Monero’s Organic Growth w/ Core Team Member ArticMine

this week on monerotalk is sponsored by cakewallet store send receive and exchange your monero safely on your ios and android 2. cake quality is open source and you always control your own keys and seed and by xmr.t.o anonymously exchange your monero into bitcoin and seamlessly send monero to any bitcoin address go to xmr.t.o or use it right in your cake wallet cakewallet and are trusted and verified by the monero community monero talk is also made possible from contributions by viewers and listeners like you this week on monero talk douglas tooman interviews francisco cabanes aka arctic mine for those of you that are new to monero francisco is the man he is a monero core team member that has been actively researching and investing in cryptocurrencies since 2011. he holds a phd in physics and is an expert in the field of cryptocurrency scaling specifically monero's elegant dynamic block size architecture he is also at the forefront of understanding how regulators will likely deal with crypto douglas gets francisco's opinion on monero's all-time high transaction volume and how manero is built to scale the us treasury's proposed crypto regulations and the delisting of monero and recent node attacks they also discussed the exciting upcoming monero improvements like increased ring size and whether the mainstream's recent witnessing of how big tech can censor a president and political groups will help people realize the importance of censorship-resistant digital cash nero talk starts now all right francisco thanks for coming on thank you 2021 um how you feeling about monero these days what's your uh your quick take on monero uh right now uh it's under attack but that's doing really well uh i think uh one of the major threats that monero faces right now is attacks by certain companies that weren't engaged in blockchain surveillance i mean we saw a major drop in the price as a result of the listing so that's the negative but overall other than that it's a phenomenal it's strong everything is really strong yeah i want to go through a few things with you um sure uh you know the the growth of the network which we're seeing i think through data of increased transaction volume uh regulations right we're seeing a lot a lot of activity there um uh the d-listing uh the network attacks like you're talking about and uh what else and i'd also like to talk to you about just this idea of the mainstream i think be becoming more aware of the importance of censorship resistant technologies so uh if you wanna if you wanna kick it off we could talk about the increased adoption we're seeing is there is there real strong data there that's showing increased usage of monero yes there is and in fact if you look at the data over a two to three year period you really get the trend now there's a fair amount of fluctuation um but if you look at the trend yes definitely there is a increased adoption and i suspect increased retail adoption that is going on the network that is very clear uh if you look at the trends the one of the difficulties with of course with the uh an encrypted network which we have everything is that sometimes hard to tell what's going on but if you look at longer term trends we'll get i get the picture now related to that of course as you know i work a lot on the scaling side of monero uh i've been working on an issue called issue 70 and mrl which was looking at how the monero network would respond to a crisis which at the time this was just before cobit was very similar to corbett and what happens if you suddenly have a sudden drop in activity and how you would do that and how it will respond and protect itself against that and uh part of the idea is that i pretty well got a finalized proposal for that uh involves um effectively using the long-term median as the penalty-free zone from a technical perspective but if so you don't get a wild fluctuation in fees if for example network activity suddenly drops by a factor of 20 because of an external event i.e a virus epidemic and uh interestingly enough um what we saw during the attacks is at one point it was a drop of about 65 percent in network activity through frustration of the nodes so this kind of thing would ensure that once you you know the community responds to the attack then you don't create a long-term problem you've got to rebuild along to medium the short-term medium back up again okay okay so this was a technical issue that we identified it's not a problem now because we're not outside of the penalty free zone so there was some listen and sort of urgent but something that needs to be addressed and because essentially right now i mean if you drop the network activity in monero by a factor of 10 fees don't change because we're still in the penalty-free zone but let's say we were at a hundred times the penalty freezing and you drop the activity by a factor of say 50 then you would have a sharp increase in fees and the recovery phase and not only that it could potentially take like a year or longer or even longer than that for a factor of 50 at the cost for it to recover back up again so yeah so this is a important subtleties in the long term medium that and this is what i've been working on and and i pretty much have a uh uh pretty close to getting a proposal out on this okay that that that's not something i was even aware of uh that that's a very interesting uh concept so you're you're working on that now and you're gonna come up with yes it's pretty well done i'm expecting you to have it really out fairly soon um the uh basic principle is that we have to stabilize the fall of the long-term medium uh and also we have to stabilize the to prevent the fees from collapsing and we have effectively to use the long-term medium as a penalty freezer and that would address the problem effectively so then you don't see a sudden drop like that okay uh with with this just so i could understand better and the people that are tuning in uh with the increased volume transaction volume volume we're seeing now uh are we are we seeing dynamic block size in action no not yet uh we're well below that we're about a third of the dynamic block size where even at the peak uh so we're significantly below the dynamic block size that's why this hasn't been an issue and that's what you mean by that yeah that's the thing but if we go into say let's say 100 times our existing transaction volume that's when this issue that was raised in issue 70 in mrl becomes really a problem i understand i understand okay that's important so we we could be approaching that that pretty soon i would expect within the next year all right um and you know one criticism that we always hear uh you know it from the crypto community regarding monero is the fact that it has dynamic blocks uh and that it can lead to large or big blocks uh that could lead to issues with being able to run nodes uh being able to propagate through the network uh just for anybody who's listening now i know we've talked about this in the past but what is your response there to people that are critical of monero and critical of the fact that it could lead to large blocks that could lead to essentially centralization of nodes because you know it's going to take a lot of memory to run to run a node at that point okay i'm going to pick my example response to this is of course nielsen's law and nielsen's law addresses bandwidth and bandwidth would be the strongest limiting factor that a home user a small business user would have the home enthusiast you have a lot more control about your cpu power but you're limited with how much bandwidth your the best plan you can get into your home it is double it has increased by a factor of one per um fifty percent compounded pretty well since the eighties to put this into perspective if i was to have a one makeup amount makeup uh bite block in 2010 when um the uh one megabyte block says introduces the bitcoin that would be equivalent today it's actually more than that it'll be equivalent say in august of last year to about 57 megabytes today so this is the kind of numbers we're talking about we have to bear in mind that technology has not remained static and it's not remaining static so this is the argument you have a gradual increase you're going to meet match technology