#30 Monday Night Konsensus: Privacy is not optional

Yeah, I actually found Monero only recently and I've been looking at the technical aspect with my friend Xiao who actually had a presentation about the privacy features in Monero and they were pretty interesting. because I have never seen anything quite like it before. So I'm really looking forward to get some answers, probably nothing, nothing too technical, I hope, some set theory and stuff like that. And it's gone, but yeah, looking forward to this one. Nice to meet you, Thiago.

So why don't we just start by briefly talking about privacy in general and why is it important and why is it important in money? Like, why would you care if somebody gets the information of your purchasing behavior or stuff like that? Like, this is a lot of times what I hear from people, especially from people who are not maybe so much into technology as myself. And normally they say something like, it's called the nothing to hide or nothing to lose argument. So, you know, why would you need privacy if you have nothing to hide? And I don't think that's a good way to look at it because we don't know what's going to happen in the future. And personally, I would rather restrict information about myself that is out there, and especially on the internet, you know, it's there permanently. You can't really— afterwards do any damage, much of damage control. So the best damage control would be to prevent the information from spreading. So that's why I take privacy very seriously nowadays, and I— that's why I'm so interested in Monero. What about Thiago? What do you think?

Yeah, I think if you're gonna have a functioning currency, it's important that you have fungibility in the currency. So if you— if I give you a $50 bill, I can give you another $50 bill and it's the same. The biggest problem when you don't have privacy in a currency of what you actually stand to lose, let's say from a business perspective, is if you are buying wheat or whatever for to make bread and your competitor knows how much you're buying it for, they can undercut your prices. And so you actually have a— there's an economic— reason to have privacy in that sort of system. Equally, if you have— you're storing your savings in Bitcoin, Bitcoin has public addresses. So if you can see where you're receiving your Bitcoin, anyone in the world can see how much Bitcoin you hold. And so something like Monero, which has stealth addresses and obscures the amount in each address, is very useful.

Yeah, that is interesting that you bring up Siagu. And by the way, if you can up your volume, that's— that would be great because it's been requested from the audience. The fungibility part is very important because there is such a kind of like a fear within the Bitcoin community that certain coins will be started— start to be treated differently because of their origin and stuff like that. For example, if they're being used for the so-called tainted coins and used for illicit stuff and somehow it It can just, you know, just like dollars or euros can contain some traces of cocaine or whatever, even though you didn't do anything, the same thing can happen to you with cryptocurrency. And that's why fungibility is so important, that every coin is indeed identical and there's no way to trace it back. However, some people argue, of course, it's a different product. Like if we're talking about Bitcoin, I think the immutability and the transparency is also an important feature of that project. But I guess that's where, that's where the projects differ. So I wouldn't say that Monero is necessarily a private version of Bitcoin. It's maybe something, something else entirely. What do you think, Alexei?

Yeah, I agree. This is a very, very interesting step forward on the blockchain development because this takes the fundamental problem of complete transparency and The fact that you can see all the transactions. This is also the problem with Ethereum because it's even more public than Bitcoin is. You need to dig around in Bitcoin to find some balances or your accounts. It's even worse in Ethereum. So I'm really looking forward to what Monero can bring to the table.

So, Siago, would you go a little bit into the practicalities and technicalities of Monero? What makes it— what makes it tick? So how do you make sure that the transactions are actually private?

Well, there's, there's 4 main technologies that Monero uses. There's stealth addresses, which makes it so that the amount in each address is not publicly visible. There's RingCT, which obscures the amount sent in each transaction. There's RingSignatures, which decoy outputs within the actual transactions that you don't know which output is being spent in a transaction. And there's Kovri, which is used to then route the transaction data Through the I2P layer using something called garlic routing to obscure the IP address location of a transaction.

So if I understand correctly, the ring signatures work in a way that in the ring there's like a certain amount of signatures and there's no way to distinguish which signature signed for which transaction. Is that correct?

Yeah, so you, when you broadcast a transaction, you have a real output that you were trying to spend. And with that output, you have a view key. And this view key is used to create a something called a key image, which is what the blockchain actually uses to verify that you have the funds to spend. But because that's all encrypted, when you're actually looking at the blockchain, what you would see is the— Oh, wait. A number of— a ring which has a variety of ring members. And so the minimum ring size of Monero was recently increased to 11. So when I broadcast a transaction, I have my real output that I'm spending, but I also have 10 decoy outputs that are also being embedded within the transaction so that you can't tell which of those 11 outputs is actually being spent.

Was it changed because people were— it was actually working against privacy because most people were using the default option of, I think it was, was it 5 or how many ring signatures? And not the maximum was like 20. And then some very few people used the bigger ring sizes, which made them somehow more vulnerable. Is that correct?

Yeah, so really it's finding a good balance because you want to have a large enough ring size that you are— your output is hiding amongst decoys that make it difficult to identify which is yours. But you also don't want to have people using large ring sizes by themselves, like one person who only uses ring size 40, because that will stand out amongst all of the other transactions. And really the benefit of Monero and why it works so well is that every transaction looks like every other transaction. And so if every transaction is using the same ring size, the same structure of privacy, then it's very difficult to distinguish between transactions. And that's really the definition of fungibility, is that each unit is interchangeable with every other unit.

Alexei, do you have something to ask?

Nope.

Okay, cool. So you mentioned garlic routing. I gotta say, I think I've heard of that, but I have no idea what does that mean. Has it something to do with onion routing?

So it's very similar to onion routing, in that onion routing is called onion routing because when you're sending a packet of data, you have layers of encryption, much like an onion has layers. The difference is that garlic has cloves, and each clove has also layers of wrapping. And so you can think of the difference— one of the main differences between onion routing, which is used in the Tor network, and garlic routing, which is used in I2P network, is that garlic routing sends multiple packets through the network in these sort of cloves that are each themselves wrapped, whereas onion routing sends one packet that is wrapped through the network. One of the biggest trade-offs between these 2 networks is that while onion routing through Tor can access the clearnet if necessary, if you want to browse Facebook using Tor, you can do so. But the trade-off for that is the way that Tor works has something called exit nodes, and these exit nodes can be controlled by actors, whoever is trying to identify who's using these networks and reveal information about the packets going through these exit nodes. Whereas

I think we lost you, Thiago. Can you hear us?

