In case you're wondering why you haven't seen a TD issue for the past week it was because of...reasons. But we're back, and we have a few exciting announcements to make soon 😏
TWEET OF THE DAY
"Fyre Festival but on the blockchain."
- Arbedout, with a thread on the Fyre Festival documentary and how perfectly (tragically) the scenes map to the lifespan of a vaporware project.
THOUGHT OF THE DAY
If you're unfamiliar with Grin and the Harry Potter crew behind the coin, read this post to learn what it's about and read Linda's thread for the Harry Potter references.
If I were going to sort privacy coins into different Hogwarts houses, Zcash would go to Ravenclaw because the founding team is largely made up of PhD-level scientists and cryptography experts, Dash would go to Hufflepuff because they're...nice?, and Monero and Grin would both go to Gryffindor* because it's tough to tell the difference between the two. At least when it comes to privacy preservation. In fact, Grin might be a little worse off.
Why privacy coins
Since bitcoin transactions are on a public ledger, all someone really needs to know is your wallet address to see your transactions. Privacy-focused coins try to solve this problem by making your transactions tough to trace. You might be thinking, why doesn't bitcoin just incorporate privacy features?
Well, to make a very long and involved discussion short, if you've ever talked to anyone working on Bitcoin Core you'll realize: one, just how tough it is to introduce these types of changes to bitcoin (which is a good thing, considering you're using this code as money). And two, bitcoin actually has had small privacy proposal wins in the form of Schnorr signatures and Dandelion.
In the meantime, a handful of privacy coins are racing towards Mainstream Adoption™including recently-launched Grin. Grin coming online sent the cryptosphere into tizzy for a few reasons:
1. Grin had a "fair launch," best described by Eric Meltzer in his latest issue of Proof of Work:
2. Credible people in the space have been vocally positive about the project.
3. Privacy is an actual use case.
4. Grin has a predictable monetary policy.
5. Grin was launched under a pseudonym, reminiscent of bitcoin's go-to-market. If I remember correctly, a few projects, including Tezos, had considered launching pseudonymously but realized it was almost impossible to pull off in the 2010s. Truly, the chances that you completely cover your tracks on the internet today are about the same as finding a snowball in hell.
There are a few and no project is perfect. But what's odd is how forgiving our usually hot-headed, im-brutally-honest-but-revel-more-in-the-brutality-than-the-honesty space has been towards Grin. Perhaps the social stakes are too high to be contrarian and wrong here. Or I just don't follow enough Grin skeptics. Or the project really is that good.
The idea, however, that Grin is more secure or more privacy-oriented because an address can't be reused after a transaction is wrong. Using an address only once doesn't do much in the way of privacy because of a thing you may have stumbled across called "The Transaction Graph."
A transaction graph pretty much is just a graph of how money flows through the network.
In MimbleWimble (the protocol behind Grin) a transaction takes a UTXO in and produces a new UTXO. Same as in bitcoin. Which means you can watch as things are spent. But the actual amount is hidden. Addresses only being used once doesn't offer much in the way of privacy since you can still see the money went from Address A to Address B.
This means if I load a bunch of money into one address (like from an exchange) and then start spending it to, say, 3 different people, they can all tell the money came from a common location. I have $100 in Address A. I pay $5 to Company 1 and the rest to address B. So, we see transactions ( A -> C1: 5, A -> B: 95)
Then when I pay company 2, the same thing. We can see transactions (B -> C2: 5, B -> D: 90). Even though we never use addresses twice and even though there are no names, company 1 and 2 can get together and both see that they all interacted with someone who had money in A originally. It's easy to reverse engineer the transactions.
So, as an effort to obfuscate the paper trail from A, MimbleWimble uses compression to disconnect inputs from outputs. As an observer watching the transaction, you would see several inputs from different addresses and several outputs to different addresses, making it tough to guess which input went where. For instance, (Input A:100, Z:15 / Output C1: 5, C2: 5, B: 95, Y:10). In this example, you see a list of two inputs and several outputs. But you can't tell if input A was linked to output B or C2 or C1 or if Z sent to Y or C2 and so on. This uncertainty is what Grin relies on for keeping transactions private.
But, it turns out, with enough repeated interactions, you can eliminate that uncertainty. Yikes. Don't take my word for it, though, watch this DevCon talk instead.
*In this theoretical scenario there is no Slytherin.
IN CASE YOU MISSED IT
🗞For today's trending headlines head on over here.
READ OF THE DAY
📖 The Social Layer is Ironically Key to Bitcoin's Security Submitted by TD'er Galen Moore, and published by TechCrunch, a rebuttal to my newsletter issue about focusing on developer experience. The humiliation! In all seriousness, it's a good read. Ideally, you'd be focusing on both UX and DX.
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As part of their governance peer review, Storecoin has shared the why and how of their checks-and-balances governance model and provided deep dives around issues such as enforcement.
Now the project in the midst of sharing the reasoning behind some of its most essential approaches to a decentralized and democratic blockchain governance, including Separation of Powers last week. This week, they get even more fundamental, arguing that token-based voting leads to plutocracy and centralization of control, while a one-entity-one-vote system offers something fundamentally different.
To learn more about how one-entity-one-vote works in practice without threatening censorship resistance, read their latest essay here. To join the 65+ members of the public peer review, sign up here.