and the reason i picked the 10-year period is because that's the length of the block size debate in bitcoin so while everybody's arguing this very point the gold booths are moving and they're still arguing and the gold's post will continue moving so yes in principle if you really started to push it in an insane level it could happen but another 50-fold increase so we're talking visa transaction rates so this is not you know something that isn't happening if you really want to go back in history you can go back to the original credit cards when they came out in 1949 or because first issued in 1950 and take a look at technological change since then monero scales way better today than dinos club did in 1950 or even visa did in 1960 in terms of technological advancement keeping up with the rate of increased adoption absolutely i mean if you look at earlier uh well i'm saying visa i'm talking the precursors to visa which would be bank america uh and then and then followed by barclaycard in the united kingdom uh then they became visa but this is what i'm saying is if you look at the history of adoption of technology yes at the early points the the the growth you know you may not be able to sustain it without technology but then as you grow the protocol has to support it and that's the key point about monero when you really get down to is there a limit there is of course and uh the the article a lot of people have has been dismissed a lot as peter risens and he's one of the bitcoin cash supporters actually and he claims that you would have a dynamic feedback uh effectively an extra penalty term due to uh orphan blocks we're not working close to this right now but that will create an actual limit in that miners would have to uh increase their fees in order to compensate for the probability of open blocks but we're not even close to this and and the dynamic nature of the block size accounts for that there's a price to increase the volatile blockchain you can't just go and blindly spam it even as it is and and that's kept in balance so no i would argue that uh gradual growth uh it's definitely very sustainable because of ongoing falling technology in in it and again i go back to it here's the people in the community they've been debating this for 10 years the globals have moved already right ten years from now we're already seeing it happen that that technology is advancing at the pace of adoption um i know i know i've asked some of these questions in the past but i'm asking them because i you know i think we have a lot of new people that are looking out for our students or concerns that are coming up uh as as you know people make that natural progression from bitcoin or wherever into monero these are the questions they have um what so another one that i think i've asked in the past what would monero look like or would monero be capable today of of handling the transaction volume that bitcoin is currently handling easily um and again in some cases it'll be easier to run a monero node than a bitcoin node and one of the problems with the bitcoin network as it stands right now so it's very vulnerable to spam attacks where you flood the network with transactions that are not going to be mined i mean i run bitcoin no so i see this myself my way suddenly shoots up like crazy it's not because there's more transactions in actually being mined it's because all the the the they call it the memory pool which we call it the transaction pool it's been flooded all these spam transactions and and one of the reasons they do that is because the student dynamics where it's cost effective for a miner to spam the blockchain in order those fees to go up and that actually is a major problem for the node so you can actually have a major sizable rise in bandwidth or a bitcoin node without mining those transactions so in many respects it'd be easier so yes no problem at all i don't see that being an issue at all what would monero transaction fees and transactions per second look like if we had the current adoption that bitcoin has transaction fees would well i see the question is in terms of monero or something in terms of monero you know if theoretically uh the the user base that bitcoin has was ported over to monero uh what would that look like today in terms of transaction fees okay in terms of transactions per second transaction fee the minimum transaction fee the limit is basically false as the square of the block size so transactions fees will go down actually the this is the other dynamic that's important now when you see that what's in the bitcoin network it's a subtlety here and a very important certainty there's a lot of activity on the bitcoin network right now that's going on on centralized ledgers or the major exchanges and i did a study on this i looked at this issue and if you look at metcalfe mccarthy's law if you take a network and you look at the price of the network and it goes to say the square of the network or maybe linear for for the equation of exchange whenever it's about 1.69 i think when i calculated over five year period bitcoin if you take a period from 2010 to 2015 five year period you get roughly 1.5 that's the exponential growth rate if you go from 2015 to 2020 the next five year period you got closer to uh like a quarter an exponent of 4.4 something like that the reason what's happening is this huge growth in prices no increase in the blockchain this economic activity is actually being shifted on the centralized ledgers of major exchanges so if you're going to get the center of economic activity on the monitor blockchain your chances are you're going to get significantly greater transaction activity on the chain itself because we would also be capturing that uh monet that activity that is going off shane and bitcoin not in lightning network not in liquid not all these other things but actually on the ledges of uh for example coinbase or crack and some of the major exchanges where this is happening and it's a subtle issue because uh not before the regulatory questions give it uh the there was a response by um coinbase they were quite upset at the uh community officials trading commission they suddenly said you have to settle on chain and they say we couldn't do this and the reason they couldn't do it because their volume was greater than the capacity that the the bitcoin blockchain could handle so got to be a bit careful here what we're talking about because there's a lot of economic activity of shame yeah i you touched a lot of things there and so anybody who's just learning about monero it's really important i know and understand because uh i mean just just that that that fact that you know the fees will essentially go down as the network grows i mean that's that's something that is beautiful about monero it really is built to scale and you know there's been if you're if you're often in bitcoin world you're kind of seeing uh the opposite argument people believe that monero for some reason is less scalable because it it deals with privacy and it has this extra load of dealing with privacy you know the transactions are essentially heavier uh but as the the system as a whole is built better for for scaling is that is that fair that is correct yes another if you actually want to compare a transaction in monero transaction and bitcoin right now it's gonna be over five to six times bigger in in transaction size but keep in mind there's also you've already built in the price there's a lot of stuff going on the bitcoin network that aims to engage in privacy minutes are using coin joints mixers all this other stuff that's just going to push that load also so it's a bit a misnomer that you're not factoring in privacy the key point though is that the fees go down and they go down basically in terms of monero at the minimum fee it's going to go down as far as the square of the block size so actually falls with the square of the block size and and the reason for this is because of the way the penalty function works if you want to have a minimally mineable fee that will actually expand the block size it goes down to square and what happens is that if the price in terms of uh let's say in terms of constant value usd of monero it stays within it doesn't grow faster than a quartic that's in a square so it doesn't go into something then of course