The whole point is that monero is, technically and conceptually, an improvement over some SERIOUS FLAWS in bitcoin.  That's not to attack bitcoin: after all, it was the first crypto, and it was an amazingly well-done thing for a first trial.  But it is normal that a first try at something is less good than the thing you can make with hindsight.  Now, in normal software development, you can simply give out a new version ; but with crypto, by definition, you cannot touch at the fundamentals, because the whole point of crypto is to be immutable.   This is why in bitcoin they are still having silly discussions over block size.   This is one thing that wasn't foreseen.  A more flexible setup, with a regular hard fork, has the advantage of not crystalizing over when a technical improvement needs to be done.   Another problem with bitcoin is the too simple PoW algorithm, that led prematurely to ASIC mining.  And the most glaring problem with bitcoin is of course the total lack of anonymity and fungibility.

Monero has improved on these issues.  I'm not saying that there can't be better stuff.  ZCASH had the potential to be better, but significantly fucked up.

So it is glaringly obvious that monero is a significant improvement over bitcoin, tackling IMO the most important no-go with bitcoin: its lack of privacy.

Now, claiming that monero is shit because on the test net there were bugs ?
Because in bitcoin there weren't bugs in the beginning either ? 


The idea itself to be a bag holder of a crypto is in my view ridiculous.  A crypto needs to be used, that means, you need to obtain it to buy stuff with.  If you hold it, you're missing the essence, and you're contributing to the big bubble that the greater fooll game that crypto has become.  There's no point in HOLDING crypto.  There's a point in obtaining it for goods and services, and in using it to acquire goods and services.  Of course, you can hold some because you want to delay your expenses, like you hold some fiat too.  But "holding to see it rise" is contributing to the bubble on which crypto is thriving now.  Sure, you can make money out of other people's pockets that way.  But sooner or later, that is going to crash down if it isn't used.

Monero is not the ultimate and best crypto, but for sure it is way way better than bitcoin concerning privacy.  Bitcoin is a privacy nightmare.


How does having a private centric crypto currency get people arrested ?  People get arrested because they do things against the law.  They may be right or wrong in doing so (after all, the law is just the dictate of the maffia that's called the state, but it is a powerful maffia nevertheless).


Again, the idea of crypto is NOT to "trade on an exchange". You don't need a block chain to trade on an exchange.  So monero, bitcoin, bubblecoin, zabalalacoin, it doesn't matter.  The only thing you need to trade on an exchange is an exchange IOU.  Not even a block chain or code.


Dark markets are important: they defy the silly laws that maffia states impose upon us.  But given the power of the state maffia, it is also dangerous, and of course, there's no way to do that in a "secure" way.  But doing dark markets with an information leaking thing like bitcoin is PURE STUPIDITY.  At least monero like coins don't HELP law enforcement in cracking down on freedom markets (which is what dark markets are in fact).  But all attempts of freedom will always be a dangerous affair, so thinking that BECAUSE you use monero, you don't run any risk defending your freedom is silly.  Of course you run a risk.  Everything that touches upon freedom, and denies the state maffia their privileges and taxes, is a dangerous thing to do.  So in as much as monero is not perfect, at least it is not as dangerous as silly transparent bitcoin.

My idea is that purely monetary wise, this waste is essential.  The economies of scale that lead to centralisation are a problem, but the waste is needed to kill off the seigniorage.

In pure PoS, there is no difficulty.  What you are talking about is a mixture of PoS and PoW, like the OP presents, that is, there is a PoS mechanism that *allows a limited number of stake holders* to compete PoW-wise for a block.


Indeed.


Well, the "inflation rate" is the coin creation rate in the end.  No matter what emission scheme you use, you will get a significant inflation rate in the beginning, or you have to start with a pre-mine.

