This interview covers the importance of a fee market on Monero's main chain as well as inclusion second layer solutions for scaling and general experimentation. Riccardo AKA "fluffypony" also talks about Monero's latest developments, including recent implementation of a multisig and the tools that can now be built on top of it. Lastly, the importance of general cryptocurrency education in order to catalyze mainstream adoption moving into 2018 is discussed.
Conor O'Higgins (C): Welcome! I am talking to fluffypony, who is the Director of Skullduggery at the Institute for Lemonade Studies. Is there anything else you do that my viewers should be aware of?
Riccardo Spagni (R): Yes... [chuckling] I am also the lead maintainer for Monero and I do some other funny stuff... I troll a lot on Twitter, I have a payment gateway called GloBee, so I do a bunch of things.
C: OK, great. A friend of mine, I was out for drinks with her about a week ago, she tells me she's going to get a Monero tattoo.
R: [laughing] Why?
C: She's a fan! Monero is interesting because culturally it's quite different from some of the other [cryptocurrency] projects. It's still got that old-school cypherpunk idealism witihn the Monero community. A lot of crypto has become about "get-rich-quick" stuff, and I feel like Monero still has values.
R: Yeah, it's certainly tricky. I think that a core part of the community definitely is like that. I do see a lot of people who are, I'm hesitant to call them newcomers, but I kind of get the feeling that they haven't been around for long relatively speaking, who are beating the low fee bandwagon. I even saw someone the other day threatening to fork Monero if the "devs didn't lower the fee".
So, whilst a large part of the community is still very cypherpunk and technical, there definitely are people who struggle. They want magical low fees and magical on-chain scaling. Stuff that Monero simply can't deliver.
C: Why not? Why can't they deliver [low fees and on-chain scaling]?
R: It's not really possible to deliver massive amounts of on-chain scaling at ridiculously low fees. The way I view it is: there's obviously a balance, you have low-ish fees which are reasonable - but at the end of the day people are paying for indefinite storage on thousands of computers around the world. That has to have a cost attached to it. And the lower the fee, the more likely people are going to use it as really cheap distributed storage. That's not something you want - you don't want a digital currency turned into a storage mechanism.
C: So on your interview on the Bitcoin Uncensored channel, you were talking about building things on top of the base layer - keeping the Monero blockchain untouched and building second layer solutions on top of that. Are you continuing to work on that?
R: Yeah, definitely. We've thought a lot about on how to approach things within Monero. It's not easy because on the one hand you have people demanding things, features, this and that. On the other hand you have a bunch of developers who work on Monero mostly for ideological reasons - why should they give a crap about what some random guy in the community thinks? Excuse my French. They're going to work on stuff that they want to work on, not stuff that someone demands they work on.
Based on that, the best way to give people what they want, whether it's magical on-chain scaling or whatever, is to move things off-chain and to keep the sanctity of main chain absolute. The Monero main chain should be as decentralized as possible. I'm hesitant to say it should be as expensive as possible, but it should have a reasonable cost attached in order to store data on it. So it should never really be ultra low fee, it should be reasonable. Like, don't block people's access to it, but also don't encourage people to use it as a storage mechanism. And then do everything else off-chain.
If you want to experiment with governance models, do that off-chain. Do that on some sort of secondary layer. There's so much scope for experimentation on a secondary layer that we don't need to wreck main chain. And I think that we can use stuff like Lightning Network Even if we just use Lightning as a mechanism for atomic swaps, we can build up all sorts of cool stuff on a secondary layer, and then Lightning is just that layer that allows you to swap inbetween them. So you have Monero, and then if you want to go into the Mimblewimble side-chain (for example) then you can. Or if you have Monero and you want to go into the, um... Magical side-chain that has Zcash SNARKs, then you can.
C: Would the anonymity and ring-signing of Monero be maintained with those off-chain parts?
R: Yes and no. Imagine a scenario where what some people want is a chain where there is a degree of traceability. They actually want traceability on this particular chain. Or the want smart contracts. Doing it on a side-chain means that:
- We don't need to have the main chain filled up with gunk that's unnecessary
- On that side-chain, we can do things like reduce privacy for enhanced scalability.
