Competing Payments: Who Is Better, Anonymous Coins or Stable Coins?
Since the beginning of this year, one of the things that has attracted the most attention in the industry is Facebook's official announcement that it will launch the cryptocurrency Libra. Libra and its alliance chain members have a large number of users and payment scenarios, which makes people pay attention to the possibility of blockchain technology in the payment field.
In fact, becoming a decentralized electronic cash was the original vision of the Bitcoin white paper. After Bitcoin finally moved towards the position of "electronic gold", many cryptocurrencies aspired to become payment cash, such as Ripple (XRP) , Dash (DASH), and a series of stablecoins that are seeking offline usage scenarios.
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Grin’s Privacy Coin Features Perfectly Match Cash
In January of this year, under the heated discussion of the media and bigwigs in the circle, Grin, an anonymous coin developed based on the MimbleWimble protocol, became the first "popular spicy chicken" in the currency circle in 2019. The popularity of Grin has also brought heat to the entire anonymous coin sector.
Gary said that Grin was originally designed to realize Satoshi Nakamoto's dream of decentralized electronic cash. Grin not only hides transaction data, but also simulates cash with an unlimited issuance mechanism. From the perspective of anonymity and issuance mechanism, Grin is perfectly equivalent to real-life cash.
But Grin itself has some problems that are not taboo to talk about, that is, the expansion of the transaction capacity is very limited and the price is unstable. In fact, most decentralized cryptocurrencies have these two problems. The two points of sufficiently large transaction capacity and price stability are precisely the important characteristics of payment currency.
In Gary's view, relying on the scalability of the MimbleWimble protocol and designing a decentralized price stabilization mechanism, it is entirely possible to create a cryptocurrency that is closer to electronic cash.
The popularity of Grin has also brought heat to the anonymous coin sector.
According to CoinMarketCap data, as of September 23, there were 6 anonymous coins among the top 100 cryptocurrencies by market value, among which Monero (XMR) had a market value of $12.33, ranking 12th, the highest among all anonymous coins. Dash (DASH) and Zcash (ZEC) also entered the top 30 by market capitalization, reaching $814 million and $343 million, respectively.
Beam and Grin, which are based on the MimbleWimble protocol, are still relatively low in terms of market capitalization due to their short release time.
Gary believes that "the existence of anonymous coins has its inevitability, because cash has been used for thousands of years, and the natural privacy of cash is the characteristic that all cryptocurrencies should have." For example, in the past, people paid cash to buy goods, except for transactions Neither party is known to the other, so the flow of cash is largely anonymous. However, the development of new technologies, especially the popularity of mobile payment, has obliterated the anonymity of payment currency. Gary believes that this is unreasonable. Social progress and technological development will inevitably give people the opportunity to pay more and more attention to protecting personal privacy, not the other way around . The emergence of blockchain technology and the development of privacy protection technology make this possible.
In fact, several mainstream anonymous coins also advocate becoming tokens applied in the payment field. For example, Monero and Zcash call themselves "digital currency" on the official website, Dash calls itself "digital cash" on the official website, and Grin's goal is to become a decentralized payment cash.
In Gary's view, the value of currency has three main points, namely, the medium of exchange, the unit of account, and the stored value tool. Circulation is a basic need for the medium of exchange function. The above six anonymous coins have relatively good circulation in exchanges, especially Dash and Zcash, according to CoinMarketCap data, have been listed on 115 and 94 exchanges respectively, and 257 and 211 trading pairs have been opened. In terms of the number of exchanges listed on these two anonymous coins, they are almost the same as Bitcoin, Ethereum and EOS, and even better than mainstream stable coins. Even Grin, which has only been online for 8 months, has already been listed on 30 exchanges and opened 57 trading pairs.
Although there is recent news that OKEx South Korea will delist all anonymous coins on October 10, including XMR, DASH, ZEC, etc. In June of this year, FATF issued a cryptocurrency supervision bill, requiring exchanges to collect and transmit customer information during transactions, including the name, account and address information of the transaction initiator, and the name and account information of the recipient. This has the potential to be a serious blow to privacy coins.
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Privacy protection should be one of the core connotations of blockchain
Privacy protection is one of the most important features of privacy coins, and it is also the aspect of privacy coins that is most similar to cash. In fact, other major cryptocurrencies are looking to increase anonymity. At present, with the development of the blockchain industry, analysts have been able to make increasingly strong inferences about the transactions of blockchain networks such as Bitcoin, and associate transactions with specific people, institutions and organizations. This is obviously not the case. The original intention of the development of decentralized cryptocurrency.
Nowadays, more and more people in the industry believe that privacy protection is important for the development of blockchain technology. Gary believes that "privacy protection is obviously very important, not only the blockchain, it is a trend in the development of the entire Internet." From the perspective of technological development, mobile Internet technology has revolutionized the way money is used, and people no longer necessarily need to face-to-face to Transactions, micropayments and change made easy, with faster transaction times. But these conveniences also come at the complete expense of privacy. On the basis of retaining the convenience brought by Internet technology, blockchain can make up for the absence of privacy protection through technical means. This is undoubtedly a new technological revolution.
Gary further explained, "In China, the two major mobile payment systems are highly popularized. Everyone can scan the QR code to pay for food on the street. In the hands of a small number of companies, this may contain huge social risks.” Although in real life, protecting data privacy is not so urgent, he emphasized that this is not something to worry about. “The more advanced the society, the more privacy will be paid .Maybe at some point in the future, through a certain event, everyone will re-aware of the importance of privacy protection."
