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1034 sats \ 3 replies \ @sethforprivacy 6 Mar 2022 freebie \ on: The issue with Monero's dynamic blocks bitcoin
Thanks so much for writing this up, critique of Monero is critical to continuing to improve it over time, and is heavily encouraged in the Monero community as well.
As an experienced Monero user and someone focused on privacy as a whole (not just in cryptocurrencies), I'd love to break down a few of the points made here and link to some further resources that have been helpful to me.
While this is true today, it is not true forever, which makes a big difference when comparing something like Bitcoin and Monero's long-term decentralization.
Monero is capable of layer-two networks (even Lightning!) with future protocol changes (some of which are in the works today), and can even be achieved without protocol changes as has been proposed in PayMo:
https://eprint.iacr.org/2020/1441
https://eprint.iacr.org/2021/1445
I know that much of the Monero community likes to tout the functionality of Monero as obviating the need for an L2, but I disagree and think we will want (and then need) an L2 sooner rather than later, even if just for the ephemerality of transactions that it provides, scaling aside.
L2s will be necessary, can be built, and will actually be better because of Monero's privacy guarantees and dynamic block size than in Bitcoin. Much of the privacy flaws and onboarding issues in Lightning are due to the lack of on-chain privacy and block size elasticity, both of which are drastically improved in Monero.
TCP/IP is a great example of the issues that occur when a system is not built for privacy and security from the ground up, and instead has to be bolted on higher up in the network stack.
Many of the privacy and security issues we still face today are due to the failings of designing systems and protocol like TCP/IP, HTTP, and email with privacy in mind as a core tenet. If these had privacy built in at the absolute lowest layer, all layers above benefit immensely and do not need to worry about privacy or security nearly as much.
Much of the issues that privacy-preserving networks like Tor, i2p, and Nym are trying to solve are due to the critical flaws in TCP/IP, flaws that could have been prevented had privacy been at the forefront of the protocol's creation.
Adding the minimum necessary complexity to provide two of the core tenets of money, privacy and fungibility, is a much better approach and lets upper layers focus on things like transaction speed, ephemerality, etc. without needing to try and solve privacy or fungibility failings of the base layer.
Privacy in cryptocurrencies is not this horribly inefficient monstrosity that many in the Bitcoin community make it out to be, and is in-fact quite efficient today and improving rapidly.
Using Monero privately is both cheaper and more efficient than Bitcoin:
https://sethforprivacy.com/posts/comparing-private-spends/
A layered approach is absolutely the path forward for all cryptocurrencies, as every payment does not need to be preserved for all eternity in a base layer. Even in Monero, I hope the base layer will serve mainly as a settlement layer and high-value layer, and not need to be used for coffee payments etc.
As mentioned above, this isn't actually true -- Monero can scale in layers, it just hasn't been needed (and thus hasn't happened) yet.
A few notes here:
- In this scenario Bitcoin simply couldn't handle the transaction load anyways, so I'm not sure the argument has weight. Bitcoin is already hard-capped on throughput many days, so this nightmare scenario for on-chain usage is somewhat pointless as a comparison.
- Monero's dynamic block size is not infinite, and has a growth cap of 1.7x per year
- Monero's dynamic block size is not meant to be an infinite growth method, and is way to handle elastic transaction usage, like seasonal spending around Christmas etc -- it handles short periods of rapid usage that then returns to normal without any issues, but has preventative measures in place to ensure the chain growth YoY is not a major barrier to node accessibility
There is a lot of info on the current and future approach to fees and dynamic block size here, for those interested:
https://github.com/monero-project/research-lab/issues/70
I couldn't let this slide, as this is an absolutely abysmal way to end what was a legitimately excellent critique and set of thoughts around Monero. The idea of laughing at people for being poor as some supposed incentive to pull Monero users "over to Bitcoin" is one of the many reasons I find the Bitcoin community at-large repulsive.
One of the many reasons I spend most of my time in the Monero community is that they are not price focused and are seriously laser-focused on building a necessary tool, protecting all user's privacy, and improving the space as a whole.
"Have fun staying poor" is quite possibly the worst and most off-putting meme in the space, and really mars your otherwise excellent post.
For those who have managed to read this far, here are some great resources I'd recommend you dig into to better understand Monero's approach:
https://localmonero.co/knowledge - A wealth of info on practically all of the design decisions behind Monero, laid out in approachable and non-technical format
https://www.youtube.com/watch?v=aC9Uu5BUxII - A long but very insightful video that walks through the key differences between Bitcoin and Monero with the angle of utility, store of value, etc. in mind.
This is a great response, and thank you for taking the time to do it!
I'm in agreeement with you on just about everything you mention. Just some points to your comment:
I know that much of the Monero community likes to tout the functionality of Monero as obviating the need for an L2, but I disagree and think we will want (and then need) an L2 sooner rather than later, even if just for the ephemerality of transactions that it provides, scaling aside.
Hopefully this doesn't turn into (a) a never-ending dream like Ethereum's PoS or (b) a contentious hard-fork splitting XMR.
In this scenario Bitcoin simply couldn't handle the transaction load anyways, so I'm not sure the argument has weight. Bitcoin is already hard-capped on throughput many days, so this nightmare scenario for on-chain usage is somewhat pointless as a comparison.
Not at the base layer, of course not. However, Bitcoin has already begun scaling in layers and LN could theoretically handle this throughput. Maybe I should have specifically called out that Bitcoin would utilized layered scaling while Monero (currently) couldn't.
I couldn't let this slide, as this is an absolutely abysmal way to end what was a legitimately excellent critique and set of thoughts around Monero. The idea of laughing at people for being poor as some supposed incentive to pull Monero users "over to Bitcoin" is one of the many reasons I find the Bitcoin community at-large repulsive.
You left out the ", privately"! This comes down to fundamentally understanding Bitcoin as a money rather than a technology, which is how I imagine most Monero fans see the two networks. When it comes to storing value for a long period of time, you need to do this in the hardest asset possible, regardless if you think the tech of another asset is better. The harder asset is unquestionably Bitcoin when compared to Monero. If you choose to store your wealth in XMR, you are losing value to Bitcoin over time, simple as that.
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If you choose to store your wealth in XMR, you are losing value to Bitcoin over time, simple as that.
The longer the tail emission goes, the less the inflation is. The benefit is security of the network.
Arguably Bitcoin will be much more prone to volatility because the hard cap is unprecedented in the history of money (remember that nobody knows how much gold exists, but we can predict some rate at which it is unearthed).
Manipulation, panic, hoarding is much easier with a hard cap, just from a human psychology perspective. Constant emission is predictable and cozy in comparison.
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The benefit is security of the network.
No one can say this with certainty for another decade or so, when we'll start to really find out if the fee market on Bitcoin is enough to make up for a significantly smaller block subsidy.
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