on the monero circular economy
on the monero circular economy
The monero community is building a lot of infrastructure to build a circular economy, and there is a lot of recent developments in that regard, such as xmrbazaar which is a sort of ebay and the sellers accepts monero. This is great. However, how can we penetrate markets outside of the monero economy? I fear that Monero still has the "dangerous hacker crypto which funds terrorism and north korea" reputation, and although while not true, could severely pause monero adoption and hurt us as a community as a whole.
We as a community value privacy, but i feel like we need to work together as a community to forge an alternative to the mainstream narrative about privacy coins. I'm thinking something revolutionarily positive, at least in the USA, such as making a charity that gives directly to homeless people, or setting up a decentralized network of people that work together to distribute life saving drugs for cheap (because drug prices are really fricking high here). Privacy coins tend to attract privacy minded people, and privacy minded people won't even touch twitter with a 10 foot pole because of all the injected ads and the tracking, and i respect that. But, one of these days we gotta do something big to break the mainstream narrative.
I personally am locked in, I have a girlfriend and two pets and a full time job, but for those that have less to lose and more time and resources to spare for the cause, i say let's fking do it. Anything, man. Let's change society with this thing.
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I agree with the thrust of what you're saying but... Monero can't sustain any circular economy of scale without a working L2. Blockspace is limited. Every transaction humanity makes shouldn't be stored on chain for perpetuity. That's silly, wasteful, and leads to centralization. An L2 solves that problem. Without an L2, as Monero's use increases, so will fees, variable block size will hold that off for a while but not forever and not without sacrificing decentralization.
Monero has no L2 and not enough dev talent or funding to make it happen in the next few years. Its protocol is different enough from Bitcoin that pre-existing solutions like lightning can't just be bolted onto it without significant development effort and privacy trade-offs. Meanwhile over on Bitcoin's side, they continue to add more functionality to their chain with a massive dev pool in terms of talent and funding. And privacy does continue to improve, lightning and ark are both pretty opaque depending on how you measure it. So if Monero wants to be a significant player on par with Bitcoin and have a circular economy, it will need to step up to the plate in a major way, and it needs to do that before Bitcoin implements privacy upgrades that place it at feature parity with Monero, which is imo only a matter of time since those folks tend to be pretty pro privacy. Yes, there's "ossification", but protocol improvements are still happening, especially outside the bounds of the main chain protocol itself (in L2, mining protocols, etc).
Hire a data hoarder to host a full node. A 16 tb hard drive will last you a couple years as a monero node if monero takes off, if not a decade, until you need to upgrade. It's not that hard to create >20, >30tb NAS, with some more room to upgrade. I have a 16tb one myself to store movie files. Nodes are run by hobbyists nowadays anyways. Disk space and bandwidth is cheap and getting cheaper. Decentralization is just another buzzword: nodes will be run by a decentralized network of very motivated, anonymous data hoarders.
Sounds cool, did you find any standout resources in the process about running nodes, and would you be willing to share if so? I last ran local when the chain was small enough to fit under a 32gb thumb drive lol
Also if you don't mind answering I had some questions:
- What would the costs be involved generally with hosting a full node? Is it high in bandwidth costs?
- Would 'mining' be an option for the device running the node?
- How much can u expect to spend on an 16tb hdd to host the node?
- Finally, all in, how much did it cost you to set up your node?
Feel free to not answer anything/ with ambiguity for privacy
So if Monero wants to be a significant player on par with Bitcoin and have a circular economy, it will need to step up to the plate in a major way, and it needs to do that before Bitcoin implements privacy upgrades that place it at feature parity with Monero, which is imo only a matter of time since those folks tend to be pretty pro privacy
Overall, not convinced of your argument for a L2 in Monero to be able to be on par with Bitcoin. In fact, I believe that the bitcoin community fell for the layer 2 trap. That high transaction fees on the base layer due to the 1mb blocksize can be solved by a Layer 2, and calling lightning a success is a stretch. It still needs to interact with the base layer to open channels, and your base layer is fucked.
