The State of the Art in Cryptocurrency Privacy

An abridged overview of production systems.

At a recent offsite with the Aragon One team, I presented a lightning talk about state-of-the-art systems for privately buying, selling, and using cryptocurrency.

A PDF of the slides is published here. The slides are pretty self-explanatory, so I’m sharing as-is. If there are any questions or feedback about the content, I’m happy to discuss in the comment section.

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New year, new job 2018 edition

I have some exciting – if somewhat belated – news to share. As you could probably tell from the title of this post, I have a new job. In November I accepted an offer to join the Aragon team as their new Community Lead!

aragon

Aragon is a project that I have been following since I first met the co-founder Luis Cuende at a Blockstack meetup in San Francisco. I was excited when they released the alpha version of their testnet client in early 2017 and blown away when they went on to raise $25 million later that year in the fourth-largest crowdfund and the second-largest token sale at the time.

After leaving Abra in July 2017, I took a few months off to explore the cryptocurrency space and see what other opportunities were out there. I considered several offers but kept my options open. The market had changed significantly since my last job search less than a year earlier. One significant change was that there were many projects outside of the Bay Area hiring for remote positions. Aragon was one of those projects.

I reconnected with the Aragon team while I was attending the Crypto-Economic Security Conference in Berkeley, CA. Zooko Wilcox, CEO of Zcash, knew I was looking for a job and had generously offered me one of the tickets his company was given for sponsoring the sold-out event. I accepted the ticket and went to the event, looking forward to meeting new crypto people in the Bay Area and watching interesting talks by the presenters.

I was surprised and delighted to meet María Gómez, Strategy and Operations Lead at Aragon, in person at the event (we’d previously met online while I was working at Abra). María asked what I was doing at the time. I told her I was looking for a new full-time gig, something in a marketing or community role. She told me that Aragon was hiring a Community Lead to replace their then-Community Lead Tatu Kärki, who was transitioning into a Communications Lead role. The rest, as they say, is history.

Within a few weeks, I had gone through several rounds of interviews and flew to Finland to do a trial week with Luis and Tatu. We worked on several community projects throughout the week, and on what would have been Thanksgiving day in the US, they offered me something to be extra thankful for: an opportunity to join the Aragon team as their new Community Lead. I gladly accepted, and have been dutifully serving the Aragon community ever since. Join us!

P.S. Aragon is hiring!

New job FAQ

Congrats on the new job! What does Aragon do?

Thanks! Aragon is building a platform that makes it easy to create and participate in Decentralized Autonomous Organizations, or “DAOs” for short. In the future, the Aragon project itself will be run as a DAO on the Ethereum blockchain. The Aragon DAO will be governed by holders of Aragon Network Tokens (ANT), an ERC-20 token that was sold in mid-2017 to raise the funds needed to develop the Aragon software.

Is $ANT a good buy?

Maybe! DYOR.

What’s it like being part of an Ethereum project?

Although I’ve been following the Ethereum project since its inception in 2013, I haven’t been closely involved since the very early days. After leaving Abra I took some time to explore all the projects that have formed in ecosystem in the intervening time. Many of the smart contract applications that first got me excited about Ethereum have begun to come to fruition, including p2p prediction markets, asset exchanges, gambling platforms, and, my personal favorite, DAOs. This, along with the amazing team that Luis and Jorge have assembled, is what led me to join Aragon.

Now is a very exciting time to be involved in the open-source cryptocurrency community. There’s no shortage of funding for extremely ambitious projects, including important blockchain research and development work. It seems like the only limitation right now is the supply of engineering talent and the imagination necessary to build the p2p future so many of us envision. I’m excited to help Aragon overcome these limitations in our own community and share what we create with the broader p2p ecosystem.

Are you still working with Bitseed?

Yes! I think 2018 will be a big year for Bitseed. We have started shipping orders for Bitseed 3, the next-generation version of our plug-and-play bitcoin full nodes. And we’ll also soon be relaunching our developer community so that devs who are interested in helping us improve Bitseed have an easy way to get involved and work together.

