Two new cryptocurrency projects are generating a groundswell of excitement in crypto-land: Grin and Beam. The two ‘privacy coins’ both went live this month, with Beam’s genesis block minted on January 4, and Grin’s on January 15. They’re relatively similar in their use of a technology called MimbleWimble to create currency that’s both decentralized and untraceable, in contrast to bitcoin’s public ledger.
They’re innovative and potentially important projects in their own right. But most importantly, they feel like a major breath of fresh air after a dispiriting boom and bust cycle in 2017 and 2018, full of puffery and scams and lies. In ways large and small, both of these new projects—but Grin in particular—represent a page turned on all of that. Their twin arrival could be an important step towards cleaning up the wreckage of a callow gold rush and rebuilding the crypto sphere as an ethos-driven community.
They’re Not F&*cking ICOs
ICOs were supposed to be the future of startup financing. They actually seemed that way for a while, and some version of them might still be—once we build some guardrails. But by late 2017, it became clear that unregulated fundraising at scale was an irresistible lure for the world’s most unethical people, from shameless hucksters to pyramid schemers to former pyramid schemers.
Those operators and scammers capitalized on crypto-hype by setting up fake or bad projects and soliciting investors through ICOs. All told, the various bad actors raked in billions of dollars—money that could have pushed blockchain forward immensely if it had made it into better hands. Now, despite their true grassroots hype, Grin and Beam are choosing not to ICO, pointing to a brighter, cleaner crypto-future.
The Technology Will Take You Forever to Grasp
Remember the first time you actually tried to understand bitcoin? Well, get ready for a trauma flashback!
Both Grin and Beam are based on an underlying technology called MimbleWimble, first described in a rough-hewn white paper in 2016. The purpose of MimbleWimble (named after a Harry Potter spell of silence) is to conceal blockchain transactions; both Grin and Beam are theoretically untraceable “privacy coins,” like Monero and Zcash.
How does MimbleWimble work? Don’t ask me! At least not yet. And maybe not ever—while bitcoin’s core innovation can eventually be grasped with basic logic, MimbleWimble’s pulsing heart is made of algebra (shudder). Here’s a useful intro to anonymous transactions, and a supposedly dumbed-down explanation of MimbleWimble, courtesy of the Beam team . . . but if there’s a single 12-year-old out there who finds it comprehensible, that’s a kid I’d like to meet.
So, plan to read explanations of MimbleWimble again and again and again, banging your head against the wall in between attempts to get it. Just like old times.
The appearance of these two idea-driven and ethically-launched projects is reason to believe 2019 will move things in the right direction.
The Creators Are Anonymous and That Is Very Cool (and Very Legal)
But the underlying MimbleWimble technology was first laid out by someone going by the name Tom Elvis Jedusor—the real dark wizard Voldemort in the French edition of the Harry Potter books. And Grin was started by someone going by Ignotus Peverell. That’s the moniker of a much more obscure Harry Potter character—appropriately, one who had something to do with a cloak of invisibility.
There’s not an overwhelming reason for these people to be anonymous at this point. The SEC has even made relatively clear statements that truly decentralized cryptocurrencies (see “Fair Launch” below) don’t qualify as securities, reducing the chance that Grin or MimbleWimble’s creators will face regulatory scrutiny. And though anonymous crypto might make some people nervous (okay, a lot of people), it’s not illegal, and plenty of devs and creators of existing privacy coins are very publicly visible, with no apparent fallout.
But still . . . anonymous creators. That’s got a certain panache, doesn’t it?
A Little Bit of Politics With Your Tech
The MimbleWimble white paper is not quite as refined and clear as the bitcoin white paper, but Tom Elvis Jedusor seems to share Satoshi Nakamoto’s political bent. Here’s the author’s (admittedly brief) comment on why private transactions are important in the first place:
“The ‘transaction graph’ resulting [from the bitcoin protocol] reveals a lot of information and is subjected to analysis by many companies whose business model is to monitor and control the lower classes.”
Satoshi Nakamoto was preoccupied with banks and finance. Jedusor has more contemporary concerns, hinting at the collaborative efforts of corporations and governments to use financial and other data to monitor and control the masses. The next time anyone tells you that if you’re not committing a crime, you have nothing to hide, remember this wisdom.
Community-Built and “Fair”
After a period when even the most half-cocked projects could raise $80 million on a white paper, it’s simply amazing to learn that Grin was coded largely by a community of volunteers. Beam went with a more conventional venture capital funding model and has a full staff, but it’s still getting in the community spirit. According to CoinDesk, Beam pitched in to fund Grin’s security audit, and the two projects are exchanging ideas regularly. In the wake of the Bitcoin vs. Bitcoin Cash wars (and then the Bitcoin ABC vs. Bitcoin SV nonsense), that’s absolutely inspiring.
Even more importantly, both projects have launched, by many accounts, “fairly.” That means there is no chunk of coins set aside for developers (or “premine”), so every coin in existence should be generated by mining from the very start. Beam, as a for-profit company, will divert a portion of the block reward to its own dev team, but that’s relatively mild compared to the seignorage that was rampant among ICOs. Some critics on Twitter have compared apparently large investments in early Grin mining to a premine, and certainly, nobody was buying $100 million worth of equipment to mine bitcoin in 2009. But the Grin and Beam teams have even taken some measures to account for that: Both projects use algorithms that don’t give an advantage to specialized, expensive ASIC chips, making it feasible to mine with more accessible GPUs. As the Beam team acknowledges, ‘ASIC resistance’ has not usually lasted long for other projects, since chips can be built specifically to beat it. But at least in the short term, it’s very healthy that these are coins anyone can mine effectively on a gaming PC.
There are certainly many differences between these two new projects and the grassroots crypto projects of the early days. Most dramatically, while bitcoin has a strictly limited supply, Grin has a constant emission model. That means new Grin tokens will be produced from now until the heat death of the universe (theoretically), possibly producing ongoing inflation. For Satoshi and many committed bitcoiners, that’s anathema, because of their deep belief that irresponsibly-managed government currencies debase holders’ wealth. But it should encourage people to actually use the currency instead of just HODLing, and the swerve, however contentious it eventually proves, is itself fully in line with the experimental spirit of the early crypto-sphere.
There is still a lot of cleaning up to do in the crypto-sphere. But the appearance of these two idea-driven and ethically-launched projects is reason to believe 2019 will move things in the right direction.