What a restrictive PoW scheme does (like the OP presents, and like you do, even though you call it PoS) is to avoid full competition for the seigniorage, so that not most of the seigniorage is burned.  By restricting the number of competitors for each block, you avoid that they enter into competition to the level of where all the seigniorage is wasted, so that stake holders can pocket in the remaining seigniorage.  In order to reduce the divergence of this "interest bearing savings account" which you nevertheless create, you propose a very low inflation rate.  However, that very low inflation rate could be applied to a pure PoW system too.  The only thing you trade off is "interest bearing savings account" (that HAS to absorb all the non-burned seigniorage) versus "wasting more electricity and burning all seigniorage".

In other words, in as much as you render less efficient the centralisation due to economies of scale for the second aspect, you render more efficient the divergence of the compound interest formula of the interest bearing savings account.

You have a "quantity of seigniorage" to handle (namely, ALL the coins apart from a premine), and you can divide this in an amount of "interest bearing" and an amount of "burning PoW", but both mechanisms have in them, a divergence towards centralisation: the first one is obvious (compound interest), the second one is more involved (economies of scale).

If you want less of the second, you'll get more of the first.  And "lowering the inflation rate" only stretches this thing in time.

I'm sure there can be optimisations, to find the right combination between "value appreciation of the market cap of the coin", "inflation rate", and the cursor between "interest" and "PoW", to push the point of centralisation as far as possible in the future, but it will happen.

At least, the PoW scheme has the advantage of wasting almost all seigniorage and securing maximally the network.


But bitcoin full node operators have absolutely no "weight" or importance in the security of the bitcoin network (apart fluidifying a bit more the transmission of data).  It is a big misunderstanding that bitcoin full nodes contribute to any form of network security.  If they don't mine, they aren't worth anything.  In the bitcoin network, only the miners and the users matter.  The miners for the chain, and the users for the market cap.  You could take out all non-mining nodes, and that wouldn't change much (apart for some latencies in the network when transmitting transactions).

That's more or less the summary of the privacy on bitcoin, no ?

There are no "extra creative hoops" to jump through on monero if you want *normal* privacy, you know, the kind of privacy that you have now with your fiat money, but that is lacking on bitcoin.

I mentioned extra creative hoops if you want to *totally limit the usability of the monero block chain for law enforcement in the case the FBI is after you* because that was the "exercise" you gave me.


If you do illegal things that piss off so much the FBI that they will put a lot of effort in finding you, of course they will find you.  But not because of the block chain.  That's the point.  That block chain is not going to be of any help in itself, that's the point.  Of course, the postal address you sent to the server of Alpha Bay may get you arrested, yes.

But the point is not (only) about doing illegal things.  It is about getting back the privacy of transactions, perfectly legal transactions included, that got lost with bitcoin.

I agree with you that p2p is much more of a resource-hog than centralization, but I think people are over-estimating the difficulty.  We look at it from the current technological stance.  But in the 1990-ies, it wasn't really thinkable to watch TV over your home internet link, was it ?
In the 1990ies, I worked in a big scientific center, and we worked with more than 100 persons on a "big machine" having 2GB of RAM.  If we needed HUGE datasets of the order of 200MB, we needed to load them from a tape driver robot.

The number of monetary transactions in the world is large, but it is not immensely large.   There's no reason why, what seems now as immense storage and network burden, is not going to look quite reasonable in a few decades from now.  I have the feeling when I hear about hard limits "because of ressources" that we have Bill Gates' 640KB limit again (you know, that amount of RAM that would never be built in a home PC, 10 times what could be addressed on a 16 bit bus).

What your proposal actually does, is to reduce the "waste" by limiting the competition.  However, purely monetary-wise, the "waste" of PoW is necessary to KILL the seigniorage.  The very idea that someone could EARN more than a competitive margin (determined by the market) by minting coins, and hence profit from seigniorage, is always problematic with a monetary system.  The bitcoin-like PoW kills all that, up to a competitive margin, which is considered the reward for maintaining the network running.  The fact that bitcoin's PoW system is wasteful, is monetary-wise a necessity.  All new value created by the minting of coins should be destroyed.

