Monero’s Third Birthday: A Complex History, Promising Future
Monero celebrated its third birthday on April 18, 2017, and has cemented its place as one of the leading blockchain networks. As an effort to continue ‘Satoshi’s vision,’ the altcoin, denoted XMR, has attracted a lot of interest, with many bitcoin holders diversifying into the privacy-focused cryptocurrency. In this article, we take a look at the coin’s intriguing and strange history.
Monero’s Roots lie with Bytecoin
Monero’s existence is linked intimately to the CryptoNote protocol, which emerged in 2012. To look at the history of Monero, we have to start with Bytecoin.
Like Bitcoin, the creator of Bytecoin was anonymous, and the project had supposedly laid low without many people realizing. The altcoin rose to prominence in 2014, when the Bitcointalk thread was established, and was most likely created around that time. At first, the crypto community could not establish who exactly were the originators Bytecoin, for example, a user by the name of pozmu stated on the thread:
“I don’t really get it… So who mined it before? There are many references to “community” on bytecoin’s page – where exactly is this community? On wiki there is reference to mailing list… But no link to it. https://cryptonote.org/ even gives you a list of developers’ names – but Googling them gives no real hits…”
But unlike ‘early Bitcoin,’ Bytecoin’s code was later purported to be very sharp, perhaps signaling that it had been refined for a long period.
For example, x0rcist stated on April 3, 2014:
“More and more i think this project was only done for research and was never mentioned to be used as a “real” cryptocurrency. I found some shady references by a group called bitcoin of things. After some brainfarts it takes me to a future where nanotechnology can be used as a trustless p2p blockchain.”
Then on the same day, some cross-referencing with the CryptoNote forum led a user, danteT, to stumble across this:
“We had good reasons to be in stealth mode for the R&D phase, just like the Bytecoin’s devs. You see there are some forces in this world, which do not agree with us and our attitude to the world and the economy of the future. This also basically answers your second question.
What we’re doing here is trying to envision a future with a completely different economic principles. A world of higher anonymity, less involvement of government and corporations in the ordinary lives… we’re doing this to offer new approaches to make the advent of decentralized economy and cryptonomy possible.”
However, while many were drew to the altcoin, there were concerns of the supply schedule. As much as 80 percent was mined by the time it took off in the crypto community and worries arose as to who mined it, as thankful_for_today pointed out on April 8, 2014, “I did some calculations about emission…” and goes on to say that “we are somewhere here” at 82 percent of emitted coins. “Is this good or bad? It’s a tricky question. It depends a lot on people holding these 82 percent of all coins.”
As there were calls for a fairer distribution and active development work on a hard fork of Bytecoin from soon to be Monero developer eizh, thankful_for_today had already birthed a fork, summing up his message:
“Next week I will start my own fork of Bytecoin – another coin based on CryptoNote technology. It will be started from scratch (from block zero)… Emission schedule will be more flat and block target will be reduced to 60 seconds.
I need help from:
– web dev, there is a huge number of works:
– official site and forum
– block explorer
– merchant integration sites
– designer, a cool logo is required
– dedicated machine owners, in order to setup seed nodes
– tech writers / translators, to translate announcement to other languages
– C++ developers, to create a cool GUI wallet
Please PM me if you want to help.”
The thread is full of interesting comments over April 8-9 as thankful_for_today got to work, ranging from a comment on an Italian website about “services and stores,” and an anonymous character who wanted to purchase 100 million Bytecoin.
A user by the name smooth emerged, replied to thankful_for_today’s call and finally established that whoever was behind Bytecoin supported a new, fairer distribution, perhaps validating x0rcist’s earlier comment that the altcoin was just an ‘experiment,’ a foundation for another crypto to be used for real?
smooth also stated, “If it can deliver on its promises this is the most innovative development since bitcoin…” but also added, “I would contribute this effort if I’m impressed with the team and vision. PM me when you have more in place.” smooth stood by his word regarding the innovative potential of Monero, and later came to be one of the main contributors.