This is a bit ominous.

Can you hear us?

Yeah, can you hear me?

Oh yeah, yeah, yeah, you just, you cut off in mid-sentence there.

Okay, what was the last thing that you heard?

Hold on, let me check.

It was something about the packets being instead, instead of using the exit nodes and Connecting to the Clearnet, the I2P network only, only sends within itself, so they don't have the exit node problem.

Yeah, and in fact, using I2P is slower than Tor or the Clearnet because it's its own network. And so the way that it works is that you have to have people that are hosting their own I2P nodes to broadcast data through the network. And so there's much fewer I2P nodes than there are Tor nodes or ISP clearnet nodes. But because of its own network, it doesn't suffer from many of the privacy vulnerabilities that happen with Tor, as an example.

Yeah, that makes sense. If you run your own Monero node, or you, you're syncing the wallet or the blockchain, you also host an I2P node?

That's a good question. Currently, the implementation that would allow Monero transactions to be routed through I2P, called Kovri, is in the alpha release right now and will be set for testnet release by the end of the year. So I'm not actually sure how— I don't know if you're running a Monero node and Kovri is implemented into Monero, if you then would also be running an I2P node. It's a very good question that I don't have the answer to yet.

Okay.

There's also actually a couple— there's very active questions in the audience as well. So I think we can take a couple here. And then people can keep commenting and maybe we can inspire more questions. So what are the technical costs of private transactions? Heavier blockchain? So this is a question from Rafael, who is a co-host on the show as well. And I think that's an interesting question. So how heavy is the Monero blockchain then?

So the Monero blockchain used to be a lot— used to be growing more quickly than it is now because one of the technologies that was creating a lot of the data on the blockchain was— is called RingCT. And basically what's going on is it's obscuring the amount of the transaction. And to do that, what it's doing is it's hashing the The actual amount being sent, and then providing what's called a range proof, where it's just this really fancy mathematical equation statement that basically proves—

Oh, you cut off again. No sound.

Test.

Yep,

cool,

that works.

Not sure why. Whatever. So the, the, the range proof in RingCT is basically proving that even though you don't know the amount in the transaction, you can prove that it's not less than 0 or larger than some arbitrarily large number. But you can still prove that the output equals the input, and so no new Monero was created in that transaction. Now that range proof is a very large statement And in terms of data bit size. And recently in Monero's most recent upgrade, we launched something called Bulletproofs, which basically slims down that range proof function to something that is 80 to 90% smaller in size. So while the Monero blockchain was growing quite quickly many months ago, now it's grown— it's growing much, much slowly. more slowly, and the cost of transactions have also dropped drastically from something like $0.25 per transaction to now it's like $0.01 for a transaction. I think we lost Niko.

Oh, okay.

Yeah, we lost Niko, guys. Oh, Niko disconnected. I don't know if the stream is going to continue.

Yeah, the stream is continuing because it's hosting through Jitsi, so you can continue if you have anything else.

Yeah, um, so you said you, you do Ethereum development?

Yeah, yeah, mostly.

And I'm back. So was it just me?

Yes, it was just you.

All right, that's good. So at least the show is still

on.

Sorry about that, guys.

So yeah, I'm doing Ethereum currently. I'm hosting the Ethereum meetup here in Helsinki, and I've really, really been fascinated by its ability to hide its transactions so well. And this is especially important in Ethereum because you essentially see all the calculation data that you're doing in the smart contracts and what have you put into the smart contract, what data do you have. So you don't need to have another layer on top of Ethereum in order to have privacy features if you use something that Monero is using for smart contracts. So that's quite an enticing aspect.

Yeah, and I think it's important— many people would argue that it's extremely important that you have privacy at the base layer. And I don't know that you can, that you can build privacy on top of Ethereum. I mean, maybe you can. I don't know about the technical specs, but it seems like having privacy integrated at the root base layer is essential.

Yeah, definitely. You can, you can use some more traditional techniques and you can view like public keys and private keys accessible from the smart contracts, but it's clumsy. And any, any layer that you implement on top of it, it's just going to go Cost more gas, essentially. So it's going to cost more, and it doesn't do anything that special, unlike Monero.

What are your thoughts on Ethereum potentially or saying they're going to switch to proof of stake?

Well, I think proof of stake. From the computational side, it makes a lot more sense because if you have large smart contracts, which I'm against even if you have proof of stake, but if you, from a theoretical standpoint, if you have large smart contracts and you need to execute them, it's going to cost a lot of money. And especially after CryptoKitties, people noticed that the gas costs were getting really high. And with the current— with the value of Ethereum at that point, it was almost completely invisible from the business standpoint to have any smart contracts on the mainnet. It was way too expensive to cover the gas costs. So I don't know if proof of stake would help on that. Maybe it will bring the gas costs down because you can't really do anything special with the instruction. Per instruction gas prices right now, but I'm hoping it's going to be a little bit more efficient at least to some some degree. Like you you could have a little bit more faster block times, and if you want to execute smart contract, you don't need to wait for four minutes for it to get mined. You can get your data data into the blockchain much more quicker. So I think that's. That's at least some sort of a bonus. But the fact is that I'm not too familiar with proof of stake, so I can't really say anything like why it's better than proof of work, even though proof of work is a little bit more simpler. But the fact that you have to use some sort of currency to guarantee that the transaction you're making is not not hostile. That's going to be a little bit tricky, at least in my opinion. So it will be very interesting to see how it pans out.

Yeah, it's, it's, it's interesting because I've heard many arguments for proof of work, uh, in that the proof of work consensus algorithm means that the miners have something to lose. And so because they have something to lose, they have more incentive to play along and continue the system. Whereas with proof of stake, you don't necessarily have those same incentives, and you also have maybe some other security vulnerabilities where people who have acquired large sums can now manipulate the consensus at very little cost without having to expend additional capital as they would have to in A proof-of-work system.