If you do not do that, you get the PoS paradigm, where new coins created will give their almost net gain to the one allowed to mint them.  The problem with any PoS mechanism is that you get the compound interest formula in one way or another: the more you have, the more you will get.  If you "top off" the reward, you will incite big stake holders to make sybil accounts.  And if you do not top off the reward, you will get the compound interest formula.

Now, the compound interest formula diverges.  Take just any randomly distributed set of stakes, and apply long enough the compound interest formula to it, and you'll end up having one account reaching more than 90%, more than 99%, more than 99.99% ... of the total amount of coins in the system.  That can take a long time, of course depending on the "interest rate".  But it will end up centralizing all coins into one entity.

In fact, PoW diverges in the same way, but much, much slower, because the "interest" in PoW is the margin, which is determined by economies of scale, and at least, most of the "benefit" got wasted, so nobody got immensely rich with it.

With PoS you get a rich king ; with PoW you get a gardian of the biggest rubble pile.
If you combine both, you'll get a kind of rich king sitting on a rubble pile.

Both are not in contradiction, that's what I'm telling you.  When you go to an exchange, then you are giving out your ID, which is normal.  You have a trading interaction, your trading partner knows in most cases who you are.  You also know that you were trading with an exchange, do you ?  So you know about them, and they know about you, and both of you know that you and them were trading coins for fiat.   What has this voluntary act of giving away ID information to do with the fact that the MONETARY ASSET is not going to propagate your information ?



That's a perfectly good illustration.  Go to Poloniex and buy monero and withdraw them.  Next, do a few transactions to yourself with different addresses on the monero chain.  (this is because monero is still leaking SOME information, it isn't perfect like zero knowledge proofs can be).  Now, wait for a year or so.

Then, use those monero to go over to Alphabay to buy crack and guns.  The link with your ID on poloniex is totally lost.  Of course, one can try to trace you using opsec failures, IP addresses and so on *when you were buying on alphabay*, but whereever these coins came from (via poloniex) has become essentially untraceable through the monero chain, and that's all monero is concerned with: not propagating earlier transaction information.

Now, do the same exercise with bitcoin.  See the difference ?

Why did I say that you had to wait for a year and that you had to transact a few times yourself ?  This is because the monero anonymity mechanism isn't total.  Poloniex knows what transaction it used to send you the monero you withdrew.  If immediately afterwards, you do a next transaction to alphabay, then this transaction will only be mixed with a few other potential transactions, and if this transaction is found out because the FBI got into alphabay's computers and found all their transactions, they know this transaction too, so the "number of potential guilty persons" is limited (the anonymity set is restricted).  However, the longer you wait, the more your Poloniex transaction is going to mix up with other transactions you have nothing to do with.  If you have done a few intermediate transactions, you raise the anonymity set size essentially to the power of the number of intermediate transactions.  After a year or so, this web of potential people is so large that this information is essentially useless for law enforcement.

However, what remains of course is all contact you take with alphabay, the delivery of the goods and so on.  All this has nothing to do with the monetary asset used to pay for the stuff.  It is not because you use a monetary asset that doesn't propagate your ID, that you don't leak your ID in another way.  If you put your postal address to Alpha bay so that they send you the package to your home, of course that has nothing to do with monero.  You'll get caught just as well.  It is very difficult to do anonymous business.  That's not the point.  The point is that the payment system doesn't propagate information.  Monero, in the example you asked for, doesn't do so. Bitcoin does.  Unless you use bitcoin tumblers (you trust), and you do a lot of bitcoin transactions in between.

But if you do the same thing with bitcoin, that is, you buy bitcoin on coinbase, you do 3 transactions to yourself, you wait for a year, and then you buy a gun on Alphabay, and alphabay gets compromised by the FBI, then the link between your coinbase ID and the transaction is in fact very obvious.  Bitcoin propagates it like a bush fire.

To add to this:

a monetary asset is always supposed to be exchanged against something else during the execution of an agreement.  In most cases, making an agreement implies somehow that the two parties agreeing, know something about one another.  If you want to buy milk with dollars, it is somehow unavoidable that the one selling milk has an identifiable place where you can get to the milk.  Also, most of the time, you don't mind the milk seller to know something about you.
If you want to buy coins with fiat, it is unavoidable that the entity that accepts your fiat and sells you some coins, knows something about you (in order to get your fiat for instance).

