Meet Riccardo ‘Fluffy Pony’ Spagni: Plett-based lead developer of the Monero cryptocurrency
JOHANNESBURG — Born and bred in Joburg but now a resident of Plettenberg Bay, Riccardo Spagni - aka 'Fluffy Pony' - is tearing up the global cryptocurrency world. As the lead developer of a private digital currency dubbed 'Monero', Spagni has been grabbing the attention and imagination of the global cryptocurrency and blockchain community. This week (and in a volatile and bear trading environment) Monero's market cap has come under just $2bn, making it the 14th largest cryptocurrency by market cap in the world according to CoinMarketCap.com. This is an incredible accomplishment when considering that there are currently over 1 600 cryptocurrencies in the world today. And in this interview with Spagni, it's clear that he's one of South Africa's brightest and best technology business minds. Take a listen. - Gareth van Zyl It’s a warm welcome to Riccardo Spagni, who’s on the line from Plettenberg Bay and a South African who is the lead developer of a major global cryptocurrency called Monero. Riccardo, before we talk about what Monero is, your nickname and Twitter handle is ‘Fluffy Pony’. Can you please give me the background to that? [Laughs] Yes, this tends to be a question that comes up more than once. So, it goes way back to my very first job. I worked with an IT company and there were these two sales girls, Fluffy Puppy and Fluffy Bunny. Because we were buddies they ended up giving me this nickname ‘Fluffy Pony’ and it kind of stuck. At the beginning it was like a big joke and it was like, ‘ha-ha Fluffy Pony – what a funny name.’ But when it gets used over and over again, eventually you sort of have to embrace it or you end up with the Streisand effect so, I had to embrace it. Now, just talking about Monero, it’s the 14th largest cryptocurrency in the world today, according to Coin Market Cap, by market cap. Its market cap is just over $2bn. For our listeners who don’t know what Monero is, how would you explain it to them? Monero is a cryptocurrency that is very similar to Bitcoin in many ways. It uses proof of work, transactions of inputs and outputs so, there are many similarities there. The big difference between is that it’s not based on Bitcoin’s code so, it’s not a simple clone or copy of the coin. It is pro-privacy so it tries to preserve the privacy of its users. Now, you’re the lead maintainer on the Monero project and there’s an interesting backstory to how you took on that role. The white paper for the Monero project was actually written by somebody with the pseudonym, ‘Nicolas van Saberhagen’, and then launched by somebody with the alias ‘thankful_for_today’. So, can you tell us how and when you got involved with it then? Sure so, when ‘thankful_for_today,’ announced that he was going to launch Monero (about 2-3 weeks before he launched it) he announced it on Bitcointalk, which is a Bitcoin forum, and I was one of the people that read that thread and I found Monero and the white paper very interesting because it was something that was privacy preserving, which is very important to me. I think that privacy is a basic human right. So, I thought this is something interesting - let me play around with it. So, then it launched and I was one of the early miners. I then became reasonably familiar with Monero’s code. About 4 to 5 weeks in, thankful_for_today, who was at that point the benevolent dictator, ended up not being a very good benevolent dictator as he didn’t really go along with what the community wanted. He had his own ideas about things he wanted to do and even when the community rejected those ideas, he still stuck to his guns and said, ‘no, well, you know we’re doing it my way anyway.’ Of course, the community didn’t like that. So, myself and 6 others ended up forking the project away from him. We had our version and his version running at the same time. They were both compatible for quite a while but then eventually it was just like he just stopped, because no one was using his version. Can you tell us some of the use-cases of Monero today, because it has a massive market cap. Lots of people must be using it already? Yes, look, Monero is useful for a lot of things. At its most basic, it’s used as a private store of value. For example, if you think about things like targeted crime – do you really want people knowing how much money you have in your bank account? I don’t think that is something that anyone is really comfortable with sharing in public. Unfortunately, due to the way Bitcoin was designed (it’s incredibly robust and in many ways, very sustainable at least compared to a lot of other cryptocurrencies at the base-layer), but it is not private at all and it’s not privately preserving. So, when you pay somebody with Bitcoin it’s not difficult for them to determine the number of Bitcoins you hold. Obviously, if a criminal decides that that’s the sort of information that they can use to target you, then that’s deeply problematic. So, that’s the most basic use case for Monero. Other things that Monero is obviously useful for are things like issues around leaking metadata all the time. So, when you make a payment using PayPal...in Europe, PayPal shares that data with more than 600 external companies. Some of those are marketing agreements, some of those are anti-fraud systems, some of those are companies that PayPal has a stake in. But still, your data for that purchase and your customer data gets shared with more than 600 companies, and that’s just for Europe. It might be even worse in the United States, for merchants that are over there. When you’re using PayPal in SA, like 60% to 70% of the time, you’re paying a merchant overseas and there goes your data. It flows