On a technical level, Monero is extremely impressive.
- The sender is hidden.
- The receiver is hidden.
- The amount is hidden.
- The node used to transfer money is masked.
- Addresses do not appear on-chain.
- The mining algorithm (cryptonight) is somehow still ASIC resistant.
I've actually always wanted to try mining Monero for real with an actual legitimate rig, but every time I try to research it I come up a bit confused. There seems to be a lot of drama in 2019 with a fork that created a 4-way hardfork split because of this exact issue. Another article claims that 85% of Monero hashrate is ASIC even though that's exactly what they are trying to avoid. I guess I'll have to look into it more before I attempt mining.
At the end of the day it is very hard to create a system that is resistant to ASIC machines because ASIC literally stands for application specific integrated circuit. No matter what algo Monero chooses, logic would dictate that hardware designers would be able to build around the rules to create a more efficient miner, and in my opinion that's fine.
Theory vs Practice
The theory behind ASIC resistance is that it makes the network more decentralized, but as @theycallmedan has already pointed out, solo-mining is irrelevant and all that matters are the massive mining pools that are the actual entities that control POW blockchain security.
If I start mining Monero, it doesn't matter if I use an ASIC machine or a PC. My hashrate is irrelevant, and I will delegate all my power to a mining pool like Nanopool. In doing so we see that POW is just DPOS with extra steps and extra unnecessary layer 0 governance structure.
But that is mostly irrelevant to the topic at hand.
Privacy is the basis of fungibility, currency, and freedom itself. When compared to other networks, Hive is less private than even something like Bitcoin that is already heavily tracked by Chainalysis. That's because we use readable addresses on Hive and those addresses have an associated reputation within the network, which makes it even more unlikely that a single person would use more than one account in many circumstances. This prompts the obvious question: shouldn't we be reaching out and connecting to other privacy coins to make our own network more private?
Being able to move in and out of a privacy network would be a pretty huge gain for any non-privacy-centered network. More privacy better. This is especially true in the face of centralized exchanges constantly delisting privacy coins due to regulation concerns. That means that privacy coins actually work and regulators are truly baffled by them. We need to be making more connections with this technology to bolster our own relevance. Everybody does.
I've heard rumors that ThorChain is already on it.
There is a project in the works that apparently is a fork of Monero that may be able to connect to ThorChain itself, which would be huge for everyone because ThorChain itself is a decentralized exchange connected to dozens of networks. The ability to move value into a privacy network and move it anywhere without being tracked would be a godsend, even if the establishment would try to spin the same tired narrative that only criminals would want such a thing. Privacy is a basic human right. This has been proven dozens of times over the course of history. The people opposed to privacy are propagandists, imperialists, and tyrants.
Rules for thee not for me, peasants!
I've already tried to run the game theory on how difficult it would be to run a cash-for-crypto operation on something like Venmo anonymously. It may or may not be viable depending on certain technical issues like verifying transactions between Venmo users. However, it was an interesting thought experiment nonetheless.
Could we apply this same logic to a Monero connection? Can Hive use its escrow smart contracts to facilitate a connection to privacy coins? I don't see why not.
The biggest problem I can think of off the top of my head is that the escrow service that holds the Hive in limbo would need to be able to confirm that a Monero trade did or did not occur. Is that even possible on a chain that masks addresses? It looks like it might be.
How to make a view-only wallet
A view-only wallet is a special type of wallet that can only see incoming transactions. Since it doesn't hold your mnemonic seed and private spend key, it can't sign transactions and it can't see outgoing transactions. This makes them particularly interesting for
- Validate incoming transactions to cold wallets or hardware wallets
- Monitor incoming donations to a fundraising campaign
Developers writing libraries to validate payments
Apparently Monero users get a special private key just for viewing funds in a public wallet. An escrow service on Hive might demand this key be shared (by the receiver) in the event of a trade being contested. If the receiver refused to share their key it would be assumed they got the money and the trade would go through, unlocking the Hive to the sending account and breaking the stalemate.
So everything would still be private to the outside world but the information would be shared with the escrow service (only in the event of a problem). If this outcome was not sufficient to the receiving party they could simply move the money one more time to another wallet to fully obfuscate the trade. That's the magic of privacy coins. Every transfer is very difficult to link with the previous transfer.
Another big problem is value capture
Who would build such a thing on Hive? What do the developers get for building it? Monetization can be a very big problem in a decentralized world where it can be very hard to capture value to justify building the thing in the first place. Perhaps it would make for a good project funded by the DHF. Say what you want about the DHF, but other networks don't even have the option. Hive is lightyears ahead of the "competition".
Conclusion
Privacy coins work. The IRS admits it. The Secret Service admits it (and their primary job is to stop people from counterfeiting USD). The FBI and the NSA admit it. They admit it with their actions and they admit it with their words (not overtly). Even more importantly, they all admit that privacy, fungibility, and currency are all fundamentally linked. A cryptosphere without privacy coins is a cryptosphere without currency. It's clear that Hive will need to link up with at least one in the future if we want to be taken seriously.