You can't just keep increasing the block size. More block size = bigger blocks = more bandwidth and disk space to host a full node. It's why the majority of Eth's nodes are now hosted in one of like three corporate datacenter providers. Sure, disks keep getting bigger and more affordable but big pipes to move that much data haven't kept up at the same pace. Bitcoin cash is now 16x Bitcoin's original block size, and they are still calling for larger blocks to keep tx costs low. Eventually, with any block size, especially if you want to capture a good portion of humanity's transactions, you will end up with massive competition for blockspace aka high fees.
Blockchain has a fundamental problem. If you put it on the ledger, all nodes have to store that forever. The more you put on the ledger, the bigger that ledger gets, the more resources you need to host it/participate, the more centralized your network becomes. Adding more block space is one solution, but comes at the cost of decentralization and doesn't scale to all of humanity's transactions let alone even just replacing SWIFT/IBAN. L2s are another solution, you get faster transfers and fees not directly coupled to chain space in exchange for slightly less trustworthiness (you may have to send a channel "back to chain" if a bad actor tries something, and you have to monitor that channel and chain to see if you need to do that, which is all handled automatically). With Bitcoin's L2, I can send funds anywhere in under a second for pennies in fees. It actually works for buying coffee. In the space 1 transaction took on chain, I can now have billions of transactions. Not just between me and the person I opened the channel with, but between me and any other person who has coins on lightning. And you can run a lightning node on a raspberry pi or android phone. Lightning isn't perfect, the inbound liquidity thing is annoying (though Ark and Fedimint proposals solve this in different ways), but it works really well and has been stable and usable for years. The inbound liquidity issue is being worked on as well through automated liquidity provisioning. Not perfect, but leagues ahead of Monero which has zero L2 and zero roadmap for an L2.
Tldr: Monero's fees are low because there isn't much competition for blockspace. And it's slow. Because it's all on L1. That space will run out as it scales, it's up to Monero to decide how to solve that problem.
Not perfect, but leagues ahead of Monero which has zero L2 and zero roadmap for an L2.
We’ll get there when we get there. Adoption is gradual. We don’t expect to see Visa level transactions overnight. And as adoption increases steadily, we can increase the capacity and infrastructure of the base layer steadily. The only real reason why Bitcoin needed an L2 was because ya’ll shot yourselves in the foot with the 1mb blocksize.
Meanwhile over on Bitcoin’s side, they continue to add more functionality to their chain with a massive dev pool in terms of talent and funding
Very talented, such as deciding to keep a 1mb block size to prevent DDOS attacks in 2010, and refusing to budge even as the entire community begged them to increase because of high transaction fees. Oozing with talent and ingenuity.
What does L2 mean?
L2 means "layer two", in short, a way of conducting transactions "off-chain" while relying on the "base chain"/L1 for security. It helps keep chain bloat minimal.
There are various ways to do this with various trade-offs in terms of speed/privacy/cost/centralization/etc. Bitcoin's main one is lightning (there's also Ark), Eth has like a dozen of them most of which are super centralized but you've got Polygon, Arbitrum, Optimism, Nova, etc. They all work a little differently.
Lightning's concept is very simple: you make a "channel" on-chain by depositing funds into that smart contract which lives on-chain (1 transaction). The channel exists between you and one other party. The channel starts with a balance of 100/0 meaning all the BTC is yours (because you deposited the BTC). When you send BTC to the other party, you update the "balance" of that channel by both of you signing a thing saying it's updated (now it's 99/1). This happens off-chain. At any point, either of you can close the channel (on-chain) and claim any BTC that's due to them according to the balance. In this example, you would get back 99 BTC and the other person would get 1. You can also transact with other parties by sending BTC "through" a chain of existing channels. And these transactions not only don't require paying on-chain fees, they can also be confirmed in < 1 second because you don't need to wait for the next block. You can have essentially infinite transactions back-and-forth in a channel, but one "side" of the channel cannot dip below 0. Almost all of this is abstracted away for the end user.
Thank you for that very well thought out explanation. I think I understand now