I have heard of an upcoming airdrop called MoneroV. Can someone explain the relationship between Monero and MoneroV, and explain their differences?
MoneroV despite whatever intentions it may claim is an actual attack on MoneroV's own privacy as well as Monero's and even in MoneroV's claims of basic differences highlights several red flags that make MoneroV indistinguishable from a scam. I say it is a definite attack and not subjective because it does undermine RingCT (explained below) even if that's not their intention. To give a general example, if someone is swinging around a loaded gun and shoots someone by accident, said shooter is can still held liable for damages rendered because of gross negligence. In the same way people who value privacy should hold MoneroV liable for any damages rendered if they proceed with the chain split.
Having established that intent isn't necessary to be considered a harmful attack let's look at what MoneroV claims are some differences and how they contradict basic math, simple economic models, and common sense and how MoneroV is actually harmful. A summary can be found on their website of the changes that:
"Among other differences, MoneroV has limited supply of coins while Monero’s coin supply is infinite, and MoneroV will implement new protocols that will solve the scaling problems facing Monero and other cryptocurrencies such as Bitcoin. You can read more in detail in the: MoneroV Roadmap"
MoneroV's whitepaper claims (bold added):
Bitcoin’s 21 million maximum coin supply was introduced specifically to avoid having a body that controls the money supply, completely restricting future inflation and devaluation of Bitcoin coins.
Based on this merit alone, Monero would never be able to compete with Bitcoin as the world’s best digital currency, since the idea of infinite coin supply is the incorrect intuition.
MoneroV adheres to core Austrian school of economics principles and caps the total amount of XMV coins that can be created to 256 million. The initial coin amount in circulation at the time of the hardfork would be 10 times the amount of XMR coins ( ~158 Million). XMR holders prior to the hard fork will receive 10 times the amount of XMV coins.
There are several things wrong with this statement just in general. For example, limiting coin supply does not limit devaluation. Devaluation can happen from lack of demand (e.g. someone in government whispers the word 'regulation' and the crypto market gets spooked driving prices down 5% because people lost their appetite).
That aside, for supply comparison Monero will have all ~18.4 mil initial coins mined circa 2022 and then a tail emission of equivalent of .3 XMR/min.
So right after the March 2018 (edit: now pushed to April) MoneroV chain split the supplies will be the following:
MoneroV: ~158 million coins
Monero: ~15.8 coins
So despite Monero technically having an infinite coin supply, and MoneroV claiming to be against inflation, MoneroV is inflated by 1,000% from the onset and a MoneroV coin is going to be 1/10 of what is had MoneroV not inflated by 10x.
Edit: They updated their FAQ circa 3/6 with this tidbit:
I’ve read confusing arguments about Monerov’s finite supply surpassing Monero’s supply soon?
The claims you’ve seen did not factor in the percentages and the proportional distribution. To start with, every Monero holder receives 10 times the amount in XMV. Because this is an even distribution, the purchasing value stays the same and there is no inflation. Afterwards, the inflation of both coins is exactly the same percentage wise until XMV hits 256 Million (XMR would be at this point 25.6 Million). After that point, MoneroV will stop inflating as it hit the max supply while Monero will keep inflating indefinitely.
There are again several issues with what they say that further show they don't grasp basic supply, demand, and scarcity economics. First problem is that they consider coin supply increasing via coin emission inflation, but increasing the coin supply '10 times' somehow not inflation because the purchase value remains the same. The problem with their understanding of supply and demand is such. I have $100 of purchasing power in 10 XMV or simply:
$100 = 10 XMV
Since your total "purchase value stays the same" but you multiple your supply by 10 you now have:
$100 = 100 XMV
Let's say the total coin supply was 100 XMV and then consequentially 1000 XMV. While your percentage of coin in relation to the total supply remained the same (10%), each XMV has gone from being worth $10 to being worth $1. All they have done is protect your initial purchasing power (prior to the 10x) from decreasing. So again, MoneroV is chiefly concerned about the 'devaluation of coins' but from the very beginning they're devaluing each XMV to 1/10 of it's value prior, but now their FAQ has demonstrated they don't understand how economics works despite name tossing 'Austrian school of economics'.
According to MoneroV's website all 256 million XMV will be mined circa 2067:
So where will Monero's coin supply be at that point?
One can create a simple formula to find this out:
We know we get .3 XMR/min with tail emission so .3*60(minutes)*24(hours)*365.25(days) = 157,788 coins/year from tail emission
which gives us: 18.4 mil + 157,788x where x is the number of years after 2022
2067 is 45 years after 2022 and plugging 45 into our formula yields 25,500,460 million. So in the year 2067 the Monero coin supply will still be ~10% of MoneroV:
MoneroV: 256,000,000 coins
Monero: 25,500,460 coins
So how long will it take Monero's coin supply to catch up? We can reuse the same formula to find when it will equal 256mil:
18.4 mil + 157,788x = 256mil
Solving for x gives us ~1505.8 years. In other words Monero coin supply will finally catch up with MoneroV coin supply around the year...3,527 A.D.. What will the annual inflation of the tail emission of Monero at that point? 0.06%. Monero's tail emission annual inflation will also continue to approach 0% as the tail emission will continue to be a smaller and smaller percentage of the existing supply.