you have essentially a constant fee in in say constant u.s dollars like say 220 21 u.s dollars you know the federal reserve can't print in the future basically but that's the key point so so if you maintain that the the fee grows in that reasonable range which is what pretty much most of the other cryptocurrencies except for bitcoin is because it's been artificially constrained if the fee if the value grows within that then you will get essentially constant fees in terms of usd now there is a one-term reduction that we will see there's a couple of factors first of all once we until we get to scaling of course until we get to proxies scaling we're not going to see any a decrease in fees because that's set by the by that number one and as you hit that point the what we're now called the low fees is basically not going to happen because you can't scale so you have to go to the normal fee and this is somewhat going to balance with the fact that we're going down to tail emission so this is this the sort of initial condition situation but once you get into the scaling mode above three hundred thousand bytes then it's just basically the the minimum fee will uh can fall as low as the um square of the block size the inverse square block says when do you estimate that we'll start to see dynamic block size in action i think it's quite possible within the next 12 months but a lot depends on adoption or whatever but looking at the trends i think it's very possible within the next 12 months okay and just your your thought uh before we leave this topic with transactions do you do you think this is actual organic uh usage we're seeing real organic growth and usage or is this potentially spamming of the network uh what do you what do you see as being potentially the cause of increase in transactions i see straight organic usage uh the trends it's just too long it's been going on for too long uh spam it's very hot you gotta simulate the gaia demo you can't just spam you're going to create signatures and you're going to identify that and this looks very much like the actual network we've got to look at the long-term trend it basically is following a long-term trend that's been going on for two to three years we've seen organic growth in monero even during a bear market in overall in crypto and i think that's one of the factors i could i would say however there are factors that could cause a sudden search in the in in in activity the monitor network um so we could see a sharp rise uh and that's because uh so considerations and i'm looking at when i'm looking at the scaling formula also because you know the the dynamic the long-term median has to be able to to keep up with that for example um but as it stands right now uh the trend is organic growth it's not something else so uh you know you're definitely an expert in the field of uh you know monero scalability and understanding the architecture of monero but you're actually also very well versed in the regulatory aspects uh i remember when i was talking to you quite some time ago you had brought up concepts of the travel rule and this is before people were even really talking about it at all and how it would start to play a role in the crypto space um so you know i think you're very well worse versed on regular what's going on in the regulatory world what is your take on the cur on the rules that are currently being proposed by the treasury what's your stance there what's your take how are you currently seeing uh the regulatory landscape for cryptocurrency okay the first thing that's happened here i mean we did a submission i was part of the monarch policy work group uh we made actually a submission in response to that rule change by vincent uh and quite at odds with the majority of the industry we actually are supportive of it with certain caveats uh fundamentally the sound rule although their method was just the way they put it together and everything with respect to the timelines etc were awful but when you get down to the nitty-gritty what they were proposing it actually made a lot of sense now the other thing to bear in mind here is that there was legislative change by congress impacting this very rule in the middle of the rule-making process yeah you want to you want to talk about that a little bit what was the change that was made like the actual uh proposed the change that was made is they added to the definition of monetary instrument under the bank secrecy act um and what they added there was uh substitutes for currency or currency substitutes i think it's the wording and then they expanded it to all the other instruments things like checks and the other stuff and the bearer monetary instrument definition under the bank secrecy act now substitutes for for currencies a broader term that encompasses um convertible virtual currencies and also what they called legal tether digital assets so that is encompassing this so effectively what they did what congress did is they set the stage for this rule where the rule-making process was in in in in the making so you you you'll see submissions where people are saying wait a minute vincent doesn't have the the secretary basically doesn't have the authority to do this in the proposed rule-making and in the meantime once the rulemaking is going in in progress congress turns around and gives the secretary the authority to do this now the essence of the rule when you get down to what fincen is doing is to treat a cryptocurrency like monero or bitcoin for that matter the same as you would treat cash and you have similar limits you have similar requirements and this is the key point and then they may compar and then you make comparison a series of instruments which for somebody of my generation i have some understanding of what they are and we're talking about things like bearer checks i don't know how many people in the monero community understand what a bearer check is or they've even even issued one traveler's checks i've never used travelers shakes my father did i'm 63 years old um bearer bombs checks that are written where you don't put the pay name in you just write the amount and pay the order leave it black so anybody can fill it that's effectively a para check or a check that has been signed on the back by the payee endorsing it but without putting any specification on the announcement again creating a bearer check now the reason this is highly relevant is because when you talk about a cryptocurrency you're talking about bonnero you're talking bitcoin and you tell a bank for example or exchange pay more narrow to this person what you actually are saying is to this address sorry not to this person to this address pay more narrow to the holder of the private key of this address it's a bearer check whoever holds the private key of that address receives the payment so conceptually it's it's basically identical to a bearer check but we have an environment where the majority of the population people under the age of i say literally under the age of 60 have very little understanding of what a bearer check is and so you have this very um this this complete disconnect in the responses in many ways because honestly a lot of people you know it's like okay this is something they don't have if you're 22 or something that your parents didn't deal with either maybe your grandparents did and for sure your great-grandparents did and this is the mindset that we're dealing with so when you read a lot of the responses you got to put it through this filter i mean i got to sit back and think my grandmother was rode in a stagecoach in the city at the turn of the between the night around 1900 and was telling you what they were doing how switching horses at a certain distance and all that and this is about as relevant to them as this is to me yeah they're trying to apply well i mean crypto is is this new animal and they're trying to pro apply you know dinosaur regulations to to not dinosaur regulations that's the point it's a new animal that behaves very much like right in 1960 there's analogies that can be made to uh existing ways that we've transacted yeah but it's more it's actually closer monero is way closer to the economy in 1950 than in 2000 right and that's the point that and that's well that's the problem you know they they don't want us to go back to that 1950.