Yes, this is true. There are some mitigations, for example, in Polkadot that I've read that there's actually a web interface in which you can participate in the staking. But that's only at the proof-of-concept level, at least not even alpha or beta or gamma. So I think something Something akin to that, that makes it easy to spot and kick out those who have abused the network, even with— even if they have large sums of the staking token or staking value or what have you. So I hope that it's going to be easier to mitigate that from an active interaction standpoint, at least.

And it's interesting because that said, proof of work isn't without its issues. Because Monero, what we do to try to alleviate some of the problems caused in the proof of work consensus algorithm from ASIC miners is tweak the mining algorithm every 6 months during our network upgrade to break any ASICs that are either in development or could potentially be deployed in secret. But this isn't a sustainable long-term solution. And we have a few proposals by someone like Howard Chu, who is working on something called Random.js, which is this idea of a— the hashing algorithm has an element of JavaScript and that it is kind of changing the hashing algorithm dynamically to make it very difficult for an ASIC to do. You really just need like a computer ASIC and that just That's— a computer is not an ASIC. So, but I think it's interesting to explore potentially other consensus algorithms beyond both proof of work and proof of stake, because I still think that this technology is in such early development that there might be alternatives that we haven't yet thought of.

Yeah, certainly. I agree. Actually, Yeah, that's actually a very good point that Monero is ASIC-resistant. I have— I only saw it partially, but I think that's quite interesting because even Ethereum had some sort of ASIC rumors at some point, but I'm— I haven't heard anything new from that front in a long time because it appears that Ethereum proof-of-work is so memory-intensive that you can't you can't reliably have an ASIC miner that has a lot of memory in it. So looking forward to the future on this one as well.

Yeah, talking about future, there's actually another question by Rafael, and what's next for Monero? And, uh, Siago, you already mentioned the, um, about the RandomJS. I think you mentioned about that. That's, that's something, a feature that is upcoming to What was the purpose of that again?

So the purpose of RandomJS is to try to get ahead of the ASIC problem in advance. So rather than having to tweak the mining algorithm every 6 months during the network upgrade, if we developed a consensus algorithm, something like RandomJS, which in itself kind of tweaks the algorithm every time a hash is performed or every time a block is found. I'm not sure exactly how RandomJS works, but the basic idea is that because the algorithm is itself changing every time, you can't build an ASIC to do just one specific algorithm. There are other coins that have experimented with switching between like 6 different hashing algorithms. But then people will just build an ASIC that has 6 different ASICs, like it's 6 ASICs in one. So it just has— yeah, and then just automatically switch depending on what the network is calling for. But the idea with RandomJS is that instead of having a finite number of mining algorithms that is swapped between, as in some of these other coins, would be something where the mining algorithm is changing Every time. And so in fact, you need something like a computer to actually perform that process because the ASIC itself can't be built in advance to keep up with effectively an infinite or near infinite number of combinations for the, the way the mining algorithm changes.

That's a really interesting take. Like, basically you need something that dynamically changes the algorithm on the fly and then As a result, you would need a dedicated computer to actually be able to mine that. So that's super interesting. I'm not a big fan of ASICs. I don't think like— well, if you look at Bitcoin, it's dominated by ASIC miners, obviously. It is a problem, but at least it's, I mean, still functioning. But I am curious to see if that's going to change in the future, what kind of changes we can make in proof of work to begin with. Because at the moment, I'm not aware of any other algorithm that comes even close with the security. And I'm sure you would agree. I would also agree with you, Siago, that I'm interested in beyond proof of stake. I'm not a big believer in proof of stake at all because of many of the reasons you already outlined. I'm not going to go into that more. Mostly because at least proof of work, you have to put up a huge upfront cost to actually attack. the chain. So that's already a win for proof of work. However, I am interested in like DAGs and Tangle systems, which at the moment are like on the garbage fire level, of course. But we are talking about very early technology, as you said yourself. So very interested to see what is coming. And would you say, what is— is there a technology or kind of like an alternative that you are looking at at the moment?

None in particular. Mostly I am exploring the ideological principles of why we would choose to be ASIC resistant, and in trying to understand the fundamental reason why it's important that every human being effectively has one or near one vote into the system, or something close to that. And that's That's kind of what Monero tries to do by being ASIC-resistant, is allow people to use commoditized hardware like CPUs and GPUs to more equally distribute the— effectively the voting hash power. Because that's kind of what hash power is, is it's kind of a proxy for voting in the crypto space. And so thinking about the ideological reasons as why we do that, and then beginning to try to think of new ways that technology could be implemented to achieve that same purpose.

Yeah, I like that one CPU, one vote, and I think it's apt to talk about Satoshi's vision at this point. I do believe that in the original white paper 10 years ago, he kind of outlined the same thing— one CPU, one vote. Of course, things tend to change when they scale, and it will be interesting to see because nothing, even Bitcoin, is not really up to scale at the moment. Not even close, and let alone any other projects. So it will be interesting to see which of these options will be able to scale the best in the future. I do think at least in the beginning, we will have this kind of like asset protocols that then maybe we'll have some kind of layer 2 or 3 solutions to swap to more easily movable or scalable tokens or stuff like that for like daily consumption or whatever. We will probably have some kind of governmental cryptos, and, and of course the government is going to want to tax us. And, and I guess these are our individual tools to fight back the oppression and stealing of funds via taxation. Would you agree on that?