So as one can plainly see via basic math and simple economic models, MoneroV claims to be against the devaluation of currency, yet has no problem inflating a currency 10x in their first chain split block and no problem with inflating MoneroV so much it will take a millennium and a half for XMR to finally match XMV.
The MoneroV roadmap claims that this 10x inflation was done to "differentiate the two cryptocurrencies while making the two cryptocurrency wallets - MoneroV’s and Monero’s - to reject one another’s blockchain." However the inflation could be easily avoided by simply creating a new blockchain via a new genesis block rather than doing a chain split.
The XMV team also fails to grasp the point of the tail emission for dynamic blocksize currencies in the first place:
We first consider a blocksize large enough (or effectively infinite). In this scenario competition among miners will drive fees towards zero since there is no scarcity. This will in turn cause the difficulty and consequently the security of the crypto currency to collapse. We must keep in mind that orphan block based arguments will also fail since these are based on the presence of a base emission. This is in fact the very legitimate fear of the small block proponents.
Either the mining revenue collapses first or the purchasing power of the mining revenue collapses first.
The Monero community doesn't hide from the fact the tx size of Monero is larger than ideal and is one of the larger problems the Monero Research Lab and the community are tackling. In fact, bulletproofs which reduce the tx size by ~80% will likely go into the September Monero hard fork.
However despite "the scaling issue of a bloated [Monero] blockchain", MoneroV is doing a chain split which means it inherits the (current) 32.5GB bloat from Monero instantly. MoneroV claims they will implement MimbleWimble in Q4 2019, but if blockchain bloat is a serious concern for them why inherit 32.5GB and why start a blockchain before you've implemented MimbleWimble? They have no issue basically doing what amounts to a pre-mine of sorts to control "5.859375% of the total supply of MoneroV coins, using it to enhance the development of all future works" so doing a pre-mine on a new chain or an ICO should pose no ethical issues for them and they wouldn't inherit 32.GB of bloat. An ICO would also enable MoneroV to get funding w/o having a real blockchain until they finished MimbleWimble. (The author would like to note that the author is against ICO's because it goes against the spirit of Free Open Source Software, but given them already doing what amounts to a pre-mine, MoneroV should have no moral issues with an ICO)
MoneroV's Privacy Problem
As sgp says in his answer and explains in-depth in his video by performing a chain split MoneroV causes tx to traceable 100% on both chains for real inputs that are used in both chains. While Monero users can be indirectly impacted if their tx use's a decoy tx that can be revealed to be a decoy, MoneroV users are going to be impacted more because the MoneroV tx pool is going to consist more of compromised tx than Monero's as Monero has a larger day-to-day tx volume of purchasing legal goods and services, etc.
MoneroV at the end of MoneroV roadmap paper claims "MoneroV facilitates the desire to have a truly private and decentralized cryptocurrency"
One of their admins in Telegram, GI MO, not once, but twice claims MoneroV intends no harm:
As seen above, they claim this chain split privacy issue was raised, but none of their material currently on their website makes reference to this issue nor them making the Monero community of the issue via Monero's Vulnerability bounty program. Thus it is likely they are lying as they have yet to provide evidence of their claims of reporting the issue and it was the Monero community itself that raised this issue first publicly. Furthermore, as said above, their own MoneroV users are impacted. Why would anyone want to hurt their own users' privacy to raise a point? If they wanted to they could have simply published a paper and created a new blockchain from a new genesis.
Edit: MoneroV pushed back their snapshot date while making this announcement of which I have included most of in order to emphasize their priorities and reasoning:
Having both our team and community grow rapidly, the past few months has positioned the MoneroV project and the upcoming hard-fork as a highly anticipated event. With both great support and enthusiasm, we are dedicated to realizing the vision of a truly decentralized, finite currency to serve the community for years to come.
Due to the growing demand and increasing expectations from users, trading platforms, and large mining pools, we have decided that the Snapshot date will be postponed to ~30th of April block 1564965 to facilitate third-party services requests and including these below reasons:
- Exchanges and custodian services need more time to implement the MoneroV technology for them to support the fork and credit XMR holders with XMV. We are in the process of helping leading exchanges (from the top five Monero trading platforms) to list MoneroV. These services require additional time for implementation and we are positive that postponing the hard-fork date so that more users will be credited with their XMV outweighs the drawbacks.
- Monero’s own software update that will occur in March is causing confusion with the initial hard-fork date. This is a common complaint we hear from both the Monero community and our own. Postponing the hard-fork snapshot date will help both Blockchains.
