Today marks the fifth launch anniversary of Monero, the first truly compelling “privacy coin”—a digital currency that obscures transaction details while remaining trustworthy. The anniversary is being celebrated by a day-long event in Vienna.
Monero was and remains a remarkable cryptographic innovation, and a full history of its development will no doubt be told someday. But it’s hard to resist focusing on the most fascinating element of its origins: One of the most trusted and fairly-launched cryptocurrencies grew out of what appears to have been an elaborate ruse.
First, a little background. Monero is fundamentally based on a protocol called CryptoNote, which appeared in 2013. When we spoke late last year, current Monero lead dev Riccardo Spagni described CryptoNote’s appearance as something of a historical watershed: Up to that point, efforts to create a privacy coin had been scarce and imperfect, but CryptoNote opened up new horizons.
“There was nothing else, and so this whole like, wow, on-chain privacy thing blew my mind, because it was so novel, and so unexpected. It came completely out of left field. It used known cryptography but in a novel way . . . Even bitcoin developers were like, this is novel.”
More than simply an innovative approach to privacy, CryptoNote expanded the sense of what was possible in cryptocurrency broadly. At a time when most “new” cryptocurrencies were simply forks of bitcoin with minor modifications, CryptoNote was a completely new body of code.
“I think,” said Spagni, “CryptoNote’s codebase gave myself and some others, who were already either bitcoin contributors or somewhat familiar with bitcoin’s codebase, the opportunity to go, ‘oh look, here’s a slightly different design decision, like not having a fixed block size.’”
Even the hard-core adherents hanging out on Bitcointalk in 2013 had never heard of it.
CryptoNote’s code was thoroughly vetted when it appeared, and has proven reliable in the years since. But the first coin created using the protocol—ByteCoin—was unveiled in an extremely odd way. Though some context is missing from this 2013 Bitcointalk thread “announcing” ByteCoin, it was framed as the “discovery” of a coin that had existed, and been used on the dark web, for years. But even the hard-core adherents hanging out on Bitcointalk in 2013 had never heard of it.
Though this was seen as suspicious even then, it wasn’t until August of 2014 that a Bitcointalk user known as “rethink-your-strategy” assembled reams of evidence that ByteCoin was a ruse. The most damning evidence were content and metadata from a CryptoNote white paper clearly showing that it had not been written in 2012. This undermined the claim that it had existed in secret before its “discovery.”
This chicanery appears to have been meant to conceal a large pre-mine of ByteCoin—which, somewhat amazingly, remains a top-50 cryptocurrency today. It’s still unknown who organized the effort, or, perhaps most intriguing, who created its very real innovations.
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But the fun didn’t stop there. To quote rethink-your-strategy:
“One of the things that happened soon after the Bytecoin ‘big reveal’ was a string of forks popping up. The first was Bitmonero on April 18 . Fantomcoin was launched May 6. Quazarcoin was launched May 8. HoneyPenny was announced on April 21, although only launched as Boolberry on May 17. duckNote was launched on May 30. MonetaVerde as launched June 17.” Many of these forks, according to DNS records, appear to have been launched by the same team that ‘discovered’ CryptoNote/ByteCoin.
“Bitmonero,” if you haven’t guessed, would eventually morph into the Monero we know today. According to Spagni, the community that coalesced around the fork found more deceit. BitMonero, unlike ByteCoin, was launched without a pre-mine (the process by which founders take coins for themselves). But its publicly-released mining algorithm had been intentionally crippled, giving its secretive founders, perhaps including pseudonymous lead dev “thankful_for_today,” a massive advantage in accumulating coins.
But within days, Spagni says, the miner-crippling code had been detected and forked out by the community, effectively giving birth to the Monero we know today.
“It basically reclaimed control of something that was, I think, a really powerful catalyst for improving the privacy of cryptocurrency,” says Spagni.