135 - Crypto Wars 2.0 with Zooko

Welcome to Bankless, where we explore the frontier of internet money and internet finance. So, how to get started, how to get better, and how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Well, maybe Bankless Nation. Becoming more bankless requires more privacy. That is what we're here to discuss today with Zuko, who is, of course, the founder of Zcash, a blockchain protocol centered around privacy. And I think David will have discovered that maybe we have just entered the Crypto Wars 2.0. A few things to look out for in this episode, some takeaways for you. We go through, did we just enter the crypto wars? Why this looks a lot like the 1990s, all over again, the crypto wars that we had previously. We also get Zuko to answer the question, why do we need privacy unless we're hiding something? It's a question we're constantly asked when we advocate for privacy. But Zuko makes the case that privacy is the foundation for any free society. That is what we want to live in, of course, a free society. Also, we talk about crypto falling prey to the same surveillance dystopia of the original internet, the internet that we find ourselves in now, where Facebook and many large corporations have control over our data. How do we prevent this from happening in crypto? And lastly, is Zcash going to become a roll up on Ethereum? Why'd we ask this question? Of course, because we have to. It is an interesting question, and Zuko certainly had an interesting answer to this. David, what do you think of this episode?

I really like Zuko, man. He's like a really friendly, personable guy with a ton of personality. And the timing of this episode is obvious. After the banning of Tornado Cash, we need to go and explore and do an episode. Why privacy? Like fundamentally, from first principles, why do we want privacy as a society? Why is having privacy a requirement for having a free society? And I think one of my biggest takeaways, the biggest angles that I appreciated the most from Zuko here is we really explored the question when we give away our data either accidentally or on purpose, why does that like almost always create negative outcomes? So like giving away your data is like a neutral thing to do. It's neither positive nor negative. But systemically, when everyone does it, why does that create dystopia at the end of the day? And now I feel really informed as to like, why we need to have privacy by default? Why, like it's not transparency by default, but privacy by default that is the best equilibrium for society, the one that doesn't create a dystopia where like Google and Facebook are harvesting our data to like sell us stuff that we might not necessarily want, or you know, God forbid, swing elections, or even worse, cause civil wars. Like all the things that actually have happened as a result of this data leakage. And so that was my big takeaway. And of course, the allusion to the crypto wars was there was a crypto wars in the 90s, of which Zuko was a part of. And this were the cryptography wars. And now we're talking about Crypto Wars 2.0, which is now the cryptocurrency wars, where we're doing it all over again. But previously we did it with cryptography, now we're doing it with cryptocurrency. And Zuko is one of the few people who's gonna be here for both wars. So a very special guest here today on the Bankless Podcast.

Yeah, absolutely. Definitely, we want to restore privacy by default, privacy as a norm. That's what Zuko makes the case for today. Of course, if you are a Bankless Premium subscriber, you got to stick around for the debrief where David and I give our thoughts on the episode after the episode, our raw, unfiltered thoughts for the day, Bankless Nation directly for you. If you want to become a premium member, click the link in your show notes, go premium. You'll get access to that episode instantly as well. We're going to get right to the episode with Zuko. Hey, Bankless Nation. Very excited, privileged to introduce you to our next guest, Zuko.

Zuko is an OG

cypherpunk, one of the few remaining, I think, in crypto, who's still very involved. And he remembers a time when crypto just meant cryptography, not cryptocurrency, as it does today. And he's been a privacy developer since the very early days, a contributor to Digicash, which is, of course, one of the precursors to cryptocurrency, as we know and love, was founded by David Chom. We've had David on the podcast as well recently, too. And of course, more recently, you know Zuko because he is the co founder or founder of Zcash, and he is the CEO of the Electric Coin Company, which is a for profit company leading the development of Zcash. Zcash, of course, being a privacy centric cryptocurrency. Zuko, welcome to Bankless.

Thank you. It's an honor to be invited. Tiny error correction.

Yes.

Well, it's not an error. You said Electric Coin Company, the thing that I'm the CEO of,

is a for-profit company.

And that's kind of true. But the

owners of Electric Coin Company donated 100% of it to a nonprofit charity, which is called the Bootstrap Foundation.

Nice.

So

ECC can make a profit, but there's no owners who are allowed to take the profit into their own pockets. Instead, any profit has to be used for the public good through the nonprofit charity.

That's very interesting.

So more like a public commons rather than a traditional, you know, for profit company that we might think of. That's

Yeah, I like it because it's a hybrid mode where we have like startup structure. We have a CEO, we have like all the departments and processes that we learned from startups.

But then the only thing we don't have is owners who can take profit out for their own pockets. Instead, all the profit has to go to the public good.

Well, it's very, very, uh, cipherpunk.

