If monero was the top-performing cryptocurrency of 2016, don't tell that to the blockchain project's outspoken maintainer.
At a Club Med resort in Cancun, Mexico, Riccardo Spagni takes a pause from his general airing of grievances to order his second margarita. Armed with oversized shades and jovial blue shorts, he looks more 'Jersey Shore' than 'Mr Robot', a style you might not expect from someone whose claim to fame is offering privacy in drug market payments.
But, the impression that Spagni isn't to be taken seriously is soon wiped away by his biting South African accent and razor-sharp quips, like the ones he directs largely at those who want to measure the success of monero by metrics like price.
Spagni told CoinDesk:
"I don’t care about the price increase, that shouldn’t be the thing that makes people interested. In terms of transactional growth, in new contributors, in transactions per day, those have far more meaning."
If you really want to know, monero is now the fifth-largest by market capitalization (and one of the fastest-growing by price in 2016), and it has been growing rapidly by the metrics Spagni cites (as well as other intangibles) as well.
But given that monero has been around since 2014, it isn't hard to understand why Spagni displays the chip-on-his-shoulder attitude you might expect from someone who has elbowed his way into the in-crowd.
Ever since online dark market AlphaBay began accepting the cryptocurrency in August of last year, the narrative around the project has undoubtedly shifted.
Spagni acknowledges this as we're sitting at Satoshi Roundtable. An invite-only gathering of bitcoin’s inner circle, it hasn’t historically been welcoming to alternative blockchains (or private versions) on the basis they distract and detract from bitcoin.
He seems a bit taken aback by the embrace as well. Spagni even earned a rare speaking slot at Coinbase last month, a visit that put him face-to-face with developers from one of the industry’s most heavily regulated startups.
"I don't really know how that happened," he said. "At some point, people started to realize what we were doing wasn't stupid."
But he also credits his rise in creditability more to monero's technological achievements. There's a case now that monero might be the first fungible digital currency ever created.
Respect the technique
Core to the increasing interest in monero is how its blockchain works (and how it has succeeded where other blockchains have run into issues).
A proof-of-work blockchain like bitcoin, monero's is rare in that it was built without forking bitcoin's code. Because of this, the project has some interesting features – it has no block size (favoring a more elastic system with penalties) and is expected to be almost completely mined at a faster rate than bitcoin.
But the most interesting tech feature to many was monero's implementation of ring signatures, which allowed users to interact with the blockchain but maintain privacy. Essentially, monero works like a built-in mixer – users sign a transaction using their private key, public key and the public keys of other users, the latter of which obscures the source of the transaction to the network's distributed ledger.
The cryptography was introduced in a 2001 paper by computer scientists from MIT and The Weizmann Institute, which has also bolstered its standing when much of the cryptography powering blockchains is new or experimental.
More abstractly, the addition of ring signatures sidestepped a problem that Bitcoin Core developer David Vorick (and others) argue is one of that network's biggest unresolved issues.
As he put forth in a recent CoinDesk feature, regulated bitcoin companies now monitor for bitcoins that have "fringe histories" or that may be associated with crime or illicit trade, but they are able to do so because of the comparative limitations of its cryptography.
"Because any platform in any jurisdiction can damage fungibility by choosing to discriminate between coins, most fungibility improvements come down to privacy. The best way to protect fungibility is to ensure that there's no way to tell the difference between two coins, regardless of the actual history of those coins," he wrote.
This is essentially what monero achieves.
With bitcoin, it’s safe for companies to assume that someone using a mixer has some reason to hide the history of their coins. With monero, however, all transactions are mixed automatically.
For this reason, bitcoin core developer Greg Maxwell told CoinDesk he believes monero was one of the first altcoins to have made a "really interesting" technical improvement that’s of interest to the wider blockchain community.
If all the above sounds slightly familiar, then you might be aware of zcash.
The first blockchain-backed asset to be backed by major VC firms, zcash caused a stir when it launched last October, in part because it boasted enhanced privacy features aimed at solving this very problem.
To bitcoin developers like Maxwell, the interest in monero primarily revolves around how it applies privacy (which is default for all network users) and how this compares to other blockchains that seek to offer fungible payment (zcash, for example, makes its privacy features optional).
As reported by CoinDesk, though, not many people seem to be using the feature with zcash.
For those academically inclined to understand which features might be best, this horse-race competition between the networks means the possibility of new advances.
"Fungibility is a really hot topic right now," bitcoin developer and Ciphrex CEO Eric Lombrozo said.
"Everyone is looking for ways to get that done. It’s something we’d like to see explored and tested."
For Lombrozo and Maxwell, the development offers an interesting litmus test by which they might consider aspects of each currency’s approach.
But the journey to this point for monero is a long one.
It starts back in 2013 with the publication of another white paper penned by an unknown developer. Credited to a still-anonymous Nicolas van Saberhagen, the CryptoNote white paper speculated on how bitcoin might fall short on offering privacy.
"Bitcoin does not satisfy the untraceability requirement," the paper reads. "Since all the transactions that take place between the network’s participants are public, any transaction can be unambiguously traced to a unique origin and final recipient."
