Recap of Guarda Wallet& Monero AMA
- Why MONERO covers all investors’ transactions and can’t be tracked. How do investors know their transactions when the transaction is delayed?
Monero indeed does have mandatory privacy. This means you can’t send a non-private transaction. This is because this is the only way to keep everyone ACTUALLY private.
Most people really don’t understand how to achieve privacy. Most of the privacy coins you may fall, probably don’t know just how difficult privacy is. They think it’s something you just bolt on, and it works. But it doesn’t work like that.
Let me give an example. Privacy is all about hiding in a crowd. If the crowd is small then the odds of finding you increase dramatically. If you are hiding in a crowd of five people, then even if I took a random guess, I have a one in five chance of finding you. If the crowd is one hundred people, then if I took a random guess I have a one in a hundred chance of finding you. The bigger the crowd that you’re hiding in, the greater the privacy.
So, let’s look at Zcash. They have a very strong privacy protocol that has very good privacy guarantees. But they make the privacy optional. Because it’s optional, very few people use it. Less than 10% of their transactions use it in any capacity, and less than 4% use it to the fullest capacity. So even though they have a very strong privacy protocol, the crowd that you’re hiding in is actually not as large as it could be.
Monero makes all transactions private to increase the crowd. It’s not really optional for you to not be in the crowd. Your transactions now increase the size of the crowd for everyone, and everyone for you. Privacy is actually very fragile, and I’m going to guess that most people here don’t know how hard it is to get right. Monero has taken steps to make sure that the average user doesn’t have to worry about getting it right, because we make sure from the start that you can’t get it wrong.
2. Does Monero’s security guarantee that investors’ transactions and data cannot be hacked?
There is no 100% guarantee anywhere that your privacy will not be broken. Tor cannot 100% guarantee your anonymity. I2P cannot 100% guarantee your anonymity. This is important to understand. NOTHING can 100% guarantee your privacy and anonymity. If anyone tells you they can 100% guarantee this they are LYING! Once again, privacy is really, REALLY hard to get right. And even though Monero has taken steps so that way the average user doesn’t accidentally do something to deanonymize themselves, it’s not a bulletproof vest. Monero is just one tool in the privacy tool belts. If you want to be very private, you need others. You should be using Tor every day. You should have a password manager like KeepassXC. How to be private goes way beyond the scope of this AMA, so I won’t be able to give tons of tips and tricks, but the answer to the question is no. Monero does not give a 100% guarantee. But neither does literally any other privacy tool out there. But, Monero is about as good as you can get for the average person. :)
3. You know that DeFi project is very popular right now, does it affect the XMR trading Ecosystem or the future plans of XMR?
So, I don’t have time to get into my full opinion about DeFi. But I’ll cover a few things. As most of you know, DeFi stands for decentralized finance. The idea is that we can emulate the roles and services of the traditional financial system in a decentralized way. Usually using smart contracts and blockchains. So things like taking a loan? Trying to do it in a decentralized way. Escrow? Decentralized. Etc.
Well, one of the things of traditional finance is sending money, which is something Monero, Bitcoin, and others already do. So Monero actually is DeFi. But I know that’s not the answer to the question you were wanting. I just wanted to begin with that so we can have a common understanding that Monero already is DeFi. Monero itself does not have the ability to deploy smart contracts on its blockchain. So deploying “DeFi contracts” on it is not possible. But very recently Monero has completed research on allowing atomic swaps on the chain, which means it is possible for Monero to interface with a smart contracts platform.
4. Does XMR have a plan of launching a Staking Mechanism in the near future?
Regarding staking, XMR has no plans to deploy proof of stake. Proof of Stake as a security mechanism is not yet proven, and has a much larger attack surface than proof of work. PoW is very simple and easy to understand its strengths and weaknesses. PoS has a lot more game theory behind it, and is generally less well understood. This means I think it’s kind of silly for people to be deploying PoS until it’s better understood. It’s like if we find a new, but unproven way to build buildings or bridges, and before we wait to see if it’s proven, we start building right away. If there is a fatal flaw discovered at any point in time, all of those buildings and bridges would collapse, but we just couldn’t wait. But I’m not going to go on a PoS rant, because I could be here all day. :P
The last thing I want to mention regarding PoS is, Monero couldn’t deploy it, even if we wanted to. Monero hides amounts exchanged and owned using our RingCT technology. In order to stake, you need to reveal how many coins you are staking so the protocol can give appropriate weight and chances to you signing on a block and receiving the block reward. Since all amounts are hidden in Monero, there is no in-protocol way to reveal amounts for something like this. I do know many people are working on privacy-preserving PoS. A few project claim to have solutions. But it remains to be seen.