Taxation is a very interesting discussion. Because certainly I don't like paying taxes. It's not fun. That's money that could have spent on other things. But there are services and features that the government provides that make a strong case for taxation. If you hold cryptocurrency, part of the safety feature of you holding cryptocurrency by you being your own bank and having, let's say, a Ledger wallet that you hide in your in your house, under your bed, something like that. Part of the security of that ledger is that you have a peace of mind knowing that if some criminal comes and breaks into your house, you can call 911. I know the police aren't going to be there immediately. It's going to take time, and maybe it won't even save anything. But the, the fact that we have federal and government security forces does, in a large way, deter, I think, many attacks. And I think that's not quite calculated into the, the mental calculation of many people in the crypto space, that the fact that you hold cryptocurrency, you're also kind of protected that someone doesn't come and rob you immediately, at least because of the threat of government protection.

Yeah, that's a good point. And yeah, of course, one could argue that everybody should protect themselves, but of course, not everybody is able. And yeah, I guess that is a true use case. And what I like about privacy features in cryptocurrencies is that at least what it does, it kind of like brings back the choice for people. People can choose to opt out or opt in of any kinds of services. When you don't have to disclose your wealth. And it shouldn't be, in my opinion, it shouldn't be anybody's business what you do with your wealth. And if you want to opt in a taxation system, a state, that should be your option, in my opinion.

I think this is a very nuanced discussion with strong arguments on both sides. But I also think it's the idea that citizens of a country should be able to opt out of the current system and opt into their own system, um, is kind of the basis for civil war, where you would just have people then form local factions that would fight amongst each other, and you would have whoever has the strongest paramilitary faction would be able to control everyone else. And then you're just back at a government. So the idea that we have this existing hierarchy which we call the government, and many people don't like it and say, you know, we don't want to pay taxes— and look, I get it, I don't like paying taxes, it's money I could have spent on something else. Um, but, uh, if you dissolve that structure, all that's going to happen is a new structure is going to form, and maybe it might be worse than the structure you had in the first place. So that's something to consider.

Yeah, of course, I agree. But I would say that most people are peace-loving individuals and just want to live a normal life. The question is, how do we provide these vital services, this infrastructure that we all need and use— roads and hospitals and stuff and police and whatnot? And I think that's going to be an interesting conversation of how algorithms and cryptocurrencies and automatic payments and drones and self-driving cars and stuff like that. And all those things can actually help us build these new societies. I don't like the word government that much. I'm not per se anti-government, but I am anti the status quo establishment because it's based on unsustainable fiat money and stealing by not only taxation, but also hidden tax of inflation that funds all the wars. At the moment. So I find that's a huge geopolitical problem that the cryptocurrency can solve because it will bring the power back to the individuals who are, well, for the majority, peace-loving. Of course, there's always going to be some crazy people who are going to do things, but that's always going to be minority in my opinion. At least my experience is this, and I'm pretty hopeful for the future that we will come up with new ways to distribute wealth more evenly. That's also one thing what I like about the one CPU, one vote approach. It does create more decentralization, at least it should. And while I don't think that mining centralization necessarily will be a problem, it will be more of a centralized thing than one CPU, one vote. But yeah, regardless, I think we have tools and it's up to us how how are we going to use these tools? So you can use a hammer for evil as well. You shouldn't judge the tool because of what it enables. Like, for example, if you skip on taxes, well, that's probably going to be illegal and land you in jail in most countries. But if you use cryptocurrencies to do that, then maybe you can avoid that. So that's going to create some kind of a moral gray area, and everybody has to make the choice for themselves, of course.

And it's very interesting because now we're beginning to ask these questions and really seem to have tools that people who have different views can enforce those ideological principles with these new technologies. And it's, it's going to be very interesting. I agree with you that most people are loving. Most people just want to live their life, be happy, have a family, enjoy life, and the time that we have here alive on this earth. But this is also in an environment where most things are stable. Our electricity is mostly stable. Our food supply is mostly— is pretty— is obviously stable. There's many things in our society that we take for granted that I think if they were removed would certainly change the nature of people as well. And so while today most people are peace-loving, want to go about their day and their business, we can't ignore the fact that many economies in the West specifically, like America and Europe, have amassed massive amounts of debt. And now governments and like, well, the Federal Reserve in the United States is now raising interest rates, which will also raise the cost of interest on the national debt. Of $21, $22 trillion. What this will mean is that the— it will cause a sort of deflation in the, uh, like, as the equity markets, let's say. Um, and the, the, the, the, the net result of these sorts of things is a risk of collapse of the banking system in the Western economies, much like we were almost on the precipice of in 2008. If after 2008, they didn't print money and kick the can down the road further, we might have seen something like large banks closing. And it's easy to say that now everyone's peace-loving and everyone wants to go about their day and live their life when everything is going reasonably smoothly. It's a much different story if all of a sudden half the population of America can't withdraw cash from their bank account. This is when you have riots in the streets, and all of a sudden what would be otherwise peace-loving people do things because their survival and their family's survival depends on it.

Oh yeah, I absolutely agree with that thought, and it is a risk.

Yeah, there's just a problem that the Fed was actually created back in 1913, like 105 years ago. Just in response to this thing that happened, that banks ran out of money and people didn't get anything to grab from the banks. So that's why the Fed actually exists. But I don't know that Fed would be a very wise choice for any economy as is. But I don't know if the Fed actually Has like a negative interest rate, like we have in Europe at the moment at least. I'm not too familiar with that, at least not right now. But I think I think the negative interest rates what have been happening for some years already. There is also two turn sides to that coin that you actually accrue a lot more. Well, through saving money, so that would that would also cut the spending and encourage people to save money instead of consuming all the time like like we have been doing for the last ten years.

I mean, this this is a this is a trend that's been in the Western economy for decades now. I think the Brenton Woods system was established sometime in the mid-1900s. I don't know, like 1950 or something like that, after World War II maybe. You have Nixon going off the gold standard in 1971. I mean, the state of the US economy is not— it's a problem that's been building for decades now, and it's gonna— I don't know exactly how it's gonna play out, but it will happen. in our lifetimes, and I think soon. I don't know that cryptocurrencies, as much as I would hope that they will alleviate some of the problems and some of the suffering, I don't know that they are a solution in and of themselves. I think it's one, one aspect to a very large problem that has multiple different elements. The national debt is one element, the, the interest rates are another, but then you also have things like innovation which are disrupting industries, like self-driving cars disrupting the transportation industry in America. What happens when one of the largest professions, truck drivers in America, what happens when you have all these truck drivers that no longer have work because in 5, 10 years you now have self-driving cars all over on the road? Can these people be reskilled to do different labor? Can we— how can we— You know, it's a very difficult question.