off into the world. One of the things that Monero changes with that is we can’t stop a merchant from sharing your data, but we can stop any intermediaries from doing so. When you pay a merchant for a service or for a product, when you pay a contractor for doing some work, or whatever – when you pay someone using Monero, then no one can tell how much you pay. No one can tell who you pay. These are all things that are preserved, from a privacy perspective, and that obviously means less metadata out there, less data leaks, and less concerns about identity theft and so on. Would you say that Monero is a one-of-a-kind payment system/currency from that perspective then? There are many cryptocurrencies that are claiming to be private. They throw around words like anonymity and privacy, and so on, but they’re throwing them around almost as buzzwords. When you dig into it there is often very basic privacy systems that are easily compromised and that’s obviously concerning because in the cryptocurrency space - as it stands - there are a ton of people selling snake oil. But now you couple it with a ton of people selling snake oil and your life might be in jeopardy if you use their system. That’s obviously, not great. There are a couple of currencies that compete with Monero in terms of the mature, new technology or the ethnicity of the technology. But where Monero really shines and is a step-up above everything else, is that the privacy in Monero is on by default and you can opt out if it. But you opt out of it to a third party. So, you typically wouldn’t opt out publicly and even if you did opt out publicly, then that’s your choice. It doesn’t affect anyone else. Whereas, with a lot of other cryptocurrencies that claim privacy, their privacy systems are disabled until you go and tick a box or do something and whilst that might have some situations where that’s useful, from the most part it’s deeply problematic because when you have an optional privacy system, especially one that’s difficult to use, then people are simply not going to use it. We’ve seen that with cryptocurrencies with optional privacy. They end up with ridiculous things like under 2% use the privacy system, and that’s obviously not useful. Riccardo, what did you do before Monero? I’ve read up about you and there’s lots of articles that say that you ran a successful business in the import/export industry with your wife? Yes, so, I started off as a developer and that was many years back, and I went up to a senior position at a company, well I worked at various companies but ended up in a senior position in a company and I didn’t really like the red-tape. It was part of a group of companies that’s listed in SA so, it was very corporate, and I found the red-tape extremely frustrating. Eventually, after about a year-and-a-half, I went off to go and start my own thing with my wife in the import/export business. That ended up being quite successful and that gave us the opportunity to start new things. So, my wife decided to focus on one of our product lines and build an e-commerce business around that, and I decided on Bitcoin. I played around with Bitcoin and I stayed with Bitcoin until early 2011, but really only started building businesses and trying to build parts of the ecosystem from 2012 onwards. What’s interesting about you is that you’re also based in Plettenberg Bay, which is obviously an incredible part of the world and an interesting place to be doing your kind of work? Yes, I have offices up in Johannesburg, in Woodmead. I have extremely competent teams of the companies that I run and that helps a lot because it does enable me to live in Plett, which is, as you said, a beautiful part of the world. I come up to Johannesburg very regularly but I find that when I’m at home in Plett that I’m able to concentrate more and be a lot more productive and I’m less distracted, which is great. Are you from Johannesburg originally? Yes, I was born and raised in Johannesburg. Apart from your involvement with Monero you’ve also launched a new open-sourced blockchain protocol called ‘Tari’. It’s a project that is set to have a Johannesburg hub and it’s being built for digital assets. Can you tell us more? Sure, so with Tari we are just starting to build it, and it’s an open sourced project, which means anyone can participate. The aim there really is to build a decentralised assets protocol, and when we talk about decentralised assets we’re talking about assets that are natively digital. An example of a physical asset is of course, something like a house, and an example of a natively digital asset are things like in-game tokens or in-game items, loyalty points and tickets. These are all natively digital assets and natively digital assets can be represented using a blockchain-based system and there’s some advantage to that. It breaks out of closed walled gardens, so if you own say 20 000 loyalty points on Emirates, what do you do with them? Well, you can spend them on Emirates. Whereas if it is a blockchain based system, then it’s open and you can send those points to anyone, which means that trade systems can be built around that. So, if I had Emirates loyalty points and I need loyalty points for a Lufthansa upgrade, then I can trade those. If I have Emirates loyalty points and I want to buy tickets to a concert – I can do that because there’s interoperability within those systems. That’s then really what we’re trying to build and our focus is not only on security and safety and robustness, but also on scalability and we think that we can, as a community and as a group of developers, build something that is truly interesting and useful. Can you tell us more about the top-team that you’ve roped in for Tari as well, because I guess, like