Mimblewimble is a great example of that. Not that it has no privacy, but they have different privacy claims and different ways of approaching privacy which can be attacked through Sybil attacks and that sort of thing. Knowing that kind of thing exists, we can consider that slightly weaker from a privacy perspective, but way more scalable than the Monero main chain. So people should be able to slip in and out of that. They should be able to say, "cool, I'm buying coffee, or doing a bunch of transactions with less privacy, but I need the scalability because I want to do it from my phone, or whatever". So they just slip in and out of main chain and do that, and then go back into [main chain] later.
C: What's the top priority for building as a second layer solution? Is it governance models? What are you working to build as [Monero's] second layer?
R: Governance is not a huge focus right now because I think that we have a reasonable structure and a reasonable governance style which is mostly dictated by fairly technical people. But, I think that in order to alleviate the demands on main chain, and by demands I don't mean transactional demand, but rather demands for features, we can have side-chains with different governance mechanisms. Imagine, for example, a side-chain that is entirely centralized and run by a company. Then, you can make demands of that company because they're in control of it. That's fine because, again, those demands don't influence the main chain and don't affect its sanctity. That's where I'd like to see things going.
Same goes for funding. At the moment the forum funding system is fantastic. We fund a bunch of stuff through crowd funding. But there's this inevitable problem where scams and ICOs are able to tap into much larger pools of funding because of their structure. I don't think we should the route of wrecking main chain by changing the distribution or doing anything like that. But we can definitely take a Decred or Zcash style of mining split and do that on a side chain. As long as that side chain has some intrinsic value, then its no problem because now there's some funds coming into that side chain and whoever uses it can build on top of Monero, or whatever. So I think there's a lot of cool stuff that we can do on a secondary layer, stuff that we won't be able to do on the Monero main chain.
C: Is the stuff that you can do under active development? What stage is that at?
R: A lot of the stuff is still in the "talking about it" stage. There's some stuff where I'm actively trying to put together a team to tackle some stuff on a secondary layer. just to try and get ahead of it. I think there's definitely transactional demand for Monero right now, but it's not massive, it could be a lot more. So how do we get ahead of it? How do we build the scaling infrastructure out such that when the demand comes, we can go, "Hey look! Here are solutions". What I'm trying to really avoid is a situation where the transactional demand arrives, and we haven't built stuff out for it and we're like, "Sorry guys, you're going to have to wait for two years".
C: Would you say that [scaling transactional demand through second layer scaling] is the top priority for development right now?
R: Yeah, for anyone who's interested in tackling layer two stuff, it's all scaling, scaling, scaling. But, the priority for layer one is getting the fundamentals right. We've literally just merged multisig. Layer one still has a ton of work required before anyone can legitimately say, "Layer one is mature or ready".
C: I feel like the Monero brand is about privacy and that's what people think about it currently. Do you see it going in a more Ethereum-like direction? For example, Monero is like a private version of Bitcoin, do you think we could see a private version of Ethereum where it's fully programmable but maintains the privacy features?
R: I think a lot of that stuff is super risky. Etheruem's progammability has been both a blessing and a curse. It's attracted a lot of developers, but it's attracted developers who mostly don't know better. [laughing] That's not ideal. A lot of that functionality, if we wanted to do something like privacy preserving smart contracts, we'd build that out of some sort of second layer and let people go wild. Let them do whatever they want, let them break stuff. Breaking stuff on a second layer doesn't affect Monero itself. We wouldn't need to hard fork Monero to refund a broken smart contract. That would be something for layer two to decide that they want to do.
C: Is there anything else you're developing that you'd like to talk about?
R: One of the things that we're playing around with now are cool things that can use multisig now that it's merged in. There's a lot of cool stuff that you can do with multisig like zero knowledge contingent payments (ZKCP). Imagine a scenario where you want to sell a domain. How do you sell a domain without using an escrow service? So, something like ZKCP allows stuff like that to happen without having funds held by an intermediary which is not ideal. There's lots of cool stuff like that that requires multisig. Now that it's built up, we're focusing on building the tools to take advantage of that.
There's also a lot of hardware wallet stuff being done. Apart from Ledger, who I believe are extremely close to completing their Monero integration, we also have a group within the Monero community who have started building up their own hardware wallet and that seems to be going quite well so far. I think we'll see in the next 3-6 months some really cool stuff coming out from individuals and companies that are adopting Monero
C: There's one decentralized marketplace, I believe it's called Particl, they have this multisig escrow system where both the buyer and sell put funds on the line and if either one tries to scam the other, then the multisig isn't completely. No one can profitably try and scam the other. If you could create a Monero marketplace with trustless multisig escrow, that would have all kinds of applications.