So the very fact that a TRADE cannot be entirely anonymous in most cases, and that identity information is given out to the trading partner, is entirely normal.  As a monetary asset is made to do trades against other stuff, it is entirely normal that the identity of ownership of that monetary asset is given out to the trading partner.

However, it is a property, or not, of the monetary asset to propagate that knowledge BEYOND what the trading partner can know.  With fiat, that knowledge can be propagated only when law enforcement, tax collectors and/or your financial institutions desire to propagate it: its propagation depends on their desire to do so or not.  But most of the time, they do not propagate that knowledge, and that is part of their service.  With transparent ledgers, that knowledge is propagated publicly.  With monero, that knowledge is almost NOT propagated and there isn't even a centralized authority that can do so.    The only one who can, is yourself, with your view key, if you decide so. 

But that has nothing to do with ALL OTHER identity information that is given out.  What monero does, is simply not CONTRIBUTE to that propagation of knowledge (or almost not) with its block chain.  But that your trading partners know who you are, because you told them, has nothing to do with it.  At least, the block chain of monero is not a propagator of that knowledge.

In other words, a "monetary asset" that is *never associated with any giving out of identity information* is an oxymoron, because you couldn't even do any trade with it where you have to identify with your partner.  And hence accusing a monetary asset of not being like that is a straw man.  This is like complaining about a messenger system that someone can read what you are sending.  Of course, if you are sending a message, the idea is that someone will read it.  A messenger system where a message is never read is an oxymoron, and accusing a messenger system that messages can be read is a straw man.

Again, what some may *claim* falsely or correctly about a technology has no influence on the actual properties of that technology, no more than what people may claim falsely or correctly about the number Pi would change its digits, right ?

I quoted the essence in red.  *that*'s the monero part.  The fact that you talk to centralized entities and give out your information has nothing to do with monero.  What has to do with monero is that that information is not (much) propagated with its block chain, contrary to bitcoin for instance.   If you have the most secure safe in the world, but you go and give the codes of that safe to your local vendor, then OF COURSE that guy, and potentially everyone he talks to, can get into your safe.  But that doesn't say anything about the safety of the technology.   It is not because the vendor's friend is a burglar that came into your house and got (of course) into the safe, that there's something wrong with the safe.  It is the fact that you gave your codes to the vendor that was the culprit.  That's monero, when you give out your information to an exchange.
However, if your safe is constructed in such a way that whatever you put inside and take out again, now has the information of how to open your safe, then *that* concerns the (bad safety) technology.  Imagine for instance that the safe is based upon nano particles: you have a spray of specific nano particles that the safe can detect and open when present.  However, it is unavoidable that these particles get onto the stuff you put inside.  That means that whatever you put inside, and take out again, and give to someone, has traces of your safe, and has the stuff needed to open it.  That's bitcoin.  It propagates your information.

This is not what I mean.  The feature that makes anonymous should be the thing that is always used, so that there is no "suspicion" when it is used.  The goal of anonymity is to "melt into the crowd and to be indistinguishable for Joe Sixpack".  It is like an envelope for snail mail.  Everybody uses a closed envelope.  There's no suspicion that you want to be anonymous when you use a closed envelope.  If all letters would be sent in an open envelope, except those that wanted to keep private, they would stand out. 
Another illustration (negative this time), is if you want to be anonymous on the street.  You can put a bag on your head, but you stand out.  As almost all people show their faces, so if you put a bag over your head, you stand out.  Ok, people cannot see who you are, but they can see that you are a guy wanting to hide his face.

You can say it differently: if you are the *only* person using a service that wants to be anonymous, that should still work.  You shouldn't depend on *how many other people* want to be anonymous to get that anonymity without standing out.
For instance, if it became a habit to publish your viewkey systematically on a public web site when you do a monero transaction, then this principle would be harmed in monero too, because those few times that you would like to be anonymous, and not publish your view key, you'd stand out again.  But this is not what happens with the view key.  The view key is usually only used in a very restrained circle if you want to prove something to someone ; not publicly.