Soon, developers sought to build off the paper's ideas, with the first incarnation being for a short-lived digital currency called bytecoin.
The project, Spagni noted, would later come under fire for the alleged improprieties of the founding team, including the fact that many of the network’s tokens were set aside in a "pre-mine", where coins were distributed before being available to the public.
Spagni said that he became interested in the "fair relaunch" of the network called BitMonero, which was later forked away from its lead developer in April 2014, again under suspicious of improprieties.
Yet, at the time, even he notes that his intentions weren’t entirely altruistic.
"I thought, 'I'm going to pump it and dump it,' because I was interested and taking the ideas and implementing them in bitcoin. The bitcoin code base was far more interesting to me than monero, and I thought, 'I'm not going to work on this codebase, it’s terrible,'" he recalls.
After of all this, however, monero miraculously emerged, growing slowly over time into a project that's now one of the more reputable in the field, despite use cases that may be unsavory to some.
The credit lies with how monero's team made adjustments along the way.
In 2016, for example, developers Shen Noether, Adam Mackenzie and the Monero Core team released a paper that envisioned how they would build off the privacy innovations in the original CryptoNote paper (whose authors had, presumably, all since left).
Called Ring Confidential Transactions (Ring-CTs), the paper explored how Confidential Transactions, a proposal made by Maxwell for the bitcoin network, could be implemented on monero, thereby keeping transaction amounts hidden from the network (along with other differences).
Monero is now in the process of updating its network for the upgrade, completing a series of hard forks (the last of which will be in September of this year) to realize the addition.
At a time when hard forks seem to be the most contentious changes to any digital currency, monero has mandated hard forks on its network every six months, in which users must accept an update to stay with the main blockchain.
That this is possible when bitcoin has been debating one hard fork for years has not gone unnoticed, even becoming a point of reference in bitcoin’s block size debate.
Spagni largely credits the movement on the development front to cultural differences, and the fact that monero adopted a development process where any contribution that isn’t "dumb or obviously bad" is added to the code base.
"Because of that open structure, we have had people pitch up and people work on it, sometimes they’re there for a few weeks, sometimes they’re there for three years," he said.
There's an attitude difference as well, in that the project has a bleacher-seat distaste for vested interests.
"I think there’s a lot of respect from the wider audience because we don't make decisions based on stakeholders interested in short or long-term profit," he said, adding:
"We're getting that social capital because we hacked away at stuff and aren’t idiots, I can't think of another reason."
It's perhaps this long road (and element of outsider-ness) that has made Spagni one of the most vocal critics of developers seeking to start successful blockchains by engaging in "token sales" or "initial coin offerings".
In this case, rather than disrupting the coins in an open, competitive market, they are sold online, first come, first serve, sometimes with only a poorly written white paper to show.
Spagni is not alone is his criticism, though his project offers a rare counter to those who describe token sales as a promising vehicle for project fundraising.
"By and large there’s a lack of seriousness and rigor in the broader community," he said. "Experimentation is super important, but when people start losing money, you can’t just say you shouldn't have invested more than you’re willing to lose."
At stake in this argument is not just another use case, but the pros and cons to one of the lowest friction ways to promote interest in blockchain tech. (Major VC firms including Union Square Ventures and Andreessen Horowitz are already interested in the idea).
Spagni, however, writes the model off as wishful thinking.
The irony is that Spagni has perhaps been most outspoken about exactly this sentiment, this kind of loose consensus that he argues favors the "loudest voices" and not the most "technically qualified", even as he acknowledges monero is currently benefitting from a similar word-of-mouth buzz.
There’s a social element to all this, one admitted by interviewees.
Lombrozo describes Spagni as "a good guy" with "good intentions", a sentiment that is echoed elsewhere.
Olaoluwa Osuntokun, a developer at bitcoin’s Lightning Network, for instance, called the monero development team "not overt scammers", a compliment that could pass for high praise among a notoriously fickle bitcoin crowd.
So, what should we make of the project with suspicious origins, a suspicious use case and a man who goes by the online moniker ‘fluffypony’ at the helm?
Spagni argues that, realistically, we shouldn’t have high hopes.
"The greatest likelihood is monero fails, it’s that bitcoin fails," he said.
Yet, there are signs he doesn’t quite believe that.
Spagni also sees a future where bitcoin and monero (and other blockchain networks) complement each other, one where bitcoin may be a store of value and monero may be more of a payment method, a digital cash that can be used for anything and everything – whether it fits into accepted norms.
Asked about the new statements by US investigators, and their interest in monero, Spagni proceeds to attack morality and those who target the technology he helps develop for its supposed violation of it.
"If you buy a bible in a country where it’s banned, most people will say that’s fine. But maybe it’s outlawed in their country, so now that person goes to prison or is put to death because they bought a bible," he said.
"Now, what if the way that person was caught was because we screwed up? We treat it with that care."
For now, Spagni is intent to keep working on the project, and keen to stay off the conference circuit and on Twitter, where he aims to continue being a divisive voice.
"I've spent three years now, without realizing it, trolling and being self denigrating, and I think that people are starting to realize that good technology isn’t the result of a single person," he said, adding:
"We need to fight against the culture of personality that exists in this space."
Image via Riccardo Spagni