Yeah, you're talking about absolute real problems, and this is exactly why I'm doing this personally. I want to try to educate people on these matters and problems and these available tools and to try to take better care of themselves because I don't feel like we can rely on the system to take care of us anymore like maybe during our parents' time. You know, we have to take personal responsibility, and that's why we are also educating people here. Alex, you had something to say?

Not right now, at least.

I wanted to add to what you were just saying, Niko. Yeah, I think many of the— not all, but many of the people in power in the West, in America, I'm not too sure about Europe, they have an interest in keeping the status quo. As long as status quo remains, they remain in their position, they remain in their income, Their power, all of this. And so they have no real incentive to change the direction of anything. And so they will— it seems, seems to be the case that many of them are, you know, they're driving this bus and they're driving it towards a cliff and no one's stopping the direction of it. So in this sort of situation where it seems like the system isn't, isn't doing anything to mitigate these coming problems, I think it's important and it's useful that these technologies like the internet right here, the fact that we are having this discussion across the world instantly is a radical technology that allows people with shared interests to collaborate together and to solve problems where maybe our— the people in power aren't necessarily have an interest in solving. Maybe they do, but I don't see much evidence that they are making changes to reflect that. And so I think it's important that we educate people on these technologies because these technologies provide ways for people to collaborate and think of solutions to these big problems that maybe the people in power aren't going to address. But someone has to do it because if— someone has to do it.

Yeah, I agree. Somebody has to do it. Like, It might not be the best idea, to be honest, to be working on these types of disruptive technologies and projects. If you look at what happened to Ross Ulbricht, for example, he was apparently— somebody said in the chat that he was tracked down by using their own Tor nodes. I don't know if that's true or not. But are you worried, Siago? Are you worried that somebody might come for you just because of what you do and you develop? How can— There's also a question here from the audience. How can any coins that dev team prevent infiltration of any kinds of government agencies or some other baddies to the dev team to disrupt, dissolve the project? Like they took down the Occupy Wall Street movement from within. So are you worried about this kind of thing? Because you are using your own face. I'm not sure if you're using your own name, but does this worry you?

Sometimes, yes. But I've lived a pretty good life, and I am willing to die for what I believe in. And I think that pushing the boundary of innovation and developing new technologies that could help the world is something worth dying for, maybe. And if, you know, maybe it doesn't come to that, maybe I just get put in prison or something, then I don't know. I don't know. I can only do what I believe is right. And yeah, if I get taken out, someone else will carry the torch further. And I don't know. I don't know.

Yeah, Occupy Wall Street is a little bit of a hard example when it comes to Monero because, as I understood, Monero is open source. So anyone can continue the development as is.

Oh yeah, that's a good point.

Yeah, totally. Maybe if you completely core out the corral all the developers. There are and there will be smart people who are going to look at the code, I hope, unless it's completely erased from everywhere, which I think it's quite hard to do.

Yeah, I agree. Open source projects is the way to go, and as long as somebody has that code on a on a USB disk or whatever. And I don't think that's hard to do. And I do think it's virtually impossible to destroy that kind of project. The thing that you have to go after in a decentralized project is the ideology. You have to kill the ideology. So then I guess it can be killed. But then it doesn't remove the fact that disruptive technology developers personally might be in danger of going to jail and stuff like that. And I would certainly like to avoid that. But like you said, Thiago, somebody has to do it. And for some things, maybe— I wouldn't go as far as say that I'm willing to die for that. Maybe it's worth dying for, but certainly it's worth spending your time on the earth doing if you can make a difference in a lot of people's lives. So that's why I'm definitely doing that to help people.

Well, I think it's— there's a Canadian psychologist who recently, over the last few years, came to fame named Jordan Peterson. And one of the central ideas that he talks about is the idea that life is suffering and that one of the ways that we can transcend the suffering of life is to embrace it. And by embracing the suffering that is life, we can maybe hopefully transcend it. And this is really kind of the central tenet of the Church of Monero, is that we— I don't want to speak for everyone in the Church of Monero, but certainly for myself. We are— I am putting my face publicly on the internet to speak for what I believe in and why these technologies are important. And while that increases my personal risk through exposure, I'm— Hopefully embracing the suffering of that risk in a way that maybe helps me transcend it. And yeah.

Welcome to the Finnish stream. I noticed that you have been getting quiet because we are— we don't usually reply. We are so polite that nobody wants to wants to interrupt you.