Well, OF COURSE that information you provide to an exchange is potentially given to authorities, to agencies, and to lucrative business, what did you expect ?  What does this have to do with monero per se ?  At least, monero doesn't *propagate* that information on its chain.

I'm not a monero shill, but at the moment, I like monero because it has quite successfully tackled a fundamental problem with bitcoin and several like coins: the privacy/anonymity nightmare of transparent block chains.  On top of that, monero has a few other nice properties, but it also lacks an important aspect: scriptability and (hence) multisig stuff.
Dash (formerly darkcoin) has the historical honour of being the first coin trying to do something about this privacy horror, but lacked the technology to do so.  Bytecoin was invented with brilliant tech, but was such a terrible scam, that it failed, and monero came in its place.  Zcash has fundamental problems, even though potentially the technology is better.  So indeed, I like monero, because by far most other coins are privacy nightmares.

That's unfortunately the state of crypto in general.  Bitcoin has *some* usage, but it is tiny as compared to its volume too.

I think between 5 and 6 coins or so.  I run a miner on my laptop when it is idle, and I think I must have accumulated between 5 and 6 coins but that's quite a while that I didn't check.  I run a full monero node for fun, but that node doesn't have the wallet that corresponds to it.   A very long time ago, I also mined some, I think even 10 or so, but I think I've lost the wallet that corresponds to it ; although I'm pretty sure it must be on one of my old backups.  But I didn't look. Why do you ask ?

As I said earlier, if the goal of the discussion is "what coin will allow me to trade myself rich" (at the expense of others), then the technology of these coins doesn't matter (apart as a source for hype of course): the only thing that matters is playing the hype of the brand name correctly, no matter what "runs under the hood" because that's not what matters in market caps sustained by exchange IOU trading.  It is true that of all three, probably ZCASH has most of the hyping potential and the right names and links to get hyped through the roof.  We saw that at the launch.  Whether the code actually does anything or not really doesn't matter.  It could even have been launched without any code or block chain. 

That said, the art of getting rich in these games is not that the stuff is hyped, but knowing in advance which hype is going to work out before it happens.  So if you have the right connections, probably ZCASH holds much potential to pump money (fiat, that is) from others into your hands.

Yes, so what ?  You are saying that the FED will always produce enough FED-dollars out of thin air to sustain the parity with bank-dollars.  Sure, very well probable.  But that doesn't change the fact that bank dollars are NOT FED dollars.  They are different entities.  Bank dollars are bank IOU, between you and the bank.  FED dollars are FED IOU between the FED and a bank, OR they are dollar bills if you keep them physically in your hands (and these dollar bills are the only FED dollars YOU will ever see if you are not a commercial bank).  A bank can invent as much bank dollars as she wants.  When you take a loan, she invents new bank IOU which she calls dollars, and which she puts on an account for you, against your promise.  No FED dollar sees the light when a bank gives out a loan.  I'm not criticising this, I'm just explaining to you that bank dollars are NOT FED dollars, except when you withdraw them at an ATM, but that we consider them *equivalent* because they are on 1-1 parity as long as we can withdraw them.   
Why can the FED do this now, and why couldn't she do that when the dollar was standing for an amount of gold ?  Because in as much as the FED can invent new dollars, she cannot invent gold.  For about 60 years (from 1914 to 1972) the FED has been lying, because it was claimed that a dollar was standing for gold, (I think it was 38 grams) but as you couldn't withdraw that gold, that parity didn't hold.  There was a TRUE DIFFERENCE between actual physical gold, and the dollar which was to be "equivalent", but wasn't because you couldn't redeem the equivalence.