As those interested in developing a new community around a derivative of Bytecoin dug deeper, they found Bytecoin to be more credible, with whatsthestory finding some sort of synergy between Bitcoin and CryptoNote, commenting, “Adam Back is famous figure in cryptography and Bitcoin’s world and he began in 90’s before Satoshi. And looks as he knows about Cryptonote a long-long time. Probably “anonymous” community aren’t so anonymous imo. What are you thinking about this?”:
With such an expert, public figure in Bitcoin knowing of the CryptoNote protocol, and the CryptoNote message discovered by smooth indicating support for another version of Bytecoin, the small community that would eventually grow into Monero then proceeded to lay out plans to hard fork Bytecoin, leading to ‘BitMonero.’
While there was a lot of promise from a fork of Bytecoin, thankful_for_today established right from the get-go that there were some features that were set in stone and laid them out in the BitMonero thread on April 9, 2014. By April 10, Johnny Mnemonic already rejected the idea of a block target of 60 seconds:
“I honestly don’t see the advantage of bringing the block time down to one minute. You’re ultimately looking at increasing orphan blocks and decreasing hash power, and all you get is a feature that looks great on paper but has little purpose. I wouldn’t mess with it. Apparently the BCN devs wanted five to ten minute block times but settled on two minutes after lengthy disputes. Their decision is explained in more detail here.”
thankful_for_today hit back:
“Block target isn’t only about transaction speed. It also influences the chance to get block in solo-mining: with the same total hashrate it’s twice easier to find block with 60 sec block target than with 120 secs. Solo mining gives decentralization. This way faster blocks lead to more decentralized network in the beginning. From another point of view faster block are smaller (less transactions per block). Small blocks are easier to propagate through network.”
While smooth chimed in:
“You raise an interesting question. I’ve seen the argument that faster block times increase centralization because of orphans. But it is true that the blocks will be smaller so the correct comparison is orphans with twice the block time and double the block size (plus header) versus half the block time and half the block size (plus header). I don’t think I’ve seen that comparison. Also, any coin that is successful wont be feasible to solo mine eventually. The orphan effect has to dominate.”
By April 15, there were doubts that the new version of Bytecoin will live up to its original promise, as thankful_for_today quietly disappeared and with no community consensus on critical features such as the parameters four days before launch, as eizh pointed out.
thankful_for_today then resurfaced, “Looks like everything is ready. Bitmonero will be launched in 24 hours => Launch time 17 April, 22:00.” But an hour before launch, it emerged that there were neither Mac or Windows clients. One member exclaimed, “Wait, you won’t have Windows available? A launch is basically a premine without a Windows client available. BCN has one, so what’s the issue?” x0rcist made it clear that he thought the fork was being rushed, “I really like the idea of forking BCN but only if it is done properly!” eizh also concurred:
“The coin had no discussion behind it… Right now this fork doesn’t have much of a reason to exist…”
A Hasty Launch: Tacotime Saves the Day
On April 18, 2014, BitMonero was launched and thankful_for_today announced plans for merge mining but rarely contributed to debates within the community. The emergence of several other CryptoNote coins such as HoneyPenny prompted a call to action to improve the communication between thankful_for_today and the community.
But perhaps the most important message in the entire BitMonero thread is one from Tacotime, which marks the beginning of the Monero that exists today. A move away from thankful_for_today’s rushed fork, incorporating the criticism from eizh, as well as changing the name to Monero, creating a new bitcointalk account, and buying a domain. Monero would eventually fix and clear the bugs from BitMonero, due to the haste on thankful_for_today’s part. NoodleDoodle, eizh, David Latapie, Tacotime and smooth among others led a split, and eventually hard-split form BitMonero.
The block target of 60 seconds was not the only problem. There were also some issues with the emission curve, with coins emitted at double the rate which was intended. The curve which was initially planned was in yellow, whereas the actual is much higher.
The Monero as we Know it Today
A new thread marking a move toward a more professional handling of a Bytecoin fork was published April 23, 2014, under the name Monero.
To fix the emission curve bug, smooth garnered support for his proposal; halve every current balance and change block target to two minutes with same block reward. After some back and forth between thankful_for_today and smooth, smooth decided to take the decision to fork from BitMonero.