Right they don't they they no no i don't agree with that they're basically saying we're going to regulate the same thing with regulated in 1970. right but it seems like they're trying to ratchet it up now and and no they're not they're not that's the misconception and a great example of the misconception the reference ratchet up they're paralleling it so they're treating it the same way as you would treat cash or you would treat a bearer check well even with cash the even with that though aren't we seeing some additional uh you know with with with the the regulations as proposed uh aren't there different requirements compared to cash uh you know they want recording on any transaction over three thousand dollars and with cash it's over what ten thousand aren't there differences there there is a difference there's one fundamental difference and it relates to the treatment of the bearer check okay and i'll tell you what it is if i tell a bank to pay you monero what do i do you give me an address on your what we call a self-hosted wallet they call unhosted wallet and i instruct the bank to send monero for that wallet you actually get at the end it's equivalent to cash not a better cheque the difference is if i give you a bearer check in order to get cash you have to go to the bank and present it at that point the bank can ask you for id right and they have to ask you for id in this case because you're already getting the code cash they're asking for the information up front and that's why it looks like a new regulation but the covering the subtle point of the bearer check that when you cache a bearer check if you take a a check it's payable to you even if it's not even a bearer check you take it to a check cashing store for example they still id you they have to id you and if you take a bearer check payable to you you still have to id you well somebody check you hold you they have to id that's requirement is there so what they're doing is they say well let's put the id requirement at the at the point of issuance to compensate for the fact that you're actually getting the cash and the second step isn't happening and that's a key difference the three thousand dollars is a very standard limit pretty well everywhere i've seen it in a lot of other places yeah i know i know there's the 3 000 limit and then the 10 000 one they want uh for recording purposes right yes um but moving moving slightly beyond this i mean overall um this seems to have would have a a greater effect on coins like bitcoin than monero absolutely and and narrow and this is essentially i guess what you're what you're saying here because monero obviously is more like cash uh these regulations are essentially saying let's treat crypto currency like cash right and that's what we're arguing for right we if you're gonna implement these regulations on top of you know for crypto we want you to do them in the same way you you would do it towards cash and if that's the case uh it's gonna benefit monero in that you'll be able to freely use and transact your monero once you pull it off in exchange right and and you you have to declare where that monero is going to but after that point it's it's cash basically longer followed whereas with bitcoin the trail would continue to follow you so there's almost uh a positive here in terms of monero versus bitcoin um it's a couple of things uh you touched on and and there's some you touch it primarily on the privacy side of it and not the scale inside now i'm going to give you a more interesting example this is from the square response and the scenario that was described there is you have a mother and she gives four thousand dollars in cash to her daughter and that daughter deposits in the bank now what happens if the daughters already have a good relationship with the bank she just deposits the the the money and there's no requirement for the bank to ask you information about the mother the equivalent transaction on the monero or bitcoin blockchain would be mother takes a four thousand dollars worth of monero transfers it to a self-hosted wallet by the daughter i.e the cash transaction and then the daughter transfers the monero to the bank or you do the same thing with bitcoin so there's two transactions on the blockchain one of them a cash transaction between two self-custody wallets the mother to the daughter and one from the daughter to the bank if you skip the first transaction you make it equivalent to a different transaction and that is the mother going to the bank and depositing the four thousand dollars in the dollars account and the bank has to id the mother and this is what people are glossing over and missing these subtle points are very critical that extra step is very important because the bank has already done the uh anti-money laundering anti-terrorist financing risk on the daughter so they know the daughter is safe they're trusting the daughter because they've already done their risk analysis on the daughter they know nothing about the mother so if your daughter is intermediating the transaction that limits the risk to the bank kenzie don't need to ask where it came from because it's already trust the daughter but if the mother does it directly they've got to figure out who the mother is and that's the key point now here's the interesting part that extra transaction on the bitcoin blockchain could attract a fee of 50 to 100 especially with this regulation in place the same fee on the monero blockchain is one cent the cash is a risk of carrying it around and so on but again it's in the limit so you have this dichotomy just on scaling alone that you're imposing this fee on the on the bitcoin network about 50 to 100 for that second transaction no wonder that that's screaming bloody mother and monero is fine it's just one cent it's an extra transaction on the blockchain so the scalability of one arrow kicks in even before the privacy issue kicks in that's interesting yeah i mean yeah i was only uh really looking at it from the the privacy perspective in that it's equivalent to cash but there's a there's a whole scaling element as well there's a huge scale it will critically affect bitcoin whereas monero will be fine and it goes back to this issue that i'm saying that this is all this extra activity going on the bitcoin network which is on centralized ledgers because it can't happen on the main uh blockchain so so you obviously get it uh you know i interpret it this way as well and i wasn't even considering the scaling options i was just more considering the privacy why isn't the market absorbing this and realizing these regulations seem inevitable they're gonna happen uh whether they happen now or some version in the future why is that not being understood by the crypto sphere and realizing that bitcoin is going to be more negatively affected than monero well there are two problems first of all the the first problem is that the regulators have been listening to these blockchain surveillance companies and i'm talking that they're called chain analysis or kyt or whatever and quite honestly contrary to a lot of the opinions even in the monero network this stuff doesn't not work even in bitcoin they've clouded the whole thing in a big way to push their essentially their product or their service which has real serious flaws and we we sort of dealt with that in it that you for example i mean you could structure transactions money laundering transactions in bitcoin to frame totally innocent people for crimes they have nothing to do with and all you have to do is if i pay you bitcoin and you're a business and let's say your that business is subject to an extortion attempt by a criminal organization or by criminals etc and you come then the private key in bitcoin there's been a transaction they can't even see on the analysis software now looks like i actually paid the criminal and then if they sell that primary key to another criminal or to a terrorist again off-chain it looks like i paid did whatever that criminal act is so there's a real risk in in this with with the chain analysis stuff that people don't even realize