With crypto and exchanges, you are in exactly the same situation: one cannot "print" crypto at will (that was the whole idea), but exchange IOU are like bank money.  As long as you can withdraw true crypto from an exchange, it is like you can redeem physical gold from the FED, or like you can withdraw dollar bills at an ATM from your bank account.  But exchange IOU are NOT crypto, not more than bank dollars are FED dollars.  There is an act of withdrawal that keeps the parity to 1-1 *as long as it works*.  However, like the FED couldn't "bail out" with gold as she can't print extra gold and one had to declare the official end of the parity in 1972 (which was already factual when you couldn't redeem your actual gold for decades at that moment), an exchange cannot be "bailed out" with crypto, as one cannot invent extra crypto.

So no, of course the FED will never bail out an exchange: nobody can.  Because you cannot "print extra crypto" to do so.


The fact that the *economy* collapsed shouldn't have had any effect on the CLAIMED PARITY of ECB euro's and Greek bank Euros.  What happened in fact is that the ECB, contrary to the FED, refused to bail out *totally* the Greek banks.  In other words, the claimed parity of Greek bank Euros and ECB Euros was a bit like the FED gold and dollar bills before 1972: one claimed that they were equivalent, but the withdrawal was not made possible freely.


That's the problem when you are part of the privileged which can enjoy the seigniorage of arbitrarily freshly printed money.  And it is exactly one of the problems bitcoin wanted to tackle.  And what we observe now, is that people are building EXACTLY THE SAME KIND OF BULLSHIT on top of bitcoin and other crypto, namely "IOU tokens" as what was done with gold dollars, in order to be able to "trade quickly" and not be annoyed with the limits of crypto, like block chains, settling times, and block periods.
 
This is why I'm pretty sad when I look at the state of crypto.  It is denying the very reasons why it was made, when most of the volume and hence most of the support of the market cap comes from trading, not crypto, but their "exchange IOU".  And when "an exchange gets hacked" the only thing that you get at that point is that the parity between those exchange IOU and the actual crypto tokens gets broken.


So what is the "exchange danger" ?  Well, as I said, as long as an exchange is just an entry point to crypto to buy crypto with fiat, and eventually to get fiat for crypto when you need to get out, there's no more "danger" to an exchange than there is danger to milk because you have to buy it at the supermarket.  The day the supermarket closes, someone else will probably open a store where you can buy milk.  That is, when you buy milk to DRINK IT. 
However, when most of the milky business consists in "taking options" on bottles that are supposed to be stored in the supermarket, to trade those options, then yes, having all those bottles stored in one supermarket is of course very dangerous for *those holding a lot of those options*.  If the essence of the milk business is about holding options on bottles in a supermarket, and is not about drinking milk, well, my point is then that it doesn't matter that this is "dangerous".   There's nothing worth of my attention in people holding options on milk bottles, if the idea was to bring milk to the people for them to drink it but they don't.

No they aren't.  About 4% of dollars are FED dollars.  All the rest are bank IOU.   But we call bank IOU (bank accounts) also "dollars" because those few times that we want to "withdraw" actual dollars (say, at an ATM) it works out.  So for the very small amount of withdrawals, the 4% backing is sufficient to keep parity.

However, ask the Greeks what they thought of the very very limited backing that the European Central Bank wanted to give to their banking system when their politicians didn't agree to the dictate of Europe.  Their withdrawals were limited to 60 Euros per person per day.  They could play with bank IOU Euros as much as they wanted.  But not with ECB Euros, which were in short supply.


Because FED dollars are in unlimited supplies.


You fundamentally can't, not any more than that they could invent gold.  Crypto is in limited supply, so you cannot "bail out" exchanges.  They could, if ever they wanted to, bail them out in fiat as much as they wanted to.  But they cannot bail them out in bitcoin of course.

The bailing out of banks is a ticking time bomb that is placed under the seat of the fiat financial system, though.  The whole idea of crypto is that such a thing is not possible.  Read the coinbase message of the very first block of bitcoin if you want a reminder.


Yeah.  Sure.  You will find your chinese miner selling you BTC on the corner of the street.


For exactly the same reasons you would want to buy bitcoins: to use them.  There is no difference between an altcoin and bitcoin, except that bitcoin was the first altcoin.


