[Messari AMA] Alexander Zaidelson, CEO and Alex Romanov, CTO at Beam

Messari hosted a public AMA with Beam's CEO, Alexander Zaidelson, and CTO, Alex Romanov, in the Messari community group. This is a transcript of the conversation.

Messari: Alex and Alexander, thanks so much for joining the group to field some questions about! We have some great questions in the queue—this should be a lot of fun. Thanks for being here.

Beam (Alexander Zaidelson): Happy to be here! Hey everyone!

Beam (Alex Romanov): Glad to be here!

Beam (Zaidelson): Ready for the questions, bring them on

Messari: Before we jump into specific questions, can you both share a quick summary of your background and why you decided to build and launch Beam?

Beam (Zaidelson): Sure! I started my career as software developer. In 2005, I co-founded a startup called Nareos that was monitoring and selling content in P2P file-sharing networks (a tech somewhat similar to crypto). Then I founded another startup called Wikitup (a desktop dictionary software that I created). That one was eventually sold to iMesh. I also worked at a big data analytics company called WeFi, as VP of Product, and after that spent 2 years in a venture capital fund here in Israel

I got interested in crypto relatively late, and the potential of the space fascinated me. Beam, as I see it, has a lot of innovation to offer, and I was happy to join.

Beam (Romanov): For me it is a fist crypto adventure. The idea was to implement Mimblewimble based coin from scratch, which we did starting in March 2018. Before Beam I worked in many different startups but none of them in the crypto space. Guy Corem, who is an old friend of mine brought me down the rabbit hole, and that is what I have been doing for the last 1.5 years.

Messari: Awesome, thank you both. I've grouped the submitted questions into a few topical categories, and I want to start with a couple generic privacy-focused questions.

First:

“How can the average user know which privacy coin is the best since all the privacy coins promise the same thing?”

Beam (Zaidelson): That's a good one. While all privacy coins may promise the same thing, they can actually be very different. First, the level of privacy offered by different privacy coins is not the same. Some examples: in Dash, the Masternodes see all the transaction information. In Zcash, while ZK-Snarks is really great tech and offers strong privacy, over 95% of transactions are fully public.

Second parameter is emission curve - some privacy coins are inflationary (e,g, Grin, Monero), some are deflationary (Beam). Scalability and blockchain size are another important parameter.

Usability is also crucial - if the coin is hard to use, doesn't have good wallet software - that will hurt mass adoption in the long run. Community size, speed of development, security audits, are some other parameters.

There are tons of materials on the Internet comparing different privacy coins. Here's a link to our own article comparing Monero, Zcash and Beam

Messari: Can you speak to any research on Beam’s decoy privacy?

“What research suggests that Beam's decoy privacy solution is effective?”

Beam (Zaidelson): There is no formal research as of yet. But intuitively it is pretty clear - decoy inputs are added into every transaction when in Dandelion Stem Phase, making it much much harder to trace transaction inputs and outputs.

Beam (Romanov): This only happens when the network traffic is low and there is not enough real inputs and outputs.

Messari: We have a couple block height / mainnet questions up next, and obviously the hard fork expected today (pretty soon, actually!) is noteworthy.

So first, what changes after the fork?

“What changes after the hard fork?”

Beam (Zaidelson): I will start and Alex will add. For the users, nothing really changes - everything stays the same. The main goal of the fork was to tweak the mining algorithm. Right at launch, we announced that we would do two hard forks. Rationale: signal to ASIC developers that there is no point in starting to work on an ASIC before the second fork. So, in this fork we are changing the mining algo to Beam Hash II. It is based on Equihash (Beam Hash I also is), but is more energy efficient. In addition to that, we incorporated first-layer support for Confidential Assets and HTLC support to enable Laser Beam (our flavor of Lightning)

Beam (Romanov): In addition there are two more changes. One if the mandatory enforcement of PoW for the SBBS messages that are calculated by the wallet to avoid SBBS spam attacks, and also the minimum fee was set dependent on the amount of outputs and kernels in the transaction.