So— This is actually cool because this turned out to be a much deeper discussion than I anticipated. I thought we're gonna be talking mostly about tech, but actually we're talking about ideology, which is even more important. And technology is the way to bring about that ideology, bring it to fruition, so to speak. Let's take a quick little break here and go into a little bit more about Monero and then maybe a couple more questions. And I just wanted to let the viewers know we appreciate you watching us. We have 15 people still with us. That's cool. That's very nice for live viewership and for our channel. And remember to smash that like button if you like what we're talking about here. And do put on some more good questions. I think the questions have been really good today. Super happy with that. And I do remind you, if you like our stream, if you want us to make a little bit better content, You may donate or may not, and it's up to you. We do have our QR code available here, and the funds through this QR code will go directly in buying camera equipment, microphones, stuff like that for the stream team. So be sure to check that out. And I'm gonna shill this Blockchain Summit 2018 that is in Helsinki. It's gonna be the biggest blockchain event in Finland, and we are also part of it. We are in charge of day 2 Helsinki hall. I'll be moderating the hall. I'll be doing the keynote for that side of the hall. And on the other side, there's gonna be Anita Katalargis, aka Crypto Granny, a very cool lady indeed. So I hope to see everybody there. We also have this discount code CONSENSUS2018 that you can get the second day ticket for €160, I believe. We also have a student ticket, which is €75. So yeah, definitely come and check us out. We're going to talk about starfish organizations, which is one of my favorite topics. We're going to present a couple of different new projects there. Niko Alazar is going to be there to talk about artificial intelligence. And by the way, he'll be doing a show later this week with me as well about how to fund the infrastructures in a future society with AI. AI and cryptocurrencies. That's going to be an interesting talk. We have some workshops. We have dApp workshop. We have wallet workshop. And we have Mark Delano from Luno also joining in and talking a little bit about the future of custodian services. We have Raphael, who is going to be also talking there. And we have Henry Prade, who is from Prosos. the biggest Bitcoin company and cryptocurrency company in Finland. He's going to be talking about the future of money. And finally, we have the panel about sound money. It's going to be moderated by me, and all of our guests are going to be talking there. So definitely something to look forward to. We plan to have an after-party. If you're going to be around Helsinki, that'll be a great place to come and meet us. So that's for the advertisements. If you would be kind and throw us some questions there. I had one more question. I actually had 2 things that I didn't get to ask you, Siago, technical things. You mentioned in the beginning there's stealth addresses and ring CT. I don't know what either of those means. So could you briefly tell us about stealth addresses?

Yeah, so stealth addresses— in Bitcoin, the way it works is you have a public address which is generated from your private key, and then you give your public address to the internet, to people, whoever, and people send funds to that public address. In Monero, you have a similar sort of public address, but what happens is when you, the sender, send Monero to an address, You're not actually sending it to the address that someone gives you. What you're doing is the address that they give you is used as an input for a cryptographic function, which then outputs a randomly generated stealth address for that specific transaction. So I can give you my Monero public address, and Niko, if you send me Monero, and Alex, if you send me money, What will happen is both of those transactions will look on the blockchain like they're going to 2 different places.

That's super interesting. I did not know that. So yeah, because I thought it works like Bitcoin. Like you give the address, that's your public key. But then I was thinking like, you know, how is this private? How is it— how is the privacy accomplished? And now You've answered one of my questions. That's pretty awesome. What do you think, Alexei?

Yeah, that's pretty much 101. Any covert communications are only covert if you don't know when you're communicating. So if you have a constant stream of stuff coming in, coming out, you can't discern between the participants of the communication. So that's Very, very good system to use.

The other thing that I wanted to ask about is the RingCT. I don't know what that means either, so would you elaborate on that as well?

Yeah, so RingCT is a technology to obscure the amounts being sent in a transaction, and basically Basically what's going on is it's hashing the input amount of the transaction and the output amount of the transaction. So every time you're broadcasting a transaction, what you're doing is you have outputs that you have the— that you can prove that you can spend. And then you are sending some or all of those outputs to another address and maybe some change. So you have your inputs and then you have your outputs. And what RingCT does is basically hashes both of those numbers. So you have 10 input and you're sending 1 and getting 9 back in change. Then you're hashing both sides of that equation so that you just see the hash of the number. You don't actually see the number itself. And what then you have to do with that is create a proof that you aren't sending negative in order to effectively create new currency out of thin air. And so previously Monero used something called range proofs to accomplish this, but those were very large and bulky and took up a lot of space on the blockchain. But now after the most recent network upgrade, we're using something called bullet proofs, which is a much slimmer proof of that fact that the input matches the output and it's not below zero. And it's less than some arbitrarily large number.

Okay, so you have technology to obscure the amounts, you have technology to obscure the addresses, and you have the garlic roading. That's— I feel like there was a 4th one. Was there a 4th one?

Yes, the ring signatures.

All right. Yeah, the most important thing that wasn't in the first place. That's cool. But yeah, that was basically the only part that I knew beforehand, how it basically works. Yeah, definitely. I need to, I need to do some more research. It's very fascinating. And I realized that it's difficult to explain to these hard— in layman's terms. But then again, I also think it's genius if you can put it in simple terms. These are very, very complex things. And I I think you've been doing a great job.

Zero-knowledge proofs.

What's that, Alexei?

Zero-knowledge proofs. Isn't that right?

Um, what about— yeah, go ahead, Thiago.

Oh, I was just gonna say, so one of the, uh, with-ring signatures One of the cool things about it is every time you send a transaction, what's going on is you are creating new— a new decoy output that can be selected from in future transactions. So the more activity that takes place on the Monero blockchain, the more plausible decoy outputs that can be selected from to mix into a new transaction. And so this is actually what we do at the Church of Monero, is we just have a group of people that are all sending small amounts of Monero to each other in rings in order to increase the number of transactions that are taking place on the Monero blockchain, to increase the pool of possible outputs that can be selected from for future transactions.

Oh, that's interesting. So you actually get together and just send some small transactions to each other? Exactly. Huh, that seems like a lot of work and commitment.

It's not. It's pretty simple. It's interesting though because there is some work involved, and what we've done is for engaging in this activity and participating each week, Users are awarded 1 faith point each week. And it's just, we keep a kind of a matrix spreadsheet of the different users in the Church of Monero and their various attendance for mass and the points that they've earned over time. And it's interesting because while what we're doing certainly is not a blockchain, because in no way is it distributed, And in no way is it— these faith points aren't transferable. They are just almost a reputation sort of system. But it's interesting because in order to get these points, a certain amount of work has to be done, and that work is engaging in the activity of generating transactions and sending it. And so we already have kind of analogies between the way a blockchain works and the way the Church of Monero works, where each week, one week is effectively our block time. And the proof-of-work algorithm for the Church of Monero is the engaging en masse and generating new transactions in this way. So we're beginning to have kind of the very primitive analogy between— Blockchain and the Church of Monero activity.

Oh, it's it almost sounds like the Monero blockchain is depending on the Church of Monero activities.