so you have this failed system in there and that's created that that narrative the first narrative the second narrative is that there's an incredible amount of denial in the bitcoin community around scaling this has been going on for a long time you talk about scaling on on our bitcoin you will be kicked off that subreddit in a flash so this denial incredible and so this denial is hidden by doing it on the ledges of exchanges and stuff like that so they're hiding essentially you have a bank that is masquerading as a cyberpunk and now vincent johnson said we're going to regulate you as a bank well you're a you're not a cyberpunk you're a bank so we're going to regulate you like a bank and that's par a lot of what's going on in the industry so you have all the industry players people like you know some of the major exchanges they're making money by running these centralized ledgers by batching transactions on the blockchain of bitcoin blockchain to get more transactions into the limited block space it's a whole industry around this that has developed around this weakness in bitcoin that now has been put in jeopardy so yeah you made a comment on reddit you put it you made a post uh regarding uh chain analysis and how it's an arms race against privacy and you said in the case of monero they know they have lost the technological arms race so instead they wage a war on the regulatory front the key point is to understand here to understand here is that in this war governments and regulators are not the enemy they instead have become the battlefield what did you what did you mean by that what i mean is that you have a series of um blockchain surveillance companies lobbying the regulators to essentially delist monero indirectly or directly on the exchanges and so a lot of people in in the community for example i i cited a post uh the australian example and the reaction of one of the members of the community was against the australian government and a very negative reaction against the australian government and i'm not trying to defend the australian government and their politics but that wasn't the issue the issue is this company came in here made a deal with key payment processors and banks who in turn pressured the uh the exchanges in australia to de-list monero so this didn't come from the government this came from the chain analysis company so the battlefield is the regulatory scam it's already scheme sorry it's it's the governments and the regulators offensive becomes the battlefield the u.s treasury becomes the battlefield not the adversary it doesn't have an enemy it's people are fighting that people lobbying the u.s treasury elliptic says that the rule is terrible uh we're saying no no it's good so what's happening where are we fighting we're fighting end up in that environment and this is the thing it's very interesting i had one of the moderators and ah monero asked me to put that as a separate post um did you mention that yeah i mean and this is obviously part of the reason why why i ran ran for congress you know i was running for other reasons as well but i i do see that as being you know obviously cypherpunks believe that you know you you we can create technology uh that's essentially immune to regulations uh and you know i'm a big believer in that and i think monero is doing an amazing job at that but at the same time in the real world there there is this ability of governments to implement regulations that no matter how resistant your technology may be against other technologies it could have a very real world effect on the usability of something if they regulate it very heavily so how far do you think that war will go that battle will go do you think we're going to see some extreme uh steps or strides taken against kryptos like monero on the regulatory front since we're they're realizing that they can't fight it on the technological front well they're going to try i mean because a realistic bit of a sometimes the regulation is favorable it doesn't necessarily mean it's a bad thing i mean i i'm very much of the opinion that the actions of the us congress and their actions of vincent are actually very favorable to monetary the current situation is way worse by several orders of magnitude it is very negative to these blockchain surveillance companies so they're fighting a battle against us and they have to because otherwise if you think for a moment what would happen to these companies if monero became as dominant as it's not going to put fencing out of business or the u.s treasury they've already have essentially a set of rules or parallel cash to deal with the scenario so they're not having them they don't have a problem who loses the losers actually the the surveillance comes because they don't have no market for their product or their service so they're the ones that are really risky so yeah they're going to try and fight in that regulatory arena so it's critical for people to do what you did i applaud you know people you know run for office um because you're not fighting the government you're fighting somebody else right but let's be realistic here you know the chain analysis companies are basically controlled by the banks right that's where they're getting their funding right and the it's the banks that what that are fighting this battle to change the regulatory framework correct i mean well it's it's it's the um the existing power structure the the the the people and the corporations that are benefiting most from the non-crypto version of the world that have the incentive to go out and try to over regulate something like monero and potentially treat it uh maybe even differently than cash right to to not allow it to function as cash but yes i mean i agree that for example if you're a payment processor like visa you would have you'll be very threatened by by not just by one error but by cash i'm not convinced that a bank is threatened by monero uh banks as a rule of thumb tend to basically make the money about the very wealthy uh not the average person um initial banking is an industry where you you basically make this the cost of each servicing a customer is essentially the same but the profit opportunity is proportional to the customer's income and net worth so there's all of certain threshold banks really don't make money on on customers and that's why they don't like poor people to be blunt i mean that's the mathematics of the whole thing so yes the payment processor visa has been fighting cash head-on worldwide i mean that's no no no secret and they won't have a major problem with monero for exactly the same reason it's a major competitor to them i'm not sure that a bank per se they could make they have a lot of offers banks were not out of business in the 1950s and 90s they did really well but they were servicing the very wealthy and high-end way wealthy individuals they're making a lot of money doing that so they have a lot of opportunity there but a payment process is yes i would agree in this particular situation i think it's actually the people that are selling the technology that are really the driving force behind the scenes because they've managed to get the ears of both the banks and the exchanges and the regulators and this is why so critical that we go out and say this is another aspect here i mean finn said if you actually read and they're very careful and then they say very clearly this is not a panacea they see serious problems with what they've been told travel rule great example they've been dragging the industries be dragging their feet on trouble with victim because it doesn't jive this mindset of doing blockchain surveillance it's got nothing to do you could do travel rules just as well on moneros you cannot bitcoin it's got nothing to do with the underlying blockchain but they're trying to say no no we're going to give you this instead of the regulators don't want which is the chain analysis or blockchain surveillance narrative that they've been selling so this is and there's been a lot of resistance on tribal rule in the industry primarily because it's not what they want to do they