📰 NewsOn January 16th, the Grin mainnet was launched and the first block was mined. Grin is the much anticipated, community developed implementation of the MimbleWimble protocol. Its launch comes only weeks after the launch of the Beam network-- another implementation of MimbleWimble. Link.
I talked about MimbleWimble in issue number 32 while discussing the launch of Beam. In short, it represents a "better" version of Bitcoin in that it uses the core of Satoshi's invention, but improves significantly on privacy and scalability, without sacrificing true decentralization. It was released pseudonymously on IRC in 2016 in the form of a whitepaper. Beam & Grin are the first two implementations of it to go live. If you'd like a comprehensive but approachable introduction to the protocol, check out this fantastic write up from Arjun Balaji at The Block. Link.
While Grin's network may be brand new, its hashrate already looks like that of a more mature network. The incredible hype around this cryptocurrency lead many, including deep pocketed venture capitalists, to invest hundreds of millions of dollars in GPU farms optimized for mining on the network. Within one day, it was estimated 88,000 GPUs were mining. Within a week, the GPU manufacturer Sapphire announced a specially designed GPU tweaked to mine Grin's hashing algorithm efficiently. Link.
While the Grin network was getting off the ground, the competing Beam network was experiencing issues. First, the startup behind its development had to rush out a new version of their wallet software to patch a critical security vulnerability. Days later, the network stopped producing blocks altogether for several hours. It was determined another bug had made it impossible for miner's to produce new blocks. Both issues have since been fixed and the network is operating again. No coins were reported lost as a result of either issue. Link.
Back in issue 32, I wrote that while MimbleWimble seemed technically superior to Bitcoin in many ways, it also lacked several critical advantages that Bitcoin has gained over the last ten years. In particular, I mentioned: network effects, name recognition, and battle tested hardening. Beam's bugs over the last couple of weeks demonstrate that the last of these is no small thing.
Cryptocurrencies that launched before the 2017 mania had the advantage of bootstrapping their networks in an environment with much less scrutiny. In Bitcoin's case, their was virtually no scrutiny at all for several years beyond a small community of enthusiasts. Numerous critical bugs were discovered and patched during this phase and in the years since.
The frenzy of mining activity on the Grin network represents another way in which bootstrapping a cryptocurrency today comes with a totally different set of tradeoffs than it did even a few years ago.
On the one hand, the fact that so much hashpower and specialized hardware was brought online from the very beginning is a good thing. It ensures the network is relatively secure from the start. Without this, a nascent network could be attacked before really getting off the ground.
On the other hand, the huge investment in mining equipment from well-heeled investors means that the "little guy" has been locked out of mining Grin from the very first block. As a a result, all the initial supply will go to these wealthy investors, as will any outsized profits to be had should the coin really take off. From this angle, it's hard to see how this is much different from the much-maligned pre-sale of tokens that are pre-mined in the first block.
The lesson here is that it's not 2008 anymore. New projects don't have the luxury of launching in obscurity, claiming a "fairly mined" supply, or working out the kinks before anyone notices them. This gives real advantages to the top networks that have already been bootstrapped and achieved some semblance of scale. It's yet to be determined just how powerful those advantages are, but the launches of Grin and Beam show us they're not trivial.