I I don't I don't I don't think so. The we we're kind of in our own little like niche ecosystem, and if the Church of Monero were to go away, Monero would still survive. and continue on. There's a large community, and there's many other different people in the community like Diego and Samsung Galaxy Player Justin and XMR Halen, who are all leading various other projects like the Monero Games or the Monero Outreach or the Monero Community. And we also have the Monero Research Lab, which consists of several PhD crowdfunded developers and researchers who improve the code. And then we also have, of course, our developer team. And so there's a— the really nice thing about the Monero project is that it's so decentralized and everyone's kind of doing their own little project, and collectively it expands the project in that way.

So you kind of have these Monero rings or groups of people who are doing their own thing but kind of benefiting the whole ecosystem. That's pretty cool.

Yeah, it's really interesting because this is kind of what I do now full-time, is crypto and Church of Monero. And it's— when people ask me, what do you do, it's always an interesting question to try to explain what it is that I do because I don't— there's no job description. It's when I and other people in the Monero community volunteer our time to work towards the project, and the project is then improved, then it attracts investors to the Monero project. And then when investors decide that the Monero ecosystem is a good investment or not, then when they invest and maybe the price of Monero goes up, then— I get paid when the price of Monero goes up. So I volunteer my time for months or years and maybe nothing happens. But maybe my and everyone else's collective effort creates a product that is so desirable for other entities to use that it— we all benefit through our own volunteer contributions to the project.

So how does one get in, Church of Monero?

Yes, you can just join the Telegram chat @ChurchOfMonero. We, we have Mass on Sundays at 18:00 UTC. We also have Mass on Wednesdays at 8:00 UTC. So for people in China or Australia, Wednesdays is better, and people in America and Europe, Sundays are better. But you just, you join. You need to have at least 0.0420 Monero in a synced wallet, maybe a little bit extra for fees. And basically all that you do is you join, you register, and there's instructions for how to do that in the chat. And then we create these different rings for people to participate, and we go through this process. We have many different members who are very understand the process very well and so that they can help explain it to you as well if I'm not available to help you. And yeah, we're just trying to build a community where people who don't necessarily have the technical skills to develop code can learn more about how Monero works and participate in a meaningful way as we also do things like volunteer marketing education by developing memes or educational resources or other ways of outreaching to the community and educating the broader cryptocurrency ecosystem about what Monero is, why it's useful, and how it works.

There you have it. I actually dropped the link in the chat, so please go. I just joined in the Church of Monero. Please do so. All these community projects are very welcome and very for the very least, great place to meet great people and you might actually make a big difference in other people's life in a positive way. So definitely something to check it out. All right. Should we start to run this show towards the end? Do you guys have some final thoughts?

Alexei? I sincerely hope that the minimum amount is randomly selected.

Minimum amount for the amount that we send in Monero?

Yeah. I mean, the— yeah.

The 420?

Yeah.

Oh no, that was not a random selection.

Okay, yeah, right.

That's a good question. Awesome. Also, the audience, if you have any more final questions, now is the chance. We're gonna go to the final round and then we're gonna go to the final show round and then we're gonna wrap it up, I think. So yeah, Thiago, do you wanna Do you wanna— if you want to, if you could leave us with one thought, what would that be?

The next 10 years will be nothing like the last 10 years.

I definitely agree with that. Yep. So we have a question for D3 Barbarian. More and more enterprises, centralized exchanges, banks, etc., are joining the Chainalysis network, which is adding more coins on top of Bitcoin and Bitcoin Cash. Is Monero vulnerable to Chainalysis? What a great question. I want to know that as well.

So in terms of the actual Chainalysis I don't know exactly how they're doing and how they're identifying. I think they're probably linking Bitcoin transactions to some on-ramp like Coinbase or Gemini or Circle, whatever. And Monero, I think the only thing that I've seen on the horizon recently with regards to Monero is this idea that if you have a, say, a tainted Monero output. So let's say some Monero is used in an illicit activity and that wallet or view key is somehow compromised. You're— I'm gonna butcher the explanation because to be honest, I don't understand it well enough myself to explain it well yet. But the idea is that Even though you're using rings with decoys, you still have a directed acyclic graph where the outputs of transactions are still linked down the chain to future transactions. So if some chain analysis determines that one output in an earlier Monero transaction was involved in some illicit activity, then further down the line, if that output is then mixed into other outputs through the randomly selection process of rings being generated, so that output gets selected into a new ring creation, then what One risk that could happen is that exchanges— if you were to then try to send that output to an exchange, the exchange might say, well, that output that we see here links back to some tainted coins output, and we don't know if that's actually your coins involved in the illicit activity or not. So if you want to deposit Monero to our exchange to sell them, then you need to provide us with a view key to prove that the coins that you are depositing are not those coins that have been tainted. So it's a very different sort of chain analysis where it doesn't deanonymize Monero, but what it does is it makes it so that outputs that might have been mixed in together with tainted coins might suffer difficulty in getting those coins onto a regulated exchange.

Huh, that's interesting. I never thought of that. You could actually have tainted coins in Monero as well. But I got the idea that you don't think it's a big problem?

It's an interesting problem because You could then say that, well, that those tainted coins could then be mixed in with every Monero transaction or every Monero output ultimately at some point down the line, and therefore every Monero output is tainted with these— with potentially with these outputs. And I think ultimately what that just comes down to is that if you were to try to send in that sort of environment, if you were to try to send Monero to an exchange and your Monero transactions history linked through the directed acyclic graph to tainted coins, the exchange would just say, look, if you want to deposit these Monero to our exchange, you need to prove to us— you have the burden of proof that these coins were not tainted. And you need to— and so it's a difficult question that I don't have the answer to yet. But this is actually part of what we're trying to do with the Church of Monero, is create new Outputs. So you have, let's say, a number of tainted coins, let's say, in Monero that are— that to some degree are polluting the outputs of other Monero transactions because they are being selected from and mixed into new transactions. And so what we are trying to do is create new outputs that can be selected that are Not tainted that can then be used to select from into future transactions.

