bitcoin and the bitcoin side needs to lock up funds first then the monero side looks up funds and the monero side holds the secret to redeem um the bitcoin side and one if he does that he reveals another secret so that the party on the bitcoin side can take the monero now the cool idea of this protocol is that you do not have to spend the monero immediately because you are the only one who holds both keys now and we just import this private key into your wallet and then you can spend it whenever you want to do it a simple solution would be to just add another transaction and create this spend this money into your personal account like a cake wallet or so but that would involve another transaction and transaction fees which we will try to avoid so in order to integrate it into a cake wallet in the most efficient way we would need to have deep access to the cake wallet features to be able to import an additional private key so that it shows up in your wallet hmm okay very interesting so so maybe the first ver might even be its own new wallet somebody who's really right looking to to get it off the ground might start a wallet from scratch that's built with that integrated in its base that's interesting so how about just just sticking with atomic swaps for a second on how it works um what essentially compels people to go through with the transaction or actually i guess what happens if one side bails out uh how how does that work so what what keeps the uh what's the game theory there how do we make sure the transaction all goes through and everybody plays appropriately yeah that's that's exactly the game theoretic part which uh joe gooker found out uh kudos to him so the by definition atomic swaps have to be atomic in a way that either both transactions go through and both parties receive the other ones funds or you have a rollback and you get your money get your money back so i said the bitcoin party looks up month funds first and now if monero party never moves forward then he can always recover with a refund transaction after a certain time period and then if the monero one also locked up funds but the bitcoin side says hey i actually do not want to move forward actually it is not 100 correct sorry and the narrow side doesn't redeem then the bitcoin side still has time to refund and once it refunds he also reveals the secret so that the monero side learns his the refund secret and can take back his money as well so there's a a couple couple between coupling between the redeem where a secret is redeemed for taking the other party's money and the same for the refund where you roll back and you get your money back and these are linked together so as long as both parties are online at all times they will always get their money back beautiful how do you see this practically affecting the market and the relationship between bitcoin and monero um i hope that we see all of those trading volume from centralized exchanges to move to complete decentralized exchanges um this might be a little bit further down the rate but i personally was affected by an exchange hack in in 2014 relatively unknown exchange back then and i don't want anyone else to experience the same thing it's it's just like you sit there and you can't withdraw your money and you're like why everyone warned me everyone told me just put it in your cold storage and you'd had some amount there to trade and then yeah money is just gone so we want to protect the users to not run into this problem and allow them to just trade outside of centros exchanges completely trustless and i think that would make a huge boost in trading because some people just cannot trade monero right it's not available on all exchanges if you take japan for example they don't have any privacy coins australia they don't have any privacy coins on on centralized exchanges so if they would want to buy monero if i want to buy monero today i have to go to local monero and that's always based on trust so i think with this protocol we can increase the trading volume between bitcoin and monero and allow anyone to trade with a high security and privacy how would the fees work i don't think we spoke about that actually how would the fees work as opposed to a typical centralized exchange or i'm a bit different because by the nature of this protocol you have multiple transactions and you need to pay transaction fees for this so there's this involved and the maker itself himself might also charge a certain fee for his rate but that's his business model right do you think it would be a premium to what you see on centralized exchanges or it'd be less how do you think that would work economically that's a real good question um we will need to see how it works out um i would assume that it will be slightly more expensive than on centralized exchanges because one business model for those makers is to just arbitrage with centralized exchanges and just add a small spread on top of it and from what we understood from normal users they are fine with a certain extra pay and extra pay in certain extra because they get trustless trades for that and they get the privacy for that um ideally we are better than and lower than centralized exchanges but then it might not be profitable for a maker anymore and then you know you have monero purists talking about the fact that you know they're not gonna you know this is great sounds great in theory uh excited about it but they're not gonna want to trade their clean monero for dirty bitcoin and you know this seems like the perfect arena where that's gonna take place where somebody would come here as opposed to a centralized exchange they would use something like an atomic swap to uh you know get rid of those dirty bitcoins without any kyc aml what's what's your what's your thinking there how do you think that's going to play out and it is that's an interesting topic um there are quite some let's call them tainted bitcoins out there and you might not want to hold any of these and you could that's that's a business model of chain analysis and so on right there are also open source solutions out there which flag just the set the utxl set and you could integrate that into the swapping protocol so that um you just automatically reject any money coming from those addresses personally i wouldn't be too worried about this because i don't do day trading anymore i just buy to invest and just hold and i think that by the time i'm willing to sell the problem of painted bitcoin has been resolved so there are different solutions like samurai wasabi or protocol we developed the a2l protocol which allows you to mix utx all steps on bitcoin and that's how you could get rid of tainted bitcoin but yeah for the normal user this might actually be a problem and you don't want to be in the situation where you did a monero to bitcoin swap you received some bitcoin and now you send it to an exchange to cash out and they like hey hey where did you get that one from so it's it is a problem yeah yeah maybe it will open people's eyes a