Soulbound: On or off Chain? | Vitalik Buterin and Evin McMullen

Bankless Nation, I'm joined by two people who are paying attention to the world of credentials. We have uh Vitalik Buterin, founder of Bitcoin magazine, Global Citizen, and record holder for the highest number of unmerged and ignored EIPs. Vitalik has recently been an advocate for soul bound NFTs, which are NFTs that cannot be transferred, which offer alternative use cases than the NFTs you're probably familiar with. Vitalik, welcome back to the show.

Thank you very much for the lovely introduction, David. It's uh great to be here.

No, cheers. And also we have Evan McMullen, founder of Disco XYZ and core community member at the Boys Club. Evan is working on the world of verifiable credentials and decentralized identifiers. She's a devoted advocate of privacy and consent, and which she believes are the key ingredients to producing an off chain decentralized identity system which preserves user sovereignty. Evan, welcome back to the show as well.

Thank you so much for having me, David. Let's get this party started.

Yeah, let's do it. Okay, so a little context for the show. I met Evan during my crypto travels, and it became immediately obvious to me that she's an aficionado of data primitives, tokens, NFTs, on-chain and off-chain, and decentralized identifiers and VCs. Learning about like these off-chain primitives, DIDs and VCs, felt like for me like learning about crypto for the first time, where like it was super complicated, it like broke my brain, it was hard to wrap my head around. But as soon as I saw it, uh, I was immediately pilled, which is something that we now call taking the disco pill. Which to me, the basic idea of the disco pill is to meme self-sovereign identity into existence, and that requires off-chain data like DIDs and VCs. VCs, not venture capitalists, but verifiable credentials. So because you as a human do not live on-chain, you are not your Ethereum address, you can't lose your soul like you can lose your private keys, and you also can't spin up new souls like you can spin up new private keys. So therefore, also your soul cannot be tagged by external graffiti artists, like how your Ethereum address can be airdrop spam. So after talking to Evan, she's like burned it into my brain that on-chain tokens and on-chain data or anything on-chain really is not sufficient to fully express your human identity. Meanwhile, this human you might know, Vitalik Buterin, releases a blog post titled Soulbound NFTs, which makes the case for NFT tokens that cannot be transferred, which start to behave very much like the verifiable credentials that Evan is so obsessed with, except for one key difference. The data for a soulbound NFT is fixed to an open public and permissionless ledger. And I'm not used to disagreeing, Viz Vitalik, and I'm also not sure if I do disagree. And so this is what we're here to do today is to get down to the bottom of this conversation. When should we be using off-chain credentials? And when should we be using a soulbound NFT? What are the merits of each? And hopefully we can educate the listener enough to expand their minds about the possibilities that are unlocked once we tackle some of these tough identity questions and the world that can emerge from that. So, guys, that is my opening rant. Vitalik, any comments or perspectives that you want to share before I get into my first questions on that?

Uh sure, yeah. I mean, I think uh first of all, like I definitely don't consider myself an uh on-chain maximalist. Um I think uh the thing that I actually advocate is uh definitely a combination of uh on-chain and off-chain approaches, uh, where we use the uh different things for the task that they're each best at. And like I do actually think that I think the uh community is uh including both probably all three of us here and even all of the other people that have been kind of blabbing about the subject on Twitter over the last couple of weeks, probably disagree with each other much less than it seems, um just uh because these concepts don't really.

To me, describe like fundamentally different categories of technology as they do even like different starting points. And you can go from one and you can go from the other. And I do think in some cases there are like these uh specific topics where it really is important to kind of really drill down and uh f and figure out like which approach makes sense. But you know, in general, like these aren't two incompatible islands that we're talking about, right? Um, so looking forward to figuring this out.

Yeah, and I think hopefully as we go and talk about like when off-chain, when on-chain, the listener also gets an idea of what the hell we're actually talking about and what is unlocked when we talk about credentials in a decentralized fashion. Evan, same question to you. Any comments or perspectives that you want to bring to the table before I jump into my first questions?