The kind of projects I’m really excited to work on with the Bitseed community include adding support for Layer 2 protocols such as Blockstack and the Lightning Network. Then Bitseed owners could have a node that not only secures their bitcoin transactions, but can also resolve decentralized domain names for them or even earn bitcoin by providing liquidity to the Lightning Network. Future work could even include using the node as a decentralized storage device or a crypto-incentivized mesh router. The possibilities are endless.

If you’re interested in helping us with any of these projects, please get in touch.

So what’s next for John Light?

Bitseed 3 ships this month, the Bitseed developer community relaunches shortly after, and Aragon goes live on Ethereum mainnet sometime in Q1/Q2 2018. I’ll probably be traveling a lot for Aragon community events this year, so if there are any cool crypto events you think I should be at let me know in the comments below or ping me on Twitter or @light in the Aragon Chat. To the moon! 🚀


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What appcoin startups have in common with Midwest logging companies

Logging companies in the 19th century Midwest had a problem. In the remote forests where they set up shop, cash was hard to come by. Still, workers needed to be paid so they could buy food and other basic necessities. So the logging companies came up with a solution to the cash shortage: they would print their own currency.

This private currency, known as “scrip“, was denominated like U.S. currency and redeemable for goods and services exclusively at company-run stores. If a worker who received scrip in lieu of cash wanted to spend their paycheck elsewhere, the scrip would often trade at a steep 10 percent to 25 percent discount. Exchanging scrip for cash would result in additional exchange fees. And so most business was done at the company store.

Company scrip for the Network Age

Fast-forward 125 years and private currencies are once again being used by cash-strapped companies to keep operations running smoothly. Only this time, the companies are high-tech software startups instead of Midwest logging companies, and the currencies they are issuing aren’t simply a stand-in for cash. Private currencies have become a core part of new business models emerging around digital networks.

Often referred to as “appcoins”, these new private currencies are being used by issuers to simultaneously fund their businesses and bootstrap networks around their products. Unlike the company scrip of the past, appcoins are neither denominated in another currency nor redeemable for a fixed quantity of goods. Instead, the issuer designs their product in such a way that users have to dispose of some quantity of the appcoin to receive the value offered by the product. As a result, demand for the product results in demand for the appcoin, creating a virtuous cycle of adoption and price discovery.

The power of incentives

For early adopters of the appcoin, this virtuous cycle can result in a significant financial return, similar to the way that an early investor in a company can earn significant returns if the company is later successful and the value of their equity increases substantially. For example, if an early adopter of a product receives appcoins when there are only 1,000 users and the appcoin is valued at 100 satoshis each, and several years later the product has over 100,000 users and the price of the appcoin has increased to 10,000 satoshis each, this results in a 10,000 percent “return” for the early adopter.

The potential for financial return creates an incentive for people to adopt an appcoin product early on, even when the “cost” to doing so may be higher than using a more established alternative (for example, using a new social network app when there aren’t as many people to connect with as on other, more established apps). This incentive helps bootstrap the network, giving the app a fighting chance in the face of well-funded incumbents and speeding up the time-to-critical-mass that gives the network value and makes the app “sticky” for end users (or so the theory goes).

The future of appcoins

I have written before about why I am skeptical of appcoins. Disintermediation and centralization remain my top concerns. But given that there is no sign of the appcoin trend slowing down, with even “mainstream” apps with millions of existing users announcing plans to release an appcoin, it is worth thinking about what it would take for appcoin issuers to address these concerns and succeed with this model.

Appcoin issuers could reduce the likelihood of disintermediation by ensuring that there is as little friction as possible when exchanging currencies to use their app, while simultaneously doing all they can to increase the value of using the appcoin. And to minimize the risk that centralization has on the long-term value of their appcoin, issuers could create a succession plan to cede control of development to a more decentralized open source community.

The long-term future of appcoins is unknown. They could overcome these and other challenges and become a powerful tool for building products and bootstrapping networks. Or, they could disappear as dramatically as they appeared, destined to be a footnote in the pages of history like the company scrip that came before.

Featured image via WisconsinHistory.org


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