Daniel Larimer, founder of EOS, is known for his habit of testing ideas with the community. He has recently done so with REX and URI and now he started a discussion about a privacy coin.
Larimer is a great advocate of radical transparency and therefore the shift towards anonymity has been accompanied by great caution, even if there is no shortage of supporters.
The creator of EOS has been pressed about the futility of his weightings at a time when the price of EOS is falling and governance seems to fall apart.
Some have even insinuated the abandonment of EOS on his part, but he reiterated: “I will say it again, I am not leaving EOS.
In the process of working on EOS security and scalability I stumbled upon a new set of trade-offs for a potential crypto token and I have merely been exploring whether there is a market for those tradeoffs.
EOSIO is the future of blockchain and each day our team at block one is making it faster, more secure, more scalable, and more flexible.”
The problem Daniel is trying to solve is creating digital money without a public ledger or centralized server, while solving the problem of privacy and infinite scalability, but admits that his idea “has some controversial properties”.
During the conversation, he defended his right to explore ideas and his method of doing so. Doing market research, testing ideas on the market before devoting development time, finding what the design finds acceptable and then implementing it are steps he takes before even writing an article on Medium.
Larimer points out several times that the topic only serves to explore new horizons and even if he says that Block.one will not be the one to develop this project, there might be someone interested in it.
The EOSIO CTO started the discussion on Telegram with a whole series of “What ifs…”
– What if I told you that I solved privacy and infinite scalability?
– What if I told you 10 million tps and no commissions?
– What if I told you no ram problems?
– What if I told you that everyone can have their own node?
– What if I told you no voting and no staking?
– What if I told you confirmation time 200ms?
– What if I told you I’m not kidding?
– What if I told you 2019?
– What if I told no ICO?
– What if I told you that the crypto world will hate it?
– What if I told you hardware [wallet]?
– What if I told you no paper wallet?
– What if I told you that a new currency could work as a common currency between Mars and Earth?
– What if I told you that this was thought of in the shower today?
And from this series of hypotheses was born the group dedicated to the idea of privacy coin jokingly named MonerEOS (shower coin).
In the group, Daniel patiently answered all the questions and addresses the concerns of users who are dissatisfied with the “trusted configuration” of the new chain, which means that a person is in charge of configuring the system because as he says:
“it is impossible to prove that the installation does not allow someone to print the coin secretly“.
He admits that it takes a lot of trust and says that there are always compromises.
What do we know about the privacy coin
The coins would not have a finite supply that can be proved, but only estimated like dollars or gold and although there is no need for identity, Sybil attacks will not be possible.
Larimer continues and says:
“I don’t use zk [zero knowledge], no bulletproof, the protocol is immutable and privacy will be implemented in everything.“
The possibility for everyone to be a node means that there will be no block producers, but the “biggest problem is if security fails no one would know until the tokens flood the market“.
It’s not a platform for smart contracts, it’s just token issuance and “gambling.”
The currency would be deflationary and provide better security for EOS. It would be possible to see the balance of the account, but the chain would not need servers or centralized dependance. “Trustee burns private key after done”.
Here’s a recap of the properties of the privacy coin:
Impossible to upgrade;
Not suitable for DEX;
No quantum entanglement;
It’s entirely decentralized once created;
More so than any blockchain;
It is truly peer to peer;
A massively decentralized and shared database;
No global state. Order enforcement on per account basis;
No double spend;
No passive acceptance… receiver and sender both need to be active to execute a transfer;
Initially allocated and sold;
No payment channel;
Just a limited supply digital good;
No account names;
Public address keys;
Frequency limit is 2 tps per account;
Private payments cannot be closed while bitcoin can be closed and is not private and Monero can be closed and its history displayed;
This idea is better than Monero, Zcash because of the lower latency;
This will have the side effect of protecting all the crypto blockchains.
Why does a privacy coin require trust
The initial configuration of the chain requires trust in the creator, however, Daniel adds that “if you trust the creator and have confidence in the security… then it will enable more decentralized version of bitcoin with no limits on tps”. The creator should not have access to funds because the keys are burned, he then adds: “Well if creator is trustworthy he won’t have access”.
Even if security were to fail, the fact remains that privacy would be guaranteed and disclosure would be safe.
The initial trust requirement creates some doubts around the project and in addition, it is expected that any price drop comes with speculation that the algorithm has been breached, however, if the security measures work properly and the creator has burned the keys, the system should work properly.
Dan adds: “The idea is solid. Governments are already relying on technology security, and corrupting security would probably require resources at the national level.
The privacy coin seems almost unstoppable as the speed of adoption would be potentially very high. The coin would preferably be adopted by small communities and ideally by multiple networks. This is because a single network failure can damage all types of tokens on that network. If a network manages to gain such confidence this would lead to its success, but at the same time, the risk of attack would be greater. For this reason, there is a need to keep the networks small which would still maximize decentralization and therefore resilience to censorship. Larimer uses the word net instead of chain.
Initially, the privacy coin would function like bitcoin, i.e. with low-value trading until the market learns to trust it. Ideally, people should only keep as much as they need and as much as they could afford to lose. In short, a bit like cash in your wallet with the difference that you can’t send cash to the other side of the world in a matter of seconds.
This could eventually allow EOSIO to go beyond the DPOS and end censorship.
This hypothetical token would be immutable, non-programmable, and limited to a currency role. It would in no way compromise the much larger use cases for EOSIO applications,” says Larimer.
Some users have compared this coin to national currencies such as the US dollar. Roughly speaking, the mechanism is very similar. Larimer himself alludes to fiat currencies and the banking system: “A nation-state that wants to kill it would swell it endlessly” or “People use cash every day, even if nation-states can counterfeit it” are just some of the insinuations that underline the malfunctioning of national currencies and the system in general.
The CTO is convinced that his privacy coin would be very successful despite all the compromises and what he calls “bounty” would be the key point of its propagation.