- Mining pools are asking for more time to implement MoneroV. We want to help these pools to prepare for the hard-fork split so that MoneroV will be more stable and robust.
- Many users have difficulty storing their XMR locally using the Monero GUI wallet due to its large blockchain size. Postponing the hard-fork date will help more users to prepare and be able to claim their XMV’s.
Overall, taking into consideration these reasons, and although MoneroV’s codebase is fully functional, we are positive that it would be best to postpone the snapshot date.
In addition, we would like to announce a few updates and clarifications:
– MoneroV has replay protection in place. This means that transactions on the Monero blockchain will not be able to be replayed on the MoneroV blockchain.
– MoneroV codebase is currently fully functional and tested (as can be seen in this image) on macOS Sierra, Windows, 64-bit and on Linux, 64-bit. We will use the additional time to add more supported machines.
– We will also use the additional time to test a few procedures (including testing the time gap between the snapshot date and mainnet release, and raising the minimum ring signature) that will help mitigate an issue that was raised that the hard-fork split might reduce the effective privacy set of ring signatures – one of three private properties of the Monero & MoneroV blockchains. This has nothing to do with user’s private keys and their safety.
Note where the privacy issue is: effectively at the bottom and not listed as one of the issues they are pushing back their snapshot and release date(s). The first reason listed they are pushing back is for exchange listing, and privacy is just a 'well I guess we can do a little bit to improve that issue' update.
MoneroV claims to hate coin devaluation by inflation of coin supply, but inflates their coin supply significantly (10x) in order to try to "differentiate the two cryptocurrencies while making the two cryptocurrency wallets - MoneroV’s and Monero’s - to reject one another’s blockchain." So much so, that it takes Monero 1500 years to catch up. Furthermore, there is no good justification for a chain split when they can more easily create a new blockchain with a new genesis block and MoneroV doesn't understand the rationale for a tail emission.
MoneroV claims scalability is a problem, but opts to inherit 32.5GB of bloat by doing a chain split, and doesn't wait until they have a MimbleWimble solution which in turn leaves them using average transactions that are 50x Bitcoin's.
Lastly and arguably most importantly, MoneroV claims they "[facilitate] the desire to have a truly private and decentralized cryptocurrency" and "isn't here to do harm", but it does precisely that by chain splitting when it can easily choose not to. Furthermore, privacy is effectively last on their list of priorities compared to getting listed on exchanges.
MoneroV contradicts itself in major ways on its own core values by chain splitting when it could choose not to and instead opt for a new blockchain via new genesis block.
Other Red Flags
There are numerous other red flags that suggest MoneroV is a scam although some of these are more subjective than the objective ones described above. For example they claim “we have brought many expert developers onboard” in their roadmap paper and can achieve MimbleWimble implementation by Q4 2019. Looking at their commiters to their blockchain explorer which they forked from a XMR blockchain explorer we see they have four psuedonyms that took 22 commits to fork and make basic changes to said XMR blockchain explorer:
- Nospawn last anything (e.g. personal or private repo) commit Feb 18th
- Vanfactory made two commits to a private repo, one prior commit March 2nd, and prior to that Feb 16th
- Instanceme, last anything commit on Feb 9th
- Miltonf (who is also a Reddit mod), last anything commit on Feb 18th
While there could certainly be more people working on the actual XMV software that we can't connect from looking at either the MoneroV repository collection, the lack of activity before an initial release is noteworthy.
For the sake of brevity I leave it as an exercise to the reader to find the other red flags, but I may update this answer if there are any that particularly stick out to me.
MoneroV is a chain split off Monero. It will inherit Monero's history going forward. MoneroV is widely regarded as an attack on the Monero network.
Any initial transactions made on MoneroV will be directly linked to their Monero counterpart. For instance, suppose I have money in Monero address A at the time of the chain split. I then spend my MoneroV and Monero. Both of these transactions will return the same key image, which means they will be linked.
Furthermore, this negatively impacts other transactions on the network. If they include the output my funds are stored in as decoys in their ring signature, then everyone knows this is a decoy instead of a real input.
Though MoneroV poses a threat to the Monero network, MoneroV itself will incur the greatest burden. Do not rely on MoneroV for privacy, since it is highly likely that a large proportion of their outputs are traceable.
It is important to realize that the security of the Monero network and your own Monero is dependent on the security of your Monero keys. Your Monero keys are MONERO keys. Do NOT use them for any other purpose, including claiming coins from a Monero fork. Using your keys to spend the same outputs twice on different forked blockchains will damage your privacy, and others', as both spends will bear the same key image, but different rings, with only your spent output in common (this does not impact stealth addresses nor confidential transactions, just ring signatures). Moreover, by using such a "same keys" fork, the security of your Monero private keys now depends on those third parties.