want to do this other thing so i say i see it so i think that distinction has to be i think the banks yes they might be concerned about cryptocurrency i don't think they're there yet um i think the biggest threat would be to the credit card providers the payment processors they're the ones that really might feel threatened by it as opposed to an actual bank you know that but that that makes a lot of sense but yeah my point being that there are there's uh you know there's there's those that um are benefiting from a from a non-crypto world and in particular a non-monero world who have incentives to to try to thwart the progress of monero i think that's fair to say well absolutely there are yeah but there's a subtle difference here there are those that are that were thought the the overall crypto that those who want to thwart monero because monero actually does what the original design of bitcoin was designed to do the uh the existing implementation of bitcoin does not threaten payments at all in fact you know all they're doing is they're replacing a bitcoin denominated debit they're using that to replace a usd denominated debit card well it's the same thing so they're not being because it's not a threat because what's it involved because of this lack of scaling the only way it can be a threat is if people can actually use it so yes is a real threat in that in that and that in that point of view yes and which which leads me to the next thing which is the d listings that we saw right um so that's a that's a reaction of that um what what's your take on that on bittrex delisting uh they saw monero potentially as a risk and they no longer allowing trading of monero do you think we're going to see more exchanges continue to do that this year uh we had you know the perkins koei paper that came out that seemed to make very cogent arguments as to why an exchange should be okay with uh allowing monero to be traded yet you know soon after that paper came out we saw bittrex dropping monero what do you see happening next in terms of exchanges i think the recent changes that have been proposed by the by u.s congress and by fincen would put a damper on that the listing trend uh primarily because it's following the narrative that uh it is treated like cash i also think a lot of the listings are driven by two factors first of all let me take for example in canada and i'll give you two examples of two exchanges one of them actually lists monero and they don't even have a monero bitcoin pair the only less monero got a monero uh ustc and there's another exchange that lifts bitcoin and will not touch monero i i'm a strong customer i told them and they won't touch it guess what the second exchange got in real trouble with the ontario securities commission because what they were doing was a wash trading bitcoin and they got caught so a lot of this is a bunch of factors there they may have a weak aml and um uh risk management scenario in that exchange this is actually very negative that could be a factor i guess i think that's a lot of the factor is those that that want to push monero out of the equation namely the the uh blockchain surveillance companies they're definitely having an impact in the case of beatrix i suspect they wanted to look good to a regulator and that's an easy way to do it uh it's not an objective risk analysis but rather risk analysis theater it looks good i mean it's real dash now you can argue whatever you want to argue about dash but a lot of people the monero community would say that dash doesn't have any private they even they agree that they don't have any hardly any privacy yet private send which is a seven year old coin joint technology is enough to break this blockchain surveillance apparently so there's a lot of theater around this too they want to give the appearance to the regulator if they got a checky situation i mean that's the that's my take is it going to continue but one of the things we want to do in the in the monetary uh policy work group is is to put a stop for this and to get reach out to the regulators to reach out to to the uh so that no this is not working i think this is i think the uh like i said i still think i moved by vincent in this direction has been very positive keep in mind that they already cast a doubt about blockchain surveillance in their own arguments for this rule they said it's not a panacea and they raised a bunch of questions that opens the door for us to say well yeah you're right which is kind of but it's actually a lot worse than you realize that they open that door and you know obviously we need exchanges to list monero i mean we really we really don't at the end of the day but uh you know it's it's it's something that we want to have to to allow people to continue to easily onboard to monero until we have things like atomic swaps and other ways of being able to go from bitcoin to monero but overall i mean long term i think it's fair to say these are bullish indicators or indications right when we're seeing the fact that it's proving that like we said that monero is doing what bitcoin originally intended to do and that's why we're seeing these d listings that's why we're seeing uh you know these chain analysis companies trying to figure out uh you know how to essentially change regulations to deal with monero since they can't deal with it on a technological level and short term it's scary but long term it's proving that monero works as intended is that it's true but first of all i think i i like offensive on this one uh i don't see atomic swaps with bitcoin as a panacea okay um in fact i will see atomic swaps the other way around i will see it that we need to be getting strong fiat on ramps for monero make it the dominant on ram for fiat and that will actually provide more privacy to to coins that don't have this privacy strength that monero does so atomic swaps of bitcoin to moneras interesting uh you know uh i i'm you know it's a it's a great technology there's a lot of risks with it especially with all the surveillance on the bitcoin side i hope it gives me the creeps i mean i honestly i i don't know if i would want to sell monero for bitcoin and then we told my bitcoin is quote 30 unquote by some proprietary algorithm i'd rather sell my if i want to sell monero i'd rather sell it directly for a fiat currency through a regulated exchange that you know you do all the proper interface with the banking system that makes that's what we need to be working on you know it's it's not everything wrong with it it's fine it's great technology uh for small transactions but that's not the answer um and especially and if you want to do a small scale you want to be you know to meet two guy meets and then do it for five hundred dollars in cash for five hundred dollars with the monero i mean that's fine too but i don't know if we create this dependency on bitcoin is the answer so no i don't i don't see that as atomic swaps at the big answer here um so we do need the on-ramp we're going to just say well bitcoin is going to take care of it from it so that that i don't think it's really an answer we need to deal with the fiat on-ramp we need to work with the regulators in this respect so that's a critical come we can't use spike or to bypass it that's my my take on this and quite honestly i mean for a small person if you wanted to use a transfer coin to go into monero from say us dollar something like litecoin or bitcoin cash is way better choice than bitcoin because you don't have all those outrageous fees on the network even ethereum i mean i sold a small amount of ethereum for monero it was a four dollar fee for a hundred dollars worth of ethereum just the ethereum trend just to sell them pay for the cast to transfer to the ethereum network that yeah no i i mean i i can't agree with you more i mean i would i would love for a world where i can easily transact venero between monero and cash i mean that that's that's the dream um unfortunately it feels like there's gonna be kind of a dark period there where that's not gonna be the case where it's gonna be difficult for that to happen i