Monero Cryptocurrency: RED ALERT?
Something is Afoot
Many of you may not have heard about Monero. If you have, great. If not, count yourself as “Fintech Challenged.”
Fewer of you still have chanced upon dwarfpool.com either. Sounds like a place where the little people swim. But you'd be wrong. It's actually an outfit, if we can believe their Tweets, that has mining systems all over the globe. Computers spitting out cryptocurrencies at a good clip.
It's okay, really, but indulge me a moment. I'm not selling anything. I'm just costing you a little time. And if you're like me at all, well, you may want to hear this before you read about it in the coming weeks.
Something is afoot in the privacy-challenged world of ours. It's probably not all that important and will go unnoticed by most of us. A blip on the screen. Edward Snowden probably wouldn't care.
So here is the blip.
There is, in a sense, a Mining Turf War going on right now with the Monero Cryptocurrency. The players want to control as much of it as possible. A few hundred million dollars worth.
Could this be a sign from the Crypto-Gods that Monero is finally achieving what has slipped from its grasp time and again? Has the Chinese question been answered? Will they participate or will they not tread in the private waters of cryptocurrency for fear of Beijing's hammer?
In a recent Reddit about an alleged former employee of OKcoin.cn, one of the largest Chinese cryptocurrency exchanges on earth, some anonymous advice was offered. The alleged employee, after giving advice to Monero about how it could become listed on this exchange, indicated that Monero should not beg to be listed.
It seems that if this former employee is legitimate -- methinks he/she is either a current employee or even a big player on OKCoin.cn -- that he/she is playing a little game of "let's not lose face." In other words, OKCoin does not want to ask, it wants Monero to ask, politely. But not beg. What does that mean to you?
To me it means, if you want to sell Monero then do so. Otherwise, have a Fortune Cookie China.
To Eat a Monero
Monero is perhaps one of the most private and useful cryptocurrencies on earth. Compared to Bitcoin, it is far more secure and private, but like Bitcoin it has its flaws.
Namely, Monero can be attacked by the big players. Like the large Mining Pools. It can be, in a sense, centralized.
That is the death knell.
Besides the stigma of being labeled a nasty “preminer,” like Zcash or a “Chinese cryptocurrency,” like Bitcoin, is to carry the label: “centralized.”
No good cryptocurrency developer worth his beans wants to “centralize” anything. He or she wants the cryptocurrency to mimic gold in the sense that it is valuable and desired, but of course, electronic.
Gold mining is not centralized.
It Goes "Poof"
If Monero is like a gold mine, it is many gold mines. If one miner controls most of the gold mines in the cryptocurrency world, he/she essentially has the ability to control all of the gold.
It's a weakness gold does not have. But gold has other problems. I won't get into that here.
So imagine, for a moment, that you went to the store. Your favorite electronics store. You pick out a giant screen TV, one of those new 3D curved jobs, place it on your rolling cart and head to the front of the store. You hand the cashier a gold coin. You are salivating. Can't wait to get home and plug in.
The gold coin you just gave the cashier magically doubles. You say “wow,” I'm twice as rich. But wait a minute. You didn't get that extra coin. Some guy in China just used that same coin to buy his TV.
And that is the problem with the old double-spend in the world of cryptocurrency. The store in China and store in your hometown are in conflict. Who gets the money? I mean one coin can't be spent twice, right? So what happens?
What happens is nobody trusts the network any longer. The magical golden coins are jettisoned like bad cheese. Poof, there goes Monero. Poof, there goes your money.
The Evil Dwarf
All of us Crypto-Heads have heard it before. We've been warned again and again that if one Mining Group or company, which mines cryptocurrency, is able to garner a majority of the mining power, they essentially own the network and can reverse transactions or attack it or rewrite all the transactions from day one.
This is the newest problem with Monero. Recently, one pool, called dwarfpool.com (herein the Dwarf) from “France/Canada” is moving in – taking over the turf. As recently as 12/28/2016, the Dwarf 'owned' 52% of the network. And Monero was soaring to new heights.