a true blockchain project, it’s really decentralised, these people are based all over the world? Yes, correct so, with it being an open software project there are a lot of people that will just sort of pitch up and help because they believe in the need for something like Tari to exist, but beyond that, we have set up a lab in Johannesburg, called Tari Labs, and we’re busy hiring at the moment. We’ve already hired a large portion of the staff compliment that we’re aiming for, and Tari Lab’s it’s primary role will be to contribute to the Tari project and the Tari protocol – but ultimately, the architecture and the development of Tari is owned by the community. While Tari Labs will play an important role, it’s not the only player, or participant that’s building it. We have a lot of people from all over the world that have expressed interest in getting involved. We’ve seen with Monero, over the years, that if you are building something interesting and you’re building it the right way, then people will pitch up and help. Over the past few years, Monero has had almost 400 developers working on it, and over the past 12 months alone, there have been 200 developers that have worked on Monero. There’s no lack of people interested in building these projects or working with a team that are building these projects, but it has to be done in a way that is attractive to open-sourced developers. Why did you choose Johannesburg as the hub for this? Part of it was the fact that I already had office space there and I have two of my companies in the office space so that made it a logical decision. I have a very competent management team at the holding company that manages all my businesses. So, we lean heavily on them because they’re able to handle all of the fiddly bits like finance, legal, HR, and graphic design, and we’re able to concentrate on just building and just writing code. That was kind of the main reason and, of course, the fact that I grew up in Johannesburg and also, having lived in Cape Town, it made me very aware of the fact that there’s tons of talent in Cape Town and the startup scene is in Cape Town but there is so much untapped talent in Johannesburg and all of that talent there is working for banks, and Discovery etc. These are all like soul-sucking companies to work for. If you’re a developer who is adept and who wants to change the world and build something amazing, you don’t want to be working in a bank doing the same work over and over. I guess that on the plus side, a lot of those developers would have gained the financial experience that would help a blockchain start-up, from that perspective? Yes, look, a lot of the development talent that we’ve been tapping into are guys that are interested in low-level systems. These are guys who have built libraries, middleware, even down to guys who have written firmware. We found all of that really useful because they are used to digging into the weeds and dealing with performance constraints and that sort of thing. But yes, there’s no real profile that we search for. If somebody is a good developer, it doesn’t matter if they’ve been writing PHP for the past 5 years. It’s about their blatant ability and about whether we can take advantage of that. Just as a last question. What do you make of where the global cryptocurrency, blockchain space is at the moment? Last year, people went nuts over it, but this year there’s been huge corrections in prices. Just this week Bitcoin has really been pummelled on the markets. What do you make of where this space is headed? I’m very pragmatic, which a lot of people take as cynicism - it’s not really. I think that cryptocurrencies and blockchain based systems are incredibly useful and are going to be around with us for a very long time. I think that Bitcoin in particular has the potential to change the world. My biggest concern is that there’s a lot of irrational exuberance, a lot of people are very excited about this, and there are a lot of people that are launching things that are poorly designed or are even outright scams. And because of the irrational exuberance and because of the burning hope that maybe you’ll be able to buy something for $1 and then one day they’ll be worth $10 000 – people are buying all sorts of ridiculous things based on just crazy claims. I think that it’s very hard to prevent that. We’ve obviously not been very good at self-policing and self-regulating, as a group. What I suspect will happen is there’s going to be a crash, at some point, and a lot of these currencies will end up just getting washed-out and will end up being pointless, or end up being virtuous rather, because that interest falls away when suddenly your hopes of buying something at $1 and selling it for $10 000 are dashed because it’s worth nearly nothing. So, you’re foreseeing a consolidation of sorts, within the market? Yes, I think that ultimately, what we’re going to end up with is Bitcoin and maybe a handful of other things that are interesting. I think that a lot of the bad projects - a lot of the projects that are poorly designed that are out there, the ones that are outright scams of course - all of those will fall away because they’re not sustainable. I don’t think this is necessarily something that will happen overnight. I don’t think it’s necessarily something that will happen immediately or in the near future – it might take many years to wash out, but it has to wash out because it’s not possible for bad projects to continue to get good money forever. Eventually, people are just going to become jaded and they’re going to stop throwing their money at things. Riccardo, thank you so much for taking the time to chat to us today. It’s been a fascinating discussion. Thank you very much for having me.