5. Can you tell us a little about Mine and the crowdfunding system on Monero. What are the benefits of getting mined on the Monero network? So, Monero mining is egalitarian, meaning that it tries very hard to make sure people are equal. Most coins are mined with ASICs these days, so if you don’t have an ASIC, you really aren’t mining competitively. You don’t have a real chance to find a block. That’s because ASICs can mine orders of magnitude faster than others. It’s not just 2x better. It’s like 1000x better or more. Monero has made a protocol called RandomX. Making ASICs for it isn’t really possible. This means that every person can mine and have a chance of finding a block reward. In fact, as recently as a month ago, there were several individuals in the Monero community reporting they had found a block by themselves. Mining itself is a big, and sometimes confusing topic. One Monero-focused company wrote a great little post about RandomX with easy-to-understand examples. Read it here: https://localmonero.co/knowledge/monero-mining-randomx. very good and easy to understand.
6. How does the crowdfunding system work on Monero?
Monero has a CCS or a Community Crowdfunding System. You can view it as ccs.getmonero.org Monero did not take a premine, does not have a founder’s reward (like Zcash), and didn’t have an ICO (like all the other shitcoins). So basically, Monero, as a project, has no money. :P
We also don’t have a corporation, or a foundation, or any sort of entity behind us. There is no “Monero Foundation”. It’s similar to Bitcoin in that manner. Really we’re just a bunch of people passionate about privacy that come together in very loose structure to work on this coin. But, there are times when we need money for things. Domain names have to be purchased, servers have to be paid for, and some people who want to work or code full time need to be paid.
We use the crowdfunding system for this. It’s kind of like kickstarter. Someone makes a proposal about what they want to do, how long it will take them, and how much it will cost. IF the community likes it, they will donate to it. If they don’t then they won’t. Through this system we have funded new technologies, audits, one full time PhD to work in the Monero Research Lab, a full time coder, and much much much more. You can look at our Completed Proposals area for details on what’s been done. The system is so powerful that Zcoin decided to fork it and make their own version, the ZCS (zcs.zcoin.io).
The CCS is, of course, open source, so forking it and making your own isn’t a problem. This means that people are always subject to the will of the community. Premines, founder’s rewards, and ICOs ensure that the founders always have a good amount of money with which they can exert their will, even if it goes against the community wishes. But with the CCS, the community decides what to fund. Not founder’s. The community decides which direction the project goes.
7. Can we treat Monero as the best privacy coin? If yes, how?
In my personal opinion, I think Monero makes the best tradeoffs between privacy, trust, and usability. Zcash, for example, has ‘theoretically’ better privacy with zk-SNARKs, but SNARKs come at the cost of introduced trust. They compromise on trust for an increase in privacy. Monero does not make this compromise. There are many other privacy coins that make different trade offs, depending on the technology they use. The biggest competitor right now to Monero, isn’t even a privacy coin. It’s Bitcoin. Bitcoin is now making privacy technologies for it, but the trade offs are usually quite poor.
Bitcoin is not making privacy at the base layer, and they don’t make it mandatory, so the crowd that you hide in is vanishingly small. It ends up being not very private at all. But the Bitcoin people think it is. Because they don’t understand privacy. ;) I don’t hold very much cryptocurrency at all. But, like, 95% of the coins I do hold is Monero. Because Monero is actually digital cash, which needs to be fungible.
8. Regarding the “ring signatures” used by Monero, when the public keys are shuffled, is there an encryption of them or is the protection given by another mechanism?
There is no encryption on the ring signature aspect. Ring signatures obscure which output is the real one. Outputs can be linked to senders, so it’s helpful to think that ring signatures hide the sender, but it’s not that 100%, because even if you correctly identify the output, that doesn’t mean you identity the sender. But Monero takes a multi-prong approach to privacy. Ring signatures hides the output (sender), RingCT hides the amount, and stealth addresses hide the receiver.
Of these, ring signatures is definitely the weakest part of the scheme, but the good news is that if someone does break one ring signature (using heuristics, poor output selection, or what have you), it doesn’t 100% reveal the sender, and doesn’t break the other technologies (RingCT and stealth addresses) so it doesn’t reveal the other info (amounts and receivers respectively).
9. You mentioned that monero is based on traditional decentralized payments can you tell us what payments Monero supports?
Although I’m not quite sure how to answer it. What kinds of payments does Monero support? Direct, non-interactive, p2p payments. Some protocols, like mimblewimble, are interactive. Meaning both you, and the person you’re sending to need to be online and interacting with the protocol to send and receive. Whereas with Monero and Bitcoin and others like it, only the sender needs to be online. The receiver can still receive even if they’re doing something else, and they’ll see the transaction when they look at their wallet. Direct means that it goes straight from the sender to the receiver. This seems obvious, but not every coin does this either.
For example, Zcoin’s sigma protocol (which they are moving away from), requires you to send a coin to yourself to achieve privacy. And THEN you send to someone else. So basically it goes You > You > Recipient if you want it to be private. Whereas Monero goes straight from You > Recipient and still achieves privacy. There’s no extra step. It’s as simple as that. Monero is just sending money to another Monero address, and it’s private automatically. You don’t have to do anything to achieve maximum privacy. It’s just there.