Within 24 hours the Dwarf was banished by the Great Unknown. I call it that, because, well, it's the newest dominant mining pool as of 12/29/2016, at approximately 7:49 AM Eastern Standard Time. The unknown.
According to MoneroMooo, from Bitcointalk.org on 12/28/2016:
“Unfortunately, Monero is now facing a new imminent danger. The strength of its network is now much less than it was just a few months ago....the network is on the verge of being trivially attackable [sic] by a single pool (and one whose admin has scammed the Monero community before, so don't think this would "never happen").
This shows that the glut of new miners is only good if decentralization isn't endangered by it. The network hash rate is now at or near the highest it's ever been, and yet the network is more fragile. It is only a small consolation that those who are undermining it are the ones who are trying for short term profit from it, and thus will be those who will lose from it.
It's not quite too late, though. For those of you who may be mining on dwarfpool and who don't intend to undermine the Monero network, choose among the smaller pools on that link, and help secure the network whose longevity is ultimately where your profit comes from.”
Pools and Fools
In the Bitcoin world, owning/controlling more than 51% of the mining power opens the entire network up to attack, by the miner. The Dwarf had controlled about about 52 percent. He was, for a glorious few hours, the “big chief.” And I say that with pause, because it appears that he will try be the “big chief” again. Unless the Great Unknown keeps him down.
There are no other pools with near as much hashing power as the Dwarf and the Great Unknown. The next closest is "crypto-pool.fr" with just shy of 16%. And notice – crypto-pool -- is French. That would mean – if true – that the French and Canadians currently own just shy of 40% of the network for Monero. I mean I like the French and even the cold Canadians, but really – whose holding the cards here?
Next on the charts is minergate.com at approximately 14%. Great for the Germans! Maybe they can up their hashing power? Keep the Dwarf and the Great Unknown at bay?
The United States? How much hash does she have? Not even 2% of Monero is mined in the U.S. Write the land of the free off. They are too afraid to mine private terrorist coins. Besides, the Internal Revenue Service will chase them to their graves or into nice Federal Prison cells where they will share a cell with “Bubba the Lover.” I dare you -- say it ain't so.
Monero Opinion Survey
Will the Dwarf Destroy Monero?
You can't Double-Spend Monero?
According to Redditor “fluffyponyza” (Riccardo Spagni of Monero fame) approximately two years ago (2014):
“Monero is double-spend proof...the only thing to be gained from a 51% attack is breaking consensus, and that would be tricky...”
In short, a double-spend problem would be when a bad player could spend the same cryptocurrency twice. In Bitcoin, this is a legitimate problem when one or more miners collude to own and operate more than 51% of the mining power. If you own the network, are the processor of most of the transactions, you set the rules. But not in Monero?
Are you sure?
And baby, Bitcoin is now slower than cash, over short distances and becoming more expensive as we speak.
Resistance is Futile
Monero's transactions are encrypted in such a way as to not allow the network to un-spend them or re-spend them. The senders are masked as are the receivers. There is no published ledger to double spend upon.
It's resistant then?
So what's the catch?
A lot has changed in the Monero code since Riccardo Spagni (see fluffyponyza above) advised that Monero was protected against double-spending.
Today (12/28/0216) on Reddit, Riccardo advised that :
“Nothing's going to change until we have background mining with a p2pool protocol baked in.”
No word about the “breaking consensus” issue, however. Are the powers that be, the caretakers of Monero, keeping calm?
The Dwarf's Goal?
So back to BitcoinTalk.org.
On 12/28/2016, on BitcoinTalk.org, after warning about the “Dwarf” problem, MoneroMooo was asked if Monero was under attack on Bitcointalk.org, he/she advised that:
“I have no reason to believe this is the goal.
However, I see this the same way as you don't stand in the middle of traffic even if no car wants to hit you. Don't tempt fate.