All right, thank you. That's a thorough answer. There's also a question about MimbleWimble and Grin. And when I cut out last time, I was about to ask you about that because you were talking about something that sounded a little bit similar to me, like pruning the— like cutting out the excess information to prune the blockchain. So what are your thoughts on those, MimbleWimble and Grin?

I don't know enough about MimbleWimble and Grin to give a good answer.

Okay, that's fair enough. Me neither. Alexei, do you have a thought on MimbleWimble and Grin? Have you looked at those?

No idea, sorry.

All right, that's cool. I want to do— it's a fresh technology. I want to do a separate video on those as well once I found them. expert because I have no idea as well. So, but it's— yeah, this is also one reason why I do these videos, because I want to learn. And one way to— one of the— probably the best way to learn is to teach other people. So that's also one thing to consider. What is the biggest challenge for the crypto industry at the moment? Henry is asking from the audience.

I think education and Practicality. I think many people, especially in Western economies, don't have a need to use cryptocurrencies yet. And so adoption is mostly coming in the form of speculation, maybe some business applications, many, many people hoping to buy crypto and make money on it, speculation. I think the number of people that are investing in cryptocurrencies to hedge their wealth against inflation is growing, but still relatively small because we haven't seen a large change in the environment yet that would require people to think about alternatives to fiat currency to escape inflation eroding their wealth. So I think that'll just— that'll solve itself over time. And honestly, I think it's a good thing that it's taking longer because during this process, The people who are involved now are really beginning to network together and understand how it works and kind of pave the way for more people to come into the system and maybe have an easier time using this technology.

Oh yeah, I totally agree that people are not ready to adopt, not even close, and mostly because they don't need it. The current system, Visa and everything, works perfectly fine. And that is also the first question that the first doubt that most people have, like, can you buy a coffee with Bitcoin? And that's not exactly what is being used right now. Like you said, it's more like a hedge for a lot of people and more like digital gold or a store of value. That is the use case right now. And most people are not apt at investing. That is not something that is commonly taught in schools, for example, which I think It should be taught in school how to invest and how to take care of your wealth. So I don't think most people are even considering hedging against anything, really. So I do think— I do agree that is also a big problem, maybe the biggest problem.

It's very interesting because this technology is a— it's more than just a currency. It is a way of organizing and governing people. And really, it's important that we carefully consider the ways in which we want to organize and govern people from an ideological perspective first as we develop the technology, because there are many competing ideas about what is a proper form of governance and You already kind of see pseudo-tax systems in cryptocurrencies where if you have a cryptocurrency that takes 10% of the block reward, that's kind of a tax. Or if you have some sort of pre-mine, that's kind of inflation. It's, it's a, it's a, it's a, it's a form of governance. If you have different sort of proof-of-stake systems where you have large holders that are making decisions about the consensus of the network. These are representatives of governments, a little micro governments, right? But still. And so I think it's— the technology is so experimental still. Like, it works, you can use it, but it definitely is important to consider the— how it's being used.

Alexei, what do you think is the biggest challenge for crypto industry?

Well, user experience. Just like Thiago said, nobody— well, not nobody, but well, the nobodies of the society can't use it yet. So it's up to us trailblazers to get Get through the toughest parts and then educate.

Yeah, definitely. I agree. We are the trailblazers and we are badly needed. Somebody somebody's gotta do it and we are doing it. And by the way, thank you for our first donation of this show. Oh point zero zero one seven seven five five. Thank you very much. It will be used well at some point. We have a goal of $2,000, but we're probably not going to wait for that. We can probably get some microphones for the streamers for a couple hundred. So once we reach that, I think I'm just going to go ahead and order some from China and we're going to get the audio quality up because that's the thing that you guys have been complaining about the most. So what I'm looking to do is to get the proper microphones for all the regular panelists and then hopefully we up the quality here. Well, thank you for watchers. Thank you for all the likes. Thank you for all the love. Thank you for your attention. Thank you for a wonderful guest, Iago. Awesome information here. And thank you, Alexei, for co-hosting with me again. Awesome. Always welcome. And super excited to have another talk with you guys soon on any kind of topic. I like to always say that I can debate anybody about anything. I might not know everything, but I can still debate. So yeah, any final words, Zyagu? And also, will you let everybody know where to find you?

Yeah, so my best way to contact me is on Telegram @zyagu. Twitter, follow me, RealZiagoo, and Reddit, also Ziagoo. I also have a YouTube channel, Lucas Ziembra, you can find it there. I haven't been uploading many videos recently, but in the next few months I'll be uploading more videos and explaining, trying to figure out new ways to explain the way Monero works and some of the ideas with the Church of Monero embedded in that as well.

Awesome. Yeah, everybody go check out Church of Monero. I know I'll be there in the group, and at least we can talk about some things, and maybe we can do a show together. I'll be on your channel if you're doing videos, if you invite me. That'll be awesome.

Absolutely.

Awesome. So Alexei, any final words? And also, where can people find more about you?

Well, there's links in the description for my Twitter handle, and you can find me in IRC, Telegram, I think in Matrix, and yeah, pretty much quite many, like non-Facebook, non-Twitter— well, on Twitter, I'm on Twitter with that handle as well. So yeah, obviously it's a Twitter link. Yes. But yeah, thanks for the show again, Niko, and thanks, Thiago, for this one. This was great. And I'll also be in the Church of Monero, but because I'm atheist, I'll just observe.

Yeah, thank you for having me on.

Yep, anytime. It's been a pleasure. Everybody, thank you. And if you wanna reach me, you can see my Telegram and Twitter right there under my picture. And yeah, I'm looking forward to the next one. And remember to tune in every Monday, same time. We're gonna be here again. And I don't know what the topic's gonna be, but you can always drop me a line and suggest. And if you have any guests, this was suggested by the community, by the way. So you are the first community guest. So that's also something to mention. Thank you, Strider, for that.

I asked the community. Shout out Strider. Yeah,

yeah, yeah, exactly. All right, that's, that's cool. Everybody have, have a nice Monday. Take care.

Goodbye.

Bye-bye.