mean we're we're going through right now okay the reality in canada today is if i wanted to sell monero for bitcoin i have first to sell for canadian dollars and then sell the canadian dollars for bitcoin there's no direct monero bitcoin pair and that's already in canada right now so either you go off troll somewhere else or if i go to the canadian exchange that trades monero the person they list is cad and usdc they don't list bitcoin why is that why is that happening in canada i would ask to ask them i think it has to do with a couple of things first of all i can see why the regulatory risk could be higher for monero card pair because that sorry for more narrow bitcoin there because you've got dirty bitcoin what better way to get to sell it than for monero so i can see that sort of uh they want to sort of probably separate it out um and maybe i think the the way they're structured um the way they do business they may see this more liquidity directly that way uh but that's how they're structured they do assume all the other coins but uh yeah so that's the reality so so my reality is somewhere closer to my to the ideal in that respect you know it's diff it's interesting if i want to sell through another exchange in canada for bitcoin i've got to go through a foreign exchange not one in one encounter oh well okay let's let's move on and i think i'm going to make this a two-part video because this is this is getting long but this is good stuff and i want to ask you a few more questions oh sure the network attacks that we're recently seeing um what what's your opinion there um are you do you have any concerns or you think this is uh just growing pains people are paying more attention to monero uh and it's it's just becoming a target what's your feel on the network attacks i guess what happened there i mean i i put my faith one of the things i say about the bankwork of course is every single element of the monitor community is someone thinks i don't have a really strong gripper and this is one of them i put my faith in the professionals who are dealing with it on our end to be honest um but uh my take on this it is a the it hardens monero they found a vulnerability that was that could do this uh and then it was responded to it is part of the process i mean that you could do this this this kind of stuff um and it i don't see it i mean there was a dynamic response a very good community response it dealt with it my focus has been primarily on the scaling side i mean okay what happens if this happens in this other scenario and they trigger this thing i'm going to deal with that i can figure out what it took how long it took the community to respond and then figure okay we're going to make sure that you know nothing drastic happens in fees in that time frame that would be sort of harm looking at it from my perspective so how can i build on that to strengthen the the aspect of scaling because okay so it took the community about a couple of weeks to respond to this we've got to make sure if he stays stable in that period of time that's kind of the the the answer that i've kind of looked at it it's a strengthening part of the process and maria was attacked actually in 2014 quite early with a 51 attack and uh again it just came out stronger out of this and this is what's happened here work across it uh could be a certain disgruntled individual i don't want to mention the good stories could be the person behind it yeah we did a whole show with vt nerd on it yes talking about fire ice potential well that's the the word i mean that that's the name that that was that that i was referring to um and basically i mean that could be a motivation but what comes out of the process is a stronger shame my perspective on the whole thing is what can i do on the scaling of fee side to strengthen that side of it so that if this happens again in the scenario it doesn't trigger the fee collapse and disruption in the sudden rise in fees in the time it takes to respond to it so that's kind of my interest in it primarily that's how i'm looking at it okay how about the fact that there's so many new code releases that are coming out in in reaction to it are you concerned that you know they may we may be moving too fast and you know we can break something i'm not i've also heard recent discussion uh people talking about trying to essentially um review the entire monero code obviously it's been reviewed in many ways but kind of do an official audit of the entire monero code base that's something the monero community should consider doing refactoring has been talked about since 2014 since we inherited the code from uh bytecoin uh and it's been an ongoing process um and i think this is a continuation of that process uh yes this kind of stuff is actually very very very strength strong uh the more you you look at code the more you audit code the more you refactor code the stronger it gets so this kind of stuff is very important but this is not a new thing this has been going on since the inception of monero um that i've heard that that discussion for a long time already and it's the kind of thing that we need to do in my opinion i mean um it's it's part of maturity of the project um that needs to happen so yes i've heard the as to the comments on that and i think we'll finally see that happen in in a very real way where you know money funds are put towards funds already being put to authority in specific situations and and there's been refactoring going on in the monero code for quite a while already this this not something that is new yeah i know they've done it in parts and pieces but uh kind of a holistic yeah so so this kind of thing is is uh it's a solid uh um thing that's gonna happen whether it's gonna be done in one big chunk or what is going to be done over time that remains to be seen but definitely my opinion is something that needs to happen and it's happening all right what what are you most excited about in monero right now in terms of technological development that's coming down the pipe well i mean there's a bias there because i'm working on one myself so obviously that's what i'm focused on which is the fee stability issue that i'm working on with issue 70 and mrl so that is my bias personal biases because that's what i'm familiar with what i see happening in monero that's exciting to be honest is this slow progression of efficiency that we're seeing and it's kind of like in many ways we're talking about a lot of small things the whole is greater than some of its spots so for example what we have seen since the advent of bulletproofs is a slow improvement in efficiency that has essentially dropped the transaction size from about 2600 bytes to about well now we could go down to about 18 something and we're going to invest some of this back very likely in the form of increasing the ring size the big ones that are coming down the pipeline of course is actuarious and triptech now triptech is um the difference between there is that there's um a proof that as ryan northa did on actuarius which i think requires it's just so cutting edge that you have to find the people that can actually audit this thing and and really understand it properly uh he feels very comfortable about it but that's maybe take a bit of time for that because of that trip tech of course what allows you to do is to keep transaction size small and significantly increase the ring size so that is a major breakthrough the limiting factor is likely to be a verification time um there but again i'm of the opinion that it is bandwidth it's the limiting factor as opposed to verification time so because of of the limiting factor for for the enthusiast so that's coming down the pipeline that's very exciting uh but it's it's more i think a cumulative effect of a lot of minor improvements really that's what's going on in monero right now how about the near-term increase in ring size uh that's being proposed and talked about before trip tech is at it um i'm of the opinion that uh probably my feeling is it should be a bit higher than the token i don't know i don't have a problem going to 17.