little bit to you know what what makes monero valuable at its core you know the fact that that it can't be tainted what is your opinion there i i mean we talk about the this topic at nauseam on this show but what's your take on on the current state of affairs in bitcoin verse monero in terms of the fact that bitcoin can effectively be tainted monero seemingly can't i heard you say you think of eventually that won't be an issue but i guess what's your current take on that yeah right now monero definitely has the advantage over it with the ring signatures approach this is just yeah technically advanced over bitcoin bitcoin is catching up slowly but it's not yet there taproot is one step further to make transaction a little bit more private it's not completely privatized in monero you still have addresses you still see the amounts um but i think in the future they should be on par and then it's a matter of preference which which you want to use it will i think bitcoin will never be as private as monero that's just all right that's what i was looking for that's what i was looking for we'll make that the quote when we uh when we post this show actually we probably will um thank you so much for coming out man where can people or what can the monero community do obviously they want to follow the project but is there anything that the community can do to help push this along is there any is there anything that can be done to help help make this happen definitely so we said we're working on the mvp right now which is just about to be finished so on that side we're looking for users to try it out to test it give provide feedback see to verify that the use case is worth to pursuing further and if there are developers out there for cakewallet or other wallets who are keen on looking into grading such a swap solution they should also reach out to us now that monero told this to disappeared and there is a gap to be filled and maybe this trading this atomic swap protocol can fill such a gap and then we need to focus on what's really important for us on the protocol and developer tools and the specification and yeah how should they reach out to you guys um we are on reddit read regularly on raider to post our updates there but we also have our public chat on matrix which is just comet i think let me just look it up matrix comet yeah it's just comet we have a few different combat based chat there is comet monero and comet is the general one to just land in there and then we we forward them to the different projects we are running having any of the wilds reach out to you at all about this yet i would i would think they would um we have someone i'm not sure if i can mention it right now okay no worries well that's good that's good that that's happening all right is there any way for people to follow you and learn more you know follow you in the space are you on on twitter and anywhere else yeah uh we have the comet network handle on twitter personally i'm also on twitter called bonomart and we also have a mailing list the comet dev mailing list which is more developer focused i can share you the links later on if you want to put them in the description of the definitely yeah definitely send us those links all right phil thank you so much man this is good this is very exciting mineiro can you eat this up this is you know what we've all been waiting for so i'm super hyped about this thanks again man thanks for your hard work thanks for having me all right cheers see ya i'm joined bye all right so so we had ended the conversation i ended recording and then phil and i were talking a little bit more and he was telling me a little bit more information about what we could expect and actually i thought it was important to to capture this so phil you want it you want to explain yeah sure so right now the atomic swap protocol between monero and bitcoin requires the party on bitcoin to move first but that means that this party is subject to the draining attack which means if someone wants to swap with let's say the two of us do an atomic swap and utak you will lock up funds on bitcoin first then i can always bail out and you know you can get your money back but you pay transaction fees for that and that's the draining attack so like enough people come to you you just keep burning money and you don't get anything and the issue is that um the protocol is designed in the way that if the monero money is locked up and bitcoin never moves then you never learn a secret and you never get the money back on monero so in order to overcome that we develop a protocol which is drawn up there right now and which allows you to lock up the funds on monero first but for that we have to implement adapter signatures onto monero's ring signatures which is a little bit more complex mathematically said and we need to have more access deeper access to the wallet and yeah this is currently in the phase of being development develop and we're working together with an academic partner in austria uh university of vienna to vienna sorry to be correct and yeah that's that's going to be a game changer because then you can have a market maker who offers both directions and this is basically needed to run an exchange whether it's a centralized or decentralized exchange so when the nvp launches it's is it going to have this additional component or you guys are going to launch for just the ability to to lock up the yeah no not yet so right now we start with only one direction and start from scratch in parallel with the new protocol and then once this is stable enough because we need to do some more cryptography on this protocol then we merge it together and then you have both directions in one tool all right i'm glad we jumped back on i think the community is going to enjoy hearing that thanks again one last one last thing on that actually we wrote a paper about it and i did not publish it on the monero isc i think i only forwarded to the forecaster project but there's a paper about this yeah if you provide us that link we'll put that into the show notes as well and uh like like i was saying i would love to have you come back on so if you guys make any further breakthroughs or progress in that i'd love to have you guys come back down and talk about it definitely yeah looking forward to it all right man thank you thank you thank you for joining us on this week's episode we release new episodes every week you can find and subscribe to the show on itunes spotify stitcher google play youtube or wherever you listen to podcasts and if you have an alexa device you can tell it to listen to the latest episode of the monero dog podcast go to subscribe for a full list of places where you can watch and listen if you want to interact with us guests or other podcast listeners you can follow us on twitter and please leave us a review on itunes it helps people find the show and we are always happy to read them so thanks so much and we look forward to being back next week

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