For sure. I want to echo Vitalik's note. I think that it's a really exciting moment in our ecosystem because we are looking at our own role in Web3 in a different way than we have before. And so we as a community have the opportunity to go meet people where they are in their own journeys, not at, you know, the first step of our user journey, which means that we can reach out to so many communities who haven't yet engaged with Web3 if we can tackle the endpoints that they're already using. So super stoked to get into the details today. And I definitely think that the more we consider the tools we have both on and off chain, the more fun superpowers we're going to be able to create in Web3.

Yeah, and so before we get into the differences between what happens when these bits of data are on-chain or on-chain, off-chain, I want to actually start exploring for the listeners who are used to when they hear the word NFT, they think of like some JPEG, or if they think of some like blob of data or like how people are using our data, they kind of think of web too. I want to start to define what is the world that we're actually talking about here. So the question is like, what can these things actually do? Because both a soul bound NFT, which is on-chain, or an off-chain verifiable credential, they both attest to something. And so to get the right image in the listeners' heads, I want to talk about like what are the utilities of these things? What use cases do these things unlock? And what can we really do with these things? And so, Vitalik, I want to get your perspective on like what is the use case that gets unlocked with these attestations, whether it's on chain or off chain.

Uh so uh I think uh the direction that I've been coming at this is uh basically uh trying to take the use cases of blockchains beyond finance and also to try to use some of those ideas to fix some of the problems that we've noticed in uh blockchain applications. So like blockchain governance is a big example that I've talked about, but uh also other applications as well, right? So like I've uh talked uh many times um, you know, in all of uh my various places on this podcast, um just for example, about how I really dislike coin voting governance, and coin voting governance can easily turn into something um, you know, very plutocratic and uh non-representative. So I've been kind of faced with this problem of uh, well, if you don't like coin voting governance, then what else can you use as like the unit of determining like you know who can participate in governing and who can't, right? I talk a lot to optimism people, uh, for example, and I've been a big fan of their approach with uh having both a token house and a citizen house. But then if you want to have a citizen house, then you know you have to have some concept of like, you know, representing who is a citizen, right? So, you know, you need to have some way of uh representing what properties does uh this uh person actually have? Um, you know, has he actually participated in the optimism ecosystem? Have they participated in the uh Ethereum ecosystem? You know, you might want to try and see like, is there some evidence that this person has some knowledge that could be relevant to the governance process? How do we even know these things are five different people instead of five accounts that are owned by one person? And if um you want to have applications that use that information, then you have to like formally represent that information somehow, right? The Ethereum ecosystem already is starting to have more and more of these ways of like formally representing stuff, right? So there's uh the Proof of Humanity protocol, there's uh the Pope protocol, um you know, if uh anyone's gone to an Ethereum event, um, chances are you've uh seen Patricio of World's Alter at least uh once uh you know giving you one of those lovely popes. You know, there is to me really uh a lot of good that can happen if you unlock the uh ability to do those kinds of things. And uh but the challenge is like how do we actually create a uh technology stack for doing that sort of thing that's um actually sustainable? And I think there's a lot of uh use cases uh that have to do with like Ethereum DAOs and uh airdrops and uh things like that, but also no eventually new applications as well.

So just to rephrase that to make sure me and the listeners are tracking the current state of like DAO governance is governance by capital, right? Token vote. That has some amount of utility in terms of governance. There are some instances where like governance by capital is what you want, but is by and large probably the minority of the total expression of governance possibilities. And so what you're focused on with this attestations is there are alternative ways to identify who should have governance powers over a system that has not to do with the capital of the system and it instead is other things. And like you said, the optimism's uh citizen house is a portion of the governance over the optimism ecosystem that is explicitly not the capital, not the token, but is it instead based off of the merits, perhaps? Could you also illustrate just like if it's not capital, what else is it? Is it turning into a meritocracy or what are the other alternatives that are unlocked if we are not having a capital governance system?