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Capacity scalability is critical for payment scenarios
The emergence of Grin and Beam not only brought fire to anonymous coins, but also brought fire to the MimbleWimble protocol, which is a protocol that emphasizes absolute privacy and anonymity, mainly through technologies such as elliptic curve cryptography, zero-sum verification, zero-knowledge proof, and Dandelion protocol. Realize privacy protection.
The highly anonymous nature of MimbleWimble limits the expansion of transaction capacity. Grin's transaction capacity can reach a maximum of about 15 transactions per second. Compared with Bitcoin's 3-5 transactions per second, the expansion is very limited. This is mainly because Grin hides the transaction amount, and the 64-bit amount is encoded with a 675-byte atomic range proof to prove that the value is a number greater than zero and less than 2 to the 64th power without revealing the specific value . This range proves to be the main body of MimbleWimble transaction data, accounting for about 85% of the total data.
Is it really necessary to hide the transaction amount?
Gary’s point of view is, “The emphasis on technology is different in different application scenarios.” He believes that from the perspective of privacy protection of anonymous coins, all data elements should be protected, even Grin currently does It is not enough, in fact, it is necessary to further improve the privacy protection of transaction addresses. Because Grin's transfer still requires an address, either an IP or a domain name, but this is likely to cause the address to be monitored or spoofed. But if it is used in the payment field to become a payment currency, then the scalability of capacity is a more important consideration. We must know that the payment volume of daily economic activities is very large. The average transaction volume of Visa in 2018 is about 4,000 transactions per second.
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Stablecoins are one of the ultimate landing scenarios for cryptocurrencies
At present, decentralized cryptocurrencies actually have two of the three major functions of currency, namely, a medium of exchange and a store of value, but still none of them can become a unit of account. As a unit of account, currency value is required to be stable. Gary believes that this is a major problem hindering the application of cryptocurrency payment, "Because the currency value is unstable, no matter how hard the currency circle is, it is only a small circle, because it is impossible for the general public to use it in their daily economic life, or it is impossible to use it on a large scale. .”
Stablecoins have a huge application market. Emerging stablecoins emerged one after another last year, and stablecoins are recognized as one of the market infrastructures. According to data from CoinMarketCap, stablecoins are indeed the closest type of cryptocurrency to stable currency values. In other words, their currency prices have the lowest volatility, especially fiat currency stablecoins. The average daily volatility of USDT, USDC and TUSD has been less than 1.5% this year. Among the mainstream currencies, BTC has the least daily price volatility, but it has reached 4.25%, ETH is about 5.36%, and EOS is as high as 6.46%. The average daily price fluctuation of anonymous coins is even greater. The smallest DASH also has 5.37%, the highest BEAM has reached 13.07%, and Grin has also reached 10.92%.
Gary believes that when discussing stablecoins, we must first see that it is an application scenario, and it is the ultimate application scenario of cryptocurrency, and then analyze various technologies. “Currently, the stablecoins on the market are either obtained by 1:1 mortgage of fiat currency, or by mortgage of other cryptocurrencies in an over-collateralized manner. There are a series of problems in collateralized stablecoins, such as centralization risk and liquidation when the price of mortgaged assets changes. Risks, low asset utilization efficiency, etc.” So until now, all stablecoins are collateralized stablecoins, and the exploration of unsecured stablecoins is still very limited. Apart from an earlier failed attempt by Basis, there has not been a single successful project so far.
"This is why I hope to try and make breakthroughs in the most important application scenario of payment. I hope to create an ultra-lightweight chain based on MimbleWimble, which supports the issuance of a series of decentralized non-collateralized stable currency assets, which can be very It is convenient to expand the capacity and maintain some privacy features.” This is the goal of the new project Gotts.
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A purely community-driven model is not conducive to winning in modern technology competition
Grin is completely community-driven, especially in the currency circle. As one of the main development contributors and a former member of the Grin committee, Gary believes that the pure community-driven model has many advantages, but it is not easy.
The advantages of pure community drive are mainly reflected in community building. The most respected point of blockchain lies in decentralization and community governance. The higher the community popularity and participation, the more beneficial it is for the governance and promotion of a chain. For open source projects, the total number of Github followers and developers is an important dimension to measure community popularity.
As of September 24, according to Github statistics, although Grin is the latest release, it has the most followers among the six mainstream anonymous coins, with a total of 4,401 followers, followed by Zcash and Monero, with 4,071 followers respectively Followed by 4013 people. But also based on the MimbleWimble protocol, only 456 people follow Beam, a competitive project relying on corporate operation. Purely community-driven Grin has its own popularity.
From the perspective of the number of developers, the purely community-driven Grin has 136 people participating in the development. Although it is obviously less than the old projects such as Monero, Zcash and Dash, it has more participants than Beam and Zcoin.
Although purely community-driven projects do not have problems attracting developers in the long run, the development efficiency is not enough. As of September 24, judging from the number of historical code submissions on Github, Beam with only 22 developers had 6,111 submissions, and Grin with 136 developers had only 2,145 submissions.
Judging from the update data of the Github code base in the last month, although Grin has a large number of developers, it is far lower than Beam in terms of submitted updates. As of September 24, the Beam development team has submitted more than 40,000 additions and 10,000 deletions in the past month, and the code updates are very active.
"From a competitive point of view, (completely relying on the community) is far from enough." Gary said, "Although I also wanted to attract more developers to join through publicity and appeals, I didn't receive too many Feedback, because Grin has no foundation and no money, and if people come to work for the community, you can hardly give anything in return.” Now Grin’s development mainly relies on donations, and the amount of donations is not large, and it is only used for two full-time developers. Pay wages.
So Gary believes that purely community-driven projects have many advantages, but they are not easy to come by. If possible, at least there can be a development foundation that can support the rapid advancement of development and ecology, which can obviously develop better.
Reference: Gotts Github