And Monero is 51% attackable [sic] similarly to Bitcoin, yes. The damage you can do is a bit different (you can't censor old transactions as easily, since private (yay!)), but you can double spend, for example...”
So is there a major problem or not?
The Dwarf & Great Unknown Consensus
Now we have another piece of new information. According to MoneroMooo, Monero is susceptible to the old double-spend.
Additionally, as I have indicated, there might be a contradiction with early information. In fact, on the Monero website consensus is defined as:
“... a property of distributed networks like monero where most of the participants follow the rules, and thus reject bad participants.”
So if the Dwarf does not want to follow the rules?
If a consensus problem develops are we talking about a fork here? Or the destruction of Monero? Why would anyone destroy a money machine that issues untraceable money? Interesting question, huh? And I'm not into conspiracy theories.
Just ask yourself who benefits if Monero goes down?
- Options traders going short
- Governments irritated about missing tax remittances
- Governments irritated about “secret money” that they can't control
- Competitors with deep pockets losing market share
- Traditional Banks with shrinking profits
- International Money Clearing Houses losing profits
- Gold/Silver Dealers
- DASH and Duffield
But Monero is small potatoes compared to Bitcoin. What's a couple of hundred million dollars compared to 24 billion?
The Evil Dwarf and the Great Unknown?
And just who is the big bad Dwarf? Good question.
It is also interesting that the Great Unknown appeared just as the Dwarf was growing out of control. Could they be one and the same?
You can try their website at dwarfpool.com, maybe email here: firstname.lastname@example.org.
Don't expect an answer. In short the Dwarf is in hiding and he doesn't speak English so well. Try French.
As for the Great unknown? Your guess is as good as mine.
As final food for thought consider this recent answer (12/28/2016) from MoneroMooo about the consensus and double spend issues:
“Nothing's changed. I think he [Riccardo Spagni] meant that Monero is double spend proof in the absence of the ability to reorganize the chain … [for example] key images ensure that an output can't be spent twice...I've asked him if that's what he meant, but as far as I know, someone with enough hash to rewrite the chain is able to double spend, as in other coins.”
Monero -- Dwarf at 52% and Growing?
On 12/28/2016, the Dwarf could have reorganized the Monero blockchain, according to some. Monero had a close call. Had the Dwarf chosen, he could have made trouble, but as of yet, all seems well.
However, and this is important, the Dwarf has not been very nice in the past.
On the bright side, maybe the Chinese are becoming interested. If so and if they like to gamble and if they think one good cryptocurrency exchange (Poloniex) is not too few, then just maybe they will ignore the Dwarf. Or maybe, just maybe – they are the Dwarf!
Let's just hope the Dwarf is a benevolent Frenchman who enjoys a good Bordeaux. And that the Great Unknown keeps his power under 51%.
Finally, it is important to remember that all of this stuff -- these cryptocurrencies -- are experimental machines -- programs -- codes -- that at any moment could come unraveled.
Monero is vulnerable, but in the same sense, so is Bitcoin. Centralization is the new byword. This link might serve to verify that for you.
Only invest what you are willing to lose.
Maybe it's time to rethink Crypto or just use it for quick transfers.
Until next time – Adios!
The Shifting Tide
And now the Great Unknown becomes a potential threat to Monero?
Monero and The Great Unknown
If we can beleive and trust Monero, the Unknown is:
"[a] slice is simply the remainder hashrate of the network that is not produced by the listed pools. This could be generated by solo miners, private pools and not listed pools."
Simply put, Monero can not tell us if a single miner or a pool of them is/are attempting to take over XMR turf.
Note: the above statements are the opinion of this author. Please do your own homework and correct me when necessary. My goal here is to let people know that something is afoot in Monero World.
Please also note: over recent days/weeks the mining problems associated with Monero have appeared to stabilize. Perhaps they should institute rules like Bitcoin Unlimited, mandating that miners never achieve 51% of the "power."