Messari: A question about mainnet versus testnet block heights:

“Why is Beam testnet block height so far behind mainnet block height?”

Beam (Romanov): During the development we have launched 4 testnets before the mainnet launch on January 3rd. The last one (using the same code base as the mainnet) was relaunched about two weeks after the mainnet. Also it has relatively few miners and the hashrate fluctuates more than then mainnet. This is what accounts for the height difference in the chains.

Messari: Even though you shared the article already, we have a few questions about Beam versus other privacy coins and protocols. But that article is a good additional resource.

First:

“Why are there only 2 Mimblewimble coins? Do you expect many more to be built?”

Beam (Zaidelson): There are indeed two main Mimblewimble projects, but several more appeared already.

BitGrin

Litecash / Lightbeam

Kepler Network

VCash

Grimm

Epic Cash

ZVChain

…to name just a few.

They are Grin or Beam forks, mostly changing the emission model. For example, BitGrin is a Grin fork with Bitcoin-like capped emission. Mimblewimble is getting more and more attention, and some more established projects are looking to use it as well. We expect that as Mimblewimble develops and matures, there will be more projects using it.

Messari: We have a couple questions about comparing these two projects—Grin and Beam—but instead of re-hashing all the differences and similarities on a low level, can you explain how you see Grin and Beam competing and also working together in the future?

Here are the questions for your reference:

“Are Beam and Grin basically the same?”

“Why is Beam better than Grin?”

Beam (Zaidelson): Sure. Beam and Grin are two different projects - two totally separate codebases. We define this as friendly competition.

There are several main differences between the two projects:

Emission: capped in Beam, constant in Grin

Governance: Grin is unfunded and community-based, Beam uses Founders' Reward and is run by a company

Vision: Grin is more of a cypherpunk project, Beam has a vision of creating a currency that is both confidential and opt-in compliant

Usability: Beam puts a lot of efforts to make our software easy to use. Our SBBS system was created to "hide" all the complexity of Mimblewimble from the user and allow users to send funds in the same fashion as they do in BTC and others (i.e. by entering a recipient address, while the address is actually not on the blockchain, but in our custom messaging system)

As stated above, Beam also has better privacy by using Decoy outputs

Beam is also is able to move faster than Grin in developing features due to the fact that we have a professional funded team working on the project full time

So, to summarize: two totally different projects. Beam has better usability, better privacy and more encompassing vision. Alex, did I miss anything?

Messari: Thanks for that breakdown—very helpful.

Beam (Romanov): Just want to add two things. We have very good relationships with grin devs, we learn a lot from each other since we often have similar problems and the other one is indeed our focus on practicality, and clear and published roadmap.

Beam (Zaidelson): This is very important to us - we believe in cooperation in the space. Both projects share a lot of same values - privacy and financial freedom.

Messari: We have a couple Bitcoin-related questions too.

First:

“Will Beam still be useful if Bitcoin implements new privacy features?”

And second:

“Will bitcoin privacy ever be better than Mimblewimble coins?”

Beam (Zaidelson): We believe it will be very hard for Bitcoin to implement privacy features. Privacy should be built in from the start, not as afterthought. Privacy features that are add-ons to basic functionality may actually make the user worse off – anyone who uses those privacy features is immediately drawing attention to themselves.

Another advantage of Mimblewimble and Beam over any potential privacy solution on Bitcoin is scalability. Addition of privacy to Bitcoin will necessarily increase the blockchain size, and thus hurt decentralization. We have seen that with Monero and Zcash already -their blockchains are much bigger than bitcoin’s .

For example, Zcash's blockchain is 9 times larger than BTC per transaction, meaning that BTC blockchain would be over 2TB in size. And as the usage grows... meaning: custom hardware to run a full node -> more centralization

Messari: Anything to add, Alex?