Merged mining was rejected, leading to a final defeat for thankful_for_today. However, it was voted by the community it was too late to change the emission curve, but rather, it was decided a minimum subsidy to incentivize miners “forever” and avoid scaling fees would be added, which was implemented March 2015. Also, it is interesting to note at this stage, the future “core” development team of Monero was being formed in a decentralized fashion.
From April 23, the work began on developing an ecosystem around the CryptoNote-based altcoin. On April 27, 2014, Tacotime offered a bounty of 1000 XMR, worth roughly $21,000 today, to create the first pool; at this stage, Bytecoin developers had not yet released any code for pools, and the only existing pool, Minergate, was closed source. Dozens of individuals from around the world contributed to building this new ecosystem, such as translations and Windows and Linux binaries. Later on came open source CPU/GPU miner’s from notable figures such as Claymore and Wolf0. Wolf0 also had some guidance for the community in May 2014:
“I like this about Monero, but it seems it was written by cryptographers, not programmers. The damned thing doesn’t even compile on Arch, and there are several bugs, like command history not working on Linux. The crypto ideas are top-notch, but the implementation is not.”
Also, this month marked the first pool-mined block on the Monero network and by May 19, it was added to popular altcoin exchange Poloniex. Wolf0 would then become a pivotal member, who spotted flaws in the newly launched pools and made public his open source optimized miner on May 21.
Another notable milestone is fluffypony‘s first message on the Monero thread, on May 17. fluffypony, also known as Riccardo Spagni, oversees the development of Monero and he has been one of the pivotal figures in Monero’s rise. Later on May 21, he explained the progress it had made in less than a month (such as improving the hashing function used in Monero and in Bytecoin to 12 times its original performance) and challenged Bytecoin’s supposed two years of blockchain data, which he suggested may have been falsified:
“Monero is not merely a fair relaunch of an existing cryptocurrency. It is unashamedly a fair relaunch of Bytecoin, but the changes and bugfixes and improvements made in under a month speak volumes for the commitment we have to improving Monero. The Bytecoin developers have already shown their reluctance to merge our changes, why would they bother inheriting any further improvements we will make? If you want to use and mine Bytecoin with their crippled miner and their 82 percent premine please be my guest. I have nothing against the Bytecoin developers or their coin, and wish them all the best. As for me, and the rest of the Monero team, we will continue to take Monero to the next level without needing to wait for anyone’s stamp of approval :)”
Following this in June 2014, the Monero logo was released, and the ticker was changed from MRO to XMR. Analogous to the bitcoin pizza that cost 10,000 BTC, a historical, first transaction for real-world goods with the cryptocurrency, Monero also has its own version; a painting bought for 2,500 XMR, worth over $50,000 today.
What Does the Future Hold?
Monero stands as the seventh-highest valued cryptocurrency and has gained approval from major exchange Kraken. But it was not until late 2016 that Monero was brought to the forefront and achieved wider recognition. BTCManager argued on August 15, 2016, that Monero was a good investment at the time, citing it as a useful hedge for bitcoin holders and was at a very low price (around $2). Shortly afterward, AlphaBay announced support for the cryptocurrency on August 25, which precipitated a sharp rise above $6. XMR-USD has since grown in value massively, around the $20 handle at the time of writing and is one of the most promising blockchain projects.
What does the future hold for Monero? After incorporating RingCT in January 2017, the next hard fork is planned for September 2017, in which the network will enforce transactions that use RingCT as the only permitted transaction type. However, the lack of training, familiarity and documentation on the CryptoNote protocol means it will be a hard grind to develop infrastructure on top of the Monero blockchain, but work is being done to address this. The cryptocurrency itself is also displaying maturity, as over the course of April 2017, XMR-USD has remained fairly stable, in contrast to volatile movements in the the overall cryptocurrency market.
In summary, Monero will most likely remain relevant and even more so during a time when privacy is a rare commodity, and many Monero enthusiasts like to wonder whether Satoshi Nakamoto has had a hand in the cryptocurrency’s formulation and stunning rise.
Disclosure: The author owns some Monero and is aware of the risks involved that come with holding cryptocurrency. Always do your own research when investing; do not overlook risk and do not overplay reward.