Yeah, I mean first I should also add that governance here is kind of just the first motivating app, right? I do think that there's uh a lot of other apps as well. And um, you know, the Soulbound paper with uh Puja and Glenn, um, you know, we talk about like loans, um, you know, potentially kind of clubs and memberships and like all of these use cases, but you know, governance is just one where there's already this kind of big existing demand. Um, so just a couple of fairly simple examples. I mean, one is just proof of humanity. So, you know, you could do some quadratic thing where if you have n tokens, then instead of n units of uh governance power, you have square root of n units of governance power. That still is a little bit token-based, and so you get the benefit of being able to distinguish between someone who cares about optimism versus someone who doesn't care about optimism, but at the same time, you know, the square root function kind of drops off after a while, and so you know, you don't have kind of full-on photocracy, right? That's just um one simple example. Another example is that uh one of the things that I think we could do a lot more with is uh airdrops where the airdropping is done in a more intelligent way, right? So the airdrops that we have today, like a lot of them they get VC farmed. Even if they don't get VC farms, a lot of people claim them and then just sell them immediately. The thing that would be more interesting to see is like airdrops that try to actually filter for people who like actually care about a project, who actually really participated in it, and maybe even people who like learned more about the project or even kind of participated in that project in some micro way, right? Or if we want it to be like any remotely easy for people to do that sort of thing, then like being able to formally represent um, you know, this person did this thing, this person uh kind of used this up.

this project for this amount of time participated in in this event um and uh that sort of thing would actually make it much easier to do that sort of stuff, right? That way, you know, we can have airdrops to like actually target both them, you know, people who would actually hold the coin instead of just uh selling it immediately and like actually continuing to be productive contributors to that project's community.

Evan, feel free to build on what Vitalik was saying here. But we all know in the crypto world, the state of crypto is not yet what we want it to be in the future. So there's many, many things to unlock in order to get to that future. So attestations and credentials being one of those things, what can we unlock? And what is left to unlock in DeFi crypto and all of these systems that we're building when we have like a robust identity system that Vitalik is referencing?

So right now, without a robust reputation system, a robust identity system, the only thing that I know about you and I know your Ethereum address is how much money you have and what kinds of financial transactions you've been participating in, what kinds of assets you've purchased or been gifted, stolen, been airdropped. And so we can't coordinate, as Vitalik was noting, very interesting coordination games. It's, you know, fairly plutocratic when we're based on token holdings alone. And so being able to describe the qualitative traits that we have as individuals, our non-financial contributions to our communities, things like our achievements, our capabilities, our friendships, relationships, our memberships in secret societies, all of these traits describe us as humans and deserve the ability to interact with our smart contracts as well as being prepared to interact with folks from any ecosystem, not just Ethereum. And so the externalities that we can start to enjoy if we take hold of off chain data for these purposes, is that we can maintain our privacy, our autonomy, our integrity without having to experience data leakage around what happens when someone sends you a token.

So the macro externality of sending a token on a blockchain from one party to another is, I mean, basically it's that Satoshi did it once and set forth the world we know is Web3, which is how we got to now, which is a very exciting moment, you know, for us. As far as I understand from this conversation so far, Vitalik and I agree that identity is an essential primitive for Web3. And our community, as we have discussed, is paying attention to identity in a way that they haven't before, whether through trauma or through faith. So we have an opportunity to answer the big questions working together. You know, how do we direct our YOLO energy in a sustainable and regen way? How can we put consent above contracts and people over protocols to align on our common values and define our identity architecture for Web3?

You know, the public conversation that ran right now has jumped into solutions, and it's the first time that a lot of crypto Twitter is talking about identity, which is super awesome. But we have this moment to amplify our shared energy into a very intentional direction. Vitaliki provided a wonderful conjecture that can help us come together as a community to optimize for our shared experience as people.

Vitalik, any comments on that before I go to my next question?

Um, no, I mean I think uh you know, those are all very uh wonderful and amazing goals and I support them.

Cool. Evan, I think you see a fork in the road with how we can do identity. And like one ends up in a better world and one ends up in a worse world. There's a famous tweet that you and I talked about from our friend Cooper Turley where he said NFTs are the truest form of our identity or our personality or something like that. Can you illustrate this fork in the road that you see with regards to like NFTs as identity or on chain data as identity versus off chain identity?