Beam (Romanov): Well, it is definitely possible, technically speaking. But I am not sure it will happen for Bitcoin. Not in the near future

Messari: The last couple questions are organizational and operational. The first related to auditing and legal use in Japan:

"’First reported by Crypto Sieve in an interview with BEAM CMO Beni Issembert, they are working with an undisclosed “top 4” global consulting firm to ensure “auditability”, and have been working with the Japanese government to make BEAM the first privacy coin that is completely private and legalized in Japan.’

Would love to know more about this if possible”

Beam (Zaidelson): So, our vision is to build a coin and a ecosystem that is both confidential and opt-in compliant. What does that mean? Today, the crypto currencies are either transparent (i.e. all your financials can be viewed by anyone who is willing to invest some effort). Bitcoin, Ethereum, and most others are like this.

Another option is fully confidential (Monero, Grin, Beam as it is today). Now, it turns out it is hard for a business to use either kind. Why? Businesses don't want their competitors know about their financials. But, businesses DO have to allow auditors and tax people, and banks to know about their financials. So, our idea is to create this Opt-in Compliance systems where users will be able to choose to create a history of their transactions and then show it to whomever they want/need.

Japan is probably the strictest jurisdiction in regards of privacy coins now, but there may be more countries joining in. The system we envision will be applicable globally, not just in Japan.

Messari: This wasn't asked in the queue, but I'm curious, given the recent drama around Zcash in the UK, do you expect something similar for other privacy coins on mainstream exchanges in the near future? And is this what you're working to avoid for Beam with opt-in compliance?

Beam (Zaidelson): Well, I am not sure the UK drama is about privacy. As everyone should know, Zcash has two kinds of addresses - the transparent t-addresses and the confidential z-addresses.I don't think Coinbase ever received or paid out funds to/from z-addresses. So, not sure it is about privacy at all, there may be other things at play

But, to your second question - indeed, the governments may make the fiat on-and off-ramps for privacy coins harder to operate. And opt-in compliance will solve that.

For example, if you operate in an environment where all the off-ramps require you to present your transaction history and such, and you plan to use those off-ramps in the future, then you will be usin the "compliant" version of Beam.

If you don't care (or only operate small amounts) - you will use the regular, confidential version. It is somewhat similar to cash - small players and private people don't need to keep history of their spending or of them receiving small amounts. Businesses that accept cash do have to keep such history.

the analogy is not perfect, but you get the idea.

Messari: We have a question about the Beam Foundation's formation — can you share updates?

“When will the foundation be ready?”

Beam (Zaidelson): In several months from now. We are working on it now as we speak. The Foundation will eventually take over the development of Beam and will work to broaden the developer outreach. Initially, the Foundation will likely work closely with Beam Core team.

Messari: Alexander and Alex, thank you both so much for your time. This has been very fun and informative. Last question to conclude with:

“What do you see as the most exciting potential use case for Beam, and how do you see this playing out in terms of adoption?”

And please share places we can continue these conversations and follow Beam's progress.

Beam (Zaidelson): To me, the use cases are very broad. We want Beam to be the Internet money. One more exciting use cases (once we deliver the Confidential Assets functionality which will take several months) is confidential stablecoins. Today, Beam is accepted as payment in a lot of privacy-oriented services such as VPNs and VPSes, as well as in mutliple online stores. More stores are coming every week - I personally believe that ANY purchases you do should be confidential - nobody is entitled just to open a blockchain explorer and research my purchasing habits

Alex, want to share your view?

Beam (Romanov): Yes, I do. Eventually Beam will cover every possible way of value transfer. Starting with trading Beam today through Atomic Swaps (already released and UI coming soon) through Lightning Network Payment channels (next quarter) for instant payments, then confidential assets and eventually DEX.

Any type of value, anytime, anywhere and with complete confidentiality.

Messari: That's awesome — we can't wait to watch it be built, deployed, and used.

Beam (Zaidelson): Thanks!

Messari: Alex and Alexander, thanks again for your time and answers!

Beam (Zaidelson): Sure! To learn more, please join our Telegram community here. Or visit our website here. And sign for our newsletter here.