Yeah, that that's very neat. Uh you know, and I think this is

Thanks to the owners for donating.

Well, I it's been very clear, I think, your kind of your history in the space in cryptography and then later in cryptocurrency, that you've been here, you know, primarily for one big reason, and that reason is privacy. I feel like this is a very timely conversation because the crypto world is asking the question of.

Can we have privacy in our cryptocurrencies in light of recent events? I think the outside mainstream world is asking the question of why do you guys actually need privacy? So I think in this episode, Zuko, we want to make the case for privacy. And I just want to get your gut reaction here because something's happened in the last few weeks that have sort of shaken the cryptocurrency community

maybe to its core. It's been quite a rattling and put privacy back into the conversation. And that is an open source developer.

May have recently been arrested just for publishing privacy code. Now we don't know all of the details of this case, but of course, I am talking about one of the developers behind Tornado Cash. His name is Alex. He's now in a prison right now, in jail behind bars. No charges have been laid at this point in time. In the Netherlands. In the Netherlands. So it's unclear, but it may be the case that he was just arrested for publishing privacy code. Zuko, like,

what's going on here? What's happening?

Well, first of all, another tiny error correction. You're not wrong that my motive throughout all these different things I've done has been privacy, but not because

privacy, but rather because freedom.

Mm.

And there is a difference. Like, I think privacy is necessary for freedom because if people don't have privacy, then they're subject to the biggest, most powerful, pushiest organization around, whether that's a corporation or a government that can surveil and manipulate them.

But so you need privacy for freedom, but privacy is not really its own value to me. It's just that it's necessary for human dignity and people's authentic selves. You know, you can't be your authentic self when you're under scrutiny, especially scrutiny of someone who's powerful and influential on you.

And this is doubly true for people who are less privileged than I am, right? People who are on the margin or have more to lose or can find themselves in a desperate position more easily.

They're all the more vulnerable

to being pressured and manipulated if they don't have privacy.

But I like to emphasize something that's more important than privacy to me, which is consent. And

I see this a lot with younger generations of people because a lot of them choose to share a lot on social media, right? Like they share their stories and their videos and their opinions and whatever. And people who have sort of a privacy focus.

Interpret this as the new generation doesn't care about privacy.

And I think that's kind of backwards. I think they actually care or they understand better than the old generation about

the choices you have with whom you share and what you share with whom,

and stuff like that.

And that notion of consent, like people who choose to share something about their private life or their feelings or whatever.

With specific people that they want to share with,

that's 100% as valid as someone who chooses not to share something with someone.

Does that make sense? So it's not like if you use the word privacy, people can interpret that as like secrecy. It's like the people who share less, the people who are more individualist or more private, you might say. This is a private person who doesn't tell anyone what's going on with them.

And that's not a value to me, and that's not what I want to support. What I want to support is people having their own choice. It's your choice who you share with.

And it's your choice what you share. It's not someone else's choice what they're gonna get to find out about you without your consent. I don't know if that answered your question at all, but you triggered me by using the word privacy.

Yeah. No, I already love where this conversation is going and uh it reminds me of a line that I've used here and there before that crypto isn't here to make you rich, it's here to set you free.

And often we also echo that, you know, decentralization

isn't

an end goal. It's a means to an end for something else. And I think that's also what you're saying with privacy. It's like we don't, we're not here to be private. We're here to have freedom and to choose what we disclose.

Exactly.

And I've heard you say this before that you're actually like more optimistic that younger generations are.

Interested in privacy more so than older generations. And I was talking to Ryan earlier today, I believe, actually, on like a recap from an episode we just did with uh Justin Drake, where I think younger generations feel a little bit perhaps like nihilist about their privacy in that, like,

what's the point? Like, Apple's got all my data, Google's got all my data, these are just extensions of the state. But also at the same time, we've contrasted that with people inside the crypto industry.

Are way more like optimistic than outside of the crypto industry. And I think it's because we see options for to move forward. We see paths forward that like non-crypto people do.

Yep.

And I'm wondering if that's kind of what you see with perhaps like why you are so motivated with Zcash and creating privacy,

because you think that there are positive effects of having privacy options that could be imbued into society. I'm wondering if you could just kind of share your thoughts on that and what you see as like a privacy enabled society.

Yeah, I totally agree with what you said. And I agree that there's a generation or a few generations that were born into this world. I saw some random person on the internet recently say something like, Well, of course the government watches and tracks every expenditure you make and every income you receive. It's always been that way. And I thought to myself, wow, this guy's gotta be way younger than me because that came into effect with Richard Nixon and like got more and more sort of invasive and powerful every decade.

But that's all new. Like it's never been that way. There's never been a long lived