For sure. To engage Coop's tweet, right? You know, Cooper's vibes have launched a thousand communities and his Web3 wallets, like his wardrobe, are a fairly thoughtful reflection of his taste and his preferences, his purchases. You know, NFTs are an authentic reflection of someone's interest and ability to obtain public digital items. So Cooper is not a music NFT as much as he would like to be. He is obviously too tall for that. Cooper is not a pair of designer sneakers. Cooper's collection of objects, both digital and physical, reflect his taste, which is part of his identity, but is not the whole thing. Right? Cooper's identity is also being an alum of the University of Denver, a resident of Los Angeles, a co-founder of Fire Eyes Dow, a Chad of Chad Team 6, an Alennium Superfan, a decent slack liner, a connoisseur of Asay bowls and fandom, employment, academic achievements, personal achievements are all really beautiful use cases for verifiable credentials. Cooper is also the life of the party for those who know him, and a tornado of memories, emotions, laughter, bull markets, bear markets, late nights, old friends, and very intense eye contact. He is a human being, a soul.

A lot about Cooper.

I know, right? You know, he's a human being, he's a soul and identity that can reflect so much more than what's inside of his wallet, you know, what his financial resources are. And he cannot be contained in a singular address. His community influence, you know, ripples through the metaverse beyond the Ethereum ecosystem. And that's why Kook needs a data backpack, a decentralized identifier with a rich set of verifiable credentials or off-chain private data that he can choose to share when he wants, so that he can carry his multifaceted identity in a form that can be understood by his friends who use email or Bitcoin, Solana, EVM, and even websites, because his squad contains multitudes. So, you know, if Coop is the sum of his experiences, ideas, and relationships, some are going to be more persistent than others over time because he's a changing and evolving organic being. So he needs personal data that's going to be similarly flexible. But in some sense, Cooper is right. In Web3, where we primarily express ourselves today, publicly and on chain, NFTs do have the most personality of any readily available token. So I'm really excited to build upon these wallets full of financial data and give us all a new accessory privacy preserving, self owned data backpacks, so we can carry around the rest of our non financial data that makes us us. And so Cooper can join the party anywhere, no matter what protocol sits underneath.

Right. So Evan was illuminating the world of what happens when you have parts of your identity that really can't be expressed by an on-chain NFT. But Vitalik, I want to turn the question to you is what utility do we have by having some bit of data embedded into an NFT and also not being able to transfer that NFT? So, what is the point of putting something on the blockchain if that thing cannot be transferred to another address? So, like, what does that non transferability unlock? And how does that help with this whole like Web3 credentialism?

Um, sure. And so I think there's two ways to answer that question, right? One is why could a uh on-chain non-transferable thing be better than an on-chain transferable thing? And the second is why could an on-chain non-transferable thing be better than an off-chain non-transferable thing? To answer the uh first question, like basically, if you have on-chain transferable things, right, then on-chain transferable things are going to like basically just uh get transferred to the highest bidder, right? So the word soul bound uh that um I used in my blog post um and uh in that paper, right? It comes from uh World of Warcraft to where you know there was this uh type of item uh in the game called a soulbound item where basically once you pick it up, you can't transfer to another player, you can't trade it, you can't auction it, right? And I've always thought that that's a very good mechanism, uh, because if that mechanism did not exist, then like basically everything would just be sold. And so if you wanted to like get all of the best stuff, all you would just have to do is like, um you know, go off into the forest and kill boars for like six months in a row without ever going to sleep, and uh you just uh be able to get all of the same stuff anyone else has without actually doing anything challenging, right? Um, imagine if like you could contact the guy who is on Wikipedia as being the most successful uh mountain climber in the world and ask him, like, hey, if I give you $100,000, can I just like replace your name with mine and everyone will recognize me as that? Right. Like basically, once uh those kinds of things become possible, the whole concept uh just kind of starts to lose meaning. So that's why I think credentials have to be non-transferable if we want uh credentials to kind of actually represent properties of a person. And then also I think there is this kind of anti-blutocratic governance argument, right? Of like you also want to prevent like one hedge fund from just um, you know, gathering up uh thousands of uh these things and just uh, you know, making these really huge uh kind of votes with one click. You know, like the sort of stuff that even happens in social media today all the time. Uh, this just reminds me, I think there was this one moment a few years ago where I think it might have been Rick Falkvinger or someone else, like he just made this tweet pointing out that, like, hey, um, you know, Twitter is like actually totally vulnerable to basically commercial attacks, I mean then a few minutes later it got 5,000 likes. That was uh, you know, that sort of stuff happens, right? And like we want to make it harder for that stuff to happen. That's the first question. The second question for why chains are useful, I think uh there is a couple of different places where chains