R: Yeah, and as I understand it the Particl guys are going to add Monero support. Now that multisig is in, it becomes a lot easier for people to build stuff up that uses that.
C: How is adoption coming along?
R: Quite well. I don't know if you're familiar with "Project Coral Reef" and the work that we did there. It's something that myself and Naveen Jain put together and we basically are trying to do this in as many phases as possible. Phase 1 of the Project Coral Reef was funded by the community in part, and the other half of phase 1 was funded by GloBee. The aim was to try and get Monero accepted by a handful of mainstream artists (musicians) and we wanted to get that going by the holidays and we did.
We ended up with over 50 mainstream artists that accepted Monero, everyone from The Backstreet Boys to Sia to Dolly Parton to Slayer, Ghost. It's kind of cool because you have artists tha - oh and Mariah Carey! So you have artists that are kind of important and kind of a big deal, and they find Monero interesting enough to accept it on their online store, and a lot of them are offering 15% discounts. That's pretty cool too. I mean, Mariah Carey offering a 15% discount on her store ONLY if you pay with Monero is kind of a big deal. Now you have Mariah Carey fans who have never heard of Monero saying, "OK. I can save 15% on my Christmas shopping or whatever. I can buy her latest album and save 15%. Cool, I'm going to figure out what on earth a Monero is."
C: That's super cool! OK, so what do you see ahead in 2018 that we haven't talked about?
R: I definitely think there's going to be a lot more outreach. I think the Monero has done an excellent job thus far of educating others, but I still think there's a big gap. Monero is a technical thing to understand. Not only do you need to understand (vaguely) how Bitcoin works, but now you need to understand how Monero works and why scaling on Monero is even harder than scaling on Bitcoin. We can abstract a lot of that stuff from users, but not all of it. The fee is probably the biggest thing. People don't understand why they need to pay a fee, and this is where it becomes different to traditional finance.
So, when you go and swipe your credit card or pay with PayPal, the person that pays the fee is not you, it's the merchant. When you pay with Monero, you pay the fee, not the recipient. That becomes kind of tricky because people aren't used to that. Newcomers especially are often really surprised that there's a fee first of all, and that they have to pay for it. So, educating people is really important. They need to understand why that fee exists, why they're paying a fee. They need to understand why the fee is sometimes high, because we could do things to lower fees, but at the end of the day if the person is doing a transaction that requires spending for example 20 outputs, it's going to be a large transaction. That means it's going to have a high fee relative to everything else. It doesn't matter if our fees are normally one cent, that person is going to pay a relatively high fee: 20, 30, 40 cents, whatever it is. Now we need to explain that to people. It needs to be done in such a way that people are educated and say, "Cool, I understand why I paid a low fee there and a high fee there."
[The fee market] is not something that is solved by forking Monero and then claiming that the fork has lower fees, that just confuses people. The solution here is just ongoing education, and I believe that's what we're going to see in 2018. More tools, better wallets, and more education for people so that they understand, "I'm using Monero, and this is the cost to use Monero".
C: Yeah, I think awareness of crypto in general is coming into the mainstream big-time. Over the Christmas season the amount of "normies" who ask me about cryptocurrency... [laughing] I just couldn't get away from cryptocurrency conversations at Christmas. I'll wrap it there, I have one last question, Riccardo. Would you rather fight a horse-sized duck or one hundred duck sized horses?
R: [laughing] I thought about this question long and hard. Every time it comes up in a Reddit AMA, I wonder what would happen if I was in that situation. I think... For me, as a pony, I feel like I can connect with horses. So, I think a hundred duck sized horses would be a lot easier. Because I would just connect with them and say, "Brothers! Let us not fight, let us bond together as equine and together we can conquer the universe." And the duck-sized horses would just rise up and work with me.
C: That is a beautiful expression of the peer-to-peer spirit and collaboration. Great. Thanks for the interview my friend and happy Christmas!
R: Thanks so much!
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Conor O’Higgins has been a digital nomad for seven years. He learned the internet marketing game with Google and Facebook ads, but in the wake of the Snowden revelations, abandoned that to help marketing and communications for a more decentralized, encrypted internet. He is not a fan of current implementations of social media, but can be contacted through conorohiggins.com