My my thoughts is somewhere between 19 and 25 somewhere around 21 23. uh mainly because that's closer to where the transaction sites were matched out of trip deck and also you you want to uh have a slower shock to uh from a verification time to to the network when trypta comes online um it's it's again one incremental improvement delay of what i'm saying when would we likely see that well if it happens it's likely gonna happen at the same time as the bulletproof plus fork and that's essentially in the other process right now so very likely the next hard fork and i suspect that the outcome of that discussion is going to happen uh in that time frame all right that's exciting okay yeah so that's what we're going to be looking but again if you look at what's happened in the last two years you have a series of incremental improvements each one of which hasn't really done that much but the cumulative effect has been very very positive last last question last time um so we're seeing in very real ways the importance of censorship resistant technology we did technologies you know we had we had a president in the united states that was basically d platformed from you know facebook and twitter we have parlor uh which is the alternative to to twitter supposedly the more censorship resistant version uh that that's been booted off amazon web services so we're seeing this ability of corporations to use their power and influence to essentially dictate uh you know conversations and control groups and censor information and we're seeing it in a more real way than we've ever seen before do you think this will be the moment where people start to really wake up especially here in the west in america wake up to these facts and then make that jump and realize oh okay there's also this is also potentially could happen in the world of finance and money where you know my bank bank account can be closed where my transactions can be censored could this be the awakening that brings people to something like monero i actually it's a very interesting point the deep platforming of president trump where he's still a sitting press in the united states regardless of how you feel about the man that is a wake-up call to everybody on this um i've heard comments from places like france and germany they're saying wait a minute this is not something that a corporation should do it's regardless of how you feel about them and what the justification is that's a wake-up call that's a real wake-up call in my opinion um yes i think that's going to open a lot of people's eyes because the power of these corporations is insane um i don't i don't i'm not on facebook and i'm not actually on twitter uh i i might go on twitter somebody might be convinced i'm not ever going to go on facebook um and that's a really interesting point but the the but it's not just that i mean i mean it's the power even companies like microsoft it controls operating systems um apple with their censored uh store i mean that's i mean i don't know if you recall when apple sends a bitcoin up to 2014.

I mean i mean seriously i mean you buy a bitcoin for like a cent and then you sell it for four hundred dollars worth of 500 and apple gave the their users permission i want to use the derogatory term but um you gotta getting out here i mean and then you buy monero in the proceeds but i mean you know this this stuff is a real threat um uh and i think it's a wake-up call and i think yes the platforming of trump is a real wake-up call yeah because all too often you hear in crypto land uh you know you hear a lot of people that say well you know what people just really don't care about privacy enough for monero to have relevance and i i see it you know there's there's a litany of arguments to make against that but if you just focus in on that point that that that's basically made that people don't care enough about privacy i think events like this could start to turn that tide where people who formally have not cared enough about privacy that we're willing to use facebook uh give up their privacy for for the purposes of using a free technology that they think that these events are going to be that wake up call that makes them realize that privacy is important and it can start to affect their lives in very real ways it's not just privacy it's censorship which is a different issue entirely i mean because twitter for example is not it's a platform you go off there for privacy yeah well i see those things as intertwined right so yeah the privacy that that monero offers essentially is also what allows it to be so censorship resisting yes yes yes that's that's very true in in financial transactions but but twitter is essentially a broadcast media um and facebook is a different story because facebook creates fake privacy and that's why i really have a real problem with that but there's a wake-up call about this corporate control and and that i think is a real wake-up call it will have an impact i mean there is strength right now in canada there is a digital uh rights act that is in the process of going through parliament to be looked at already we've seen the moves in the european union we've seen the moves in california for example so it's a real awakening of the whole privacy question that you write in a broad sense not just in the specific situation here so yes monero fundamentally sitting there the question is when is it going to wake up right it's not a question of it it's it's if if it's when and the when is a really important question um i i kind of think i i i stopped trying to predict when monero's going to wake up i just sit on it and do my part and be well sooner or later but if you're right i asked you to predict when i have no idea yeah i mean in reality what we're up against too is the fact that bitcoin's number keeps going up and you know you have people that are very heavily invested in that so you even see the talking heads like andreas antonopoulos who's tweeting about you know that you should move from whatsapp to signal if you're concerned about your privacy and that you know it's it's tracking and tracing everybody uh so remove it from your phones yet he you know is hesitant about pointing out the flaws that bitcoin has in terms of people's privacy and huge but it's not just privacy i mean it's also scaling and um but basically andreas i think it's it's in a very delicate situation we have essentially a bubble in bitcoin one that i in my opinion is not justifiable on a host on levels because if you look at monero moneros addressed three things that failures of bitcoin it's not it's privacy yes it's scaling and it's decentralization with random x i mean these are critical issues i mean bitcoin is effectively controlled by the chinese government through mine yeah no i i obviously agree with you on all these points and uh yeah so it's uh monero is the best hedge against bitcoin if you're gonna if you're gonna look at those terms personally i don't hold any bitcoin i've used it as a transfer of coin either do i um in a hedge whether i catch my monero portfolio other things everything from real estate to gold but but that's another story but you know it's not uh bitcoin has become a bubble it's lost its purpose and in many respects i hate to quote what's his name uh uh warren buffett when it's rat poison squared well maybe this he's got the exponent wrong but i uh i i don't know what to say about about this but bitcoin has lost its purpose because once you take away the transactional currency what's the point of it yeah it's seemingly been co-opted that i feel like the greed was the engine that got bitcoin as far as it's gotten in terms of growing its network effect and it's it's it was built that way to run off that engine of greed but i feel like it that greed has also taken it to a place where it's sold out a little bit in terms of the features it needs to offer for it to live up to the original vision of what cryptocurrency is supposed to be i see a great vision in bitcoin and very poor engineering and i think that's really what it comes down to and it's not something you know what monero has done is taken the bitcoin vision and engineered it properly that's a good way of putting it we'll leave it at that for instance yes this was a great conversation we're probably going to put split it up in in two parts i always ask my guests at the end where can people learn more about you obviously i think most people know about you already but like i said i think fortunately there's a lot of new people getting into monero these days so yes where can people learn more about you and follow you and sounds great and uh so where is it where i i know you're not on twitter i know where can people uh your writings and your thoughts primarily right now i'm on i'm on reddit um and of course uh that's primarily why i'm involved right now as far as social media uh i do have occasionally posted also a bitcoin dot but not recently but that's primarily where i am right now correct that's correct yeah and and without the c so yeah and uh um so that's why you'll see me right now the most uh and of course things like what we did for the vincent thing and so on and can be reached through my arctic mine at uh i mean that's also there um but that's the main places of course i hang out a lot on irc uh within the community so that's where a lot of i interact with most of the members of the community actually it's on aic so those are the the main channels all right thank you so much francisco thank you all right hope to check in soon okay all right thank you bye 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 monaro talk podcast go to subscribe for a full list of places where you can watch and listen if you want to interact with us guests 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