Well, that would surely be easier with monero than with bitcoin, wouldn't it.  But alphabay is also a centralised system.  I would simply prefer that they add monero to openbazaar.

We see here how far we got away from true crypto.  People are complaining about LATENCY when trading crypto tokens with a block period of 10 minutes !  The idea that a "bitcoin" can be exchanged 50 times between two successive blocks illustrates the ridicule that trading has become as compared to the original idea of crypto, which was to have "free (as in freedom) money on the internet" to buy and sell stuff.

An exchange should only have been a thing where you could exchange fiat for crypto, to use that crypto (and eventually, to exchange back crypto to fiat if you needed it).  Turning crypto into an exchange IOU fest where most of the volume is done off-chain, at higher "transaction" speeds than the block rate, has totally killed it.

I think that "gouvernance" and "trustlessness" are incompatible notions.  The best one can do in this domain is a smart contract.

I agree with you: exchanges as they are now, actually "nullify" crypto's reason of existence.   You don't own crypto tokens on an exchange, you own exchange IOU, in the same way that you don't own FED dollars when you have a bank account, but you own bank IOU.  That is, your entitlement to the "promised backing" is just as good as the honesty and the solidity of the entity that made you believe so (the exchange, or the bank).  If you own bitcoin IOU on an exchange, the only thing you own is a promise, you don't own bitcoin.

Now, a priori, exchanges are a necessary evil to "link" to fiat.  But the idea was that you only went to an exchange *temporarily* to buy some coin IOU, and withdraw them immediately to use them on the block chain for goods and services.  At some points, it might have been necessary to do the inverse, and sell bitcoins on an exchange to get, and withdraw immediately, some fiat, because the economy in crypto isn't closed.

But all this went to hell when people started trading, and when this trading became the essence of the crypto volume and market cap.  At that point, most "transactions" were trading transactions of *exchange IOU* and not of *crypto tokens*.  When that point is reached, we are actually having a new "banking system" we wanted to get rid off, but which are called "exchanges" and which are much less regulated, much more scammy, and just as prone to investigations and privacy breaks as the old banking system, except that you kill the original idea of crypto with it.

If there are only a few points where you can BUY a crypto to withdraw it and to USE it, that's not much of a problem.  And if this is a centralized TRADING point, then you're in any case out of the spirit of crypto.

I have several answers to this:

1) In 2013, 90% of bitcoin trading was done on MtGox.  That was 4 years after bitcoin came into existence.
Monero is 3 years in existence, and 1 year ago, it was still a minor crypto.

2) In any case, "trading" is a parasite onto crypto which doesn't even need a block chain.  You could have a "SWIFT-like" transmitter service between the few "big" exchanges in the world, and just have exchange IOU, allowing you to have your "wobblecoin" IOU tokens on exchange A to be transferred to wobblecoin IOU tokens on exchange B, trade like crazy with it, and never ever have a block chain or any code attached to "wobblecoin".  If block chains are simply transfer mechanisms between the few exchanges where you have accounts to trade, it is a ridiculous enterprise.  Unfortunately, 90% or more of crypto is now this ridiculous enterprise.  But that's not any judgement of the underlying crypto.

3) Monero is starting to be available on several exchanges.

4) the nice thing about an obfuscated block chain like monero is that the exchange information is not propagated on the block chain.  So in as  much as you want to USE monero (and not just "trade" monero IOU tokens on exchanges), you can easily buy monero on an exchange, transfer it once or twice to another account of your ownings, and whatever you are going to do now with that monero as a currency, whatever you are going to buy with it, is not "contaminated" with the information that was given out by buying it on an exchange.  That is a bit like buying petrol in a gas station, but not letting this information propagate to tell where you're driving. 
If you buy coins of a transparent ledger, like bitcoin, then the information that you got it from an exchange (where it is attached to your identity) is propagated to whatever you are going to do with those coins, and you need to do special things to get that information away (like using tumblers).  But again, if the only game is to trade with exchange IOU that have the same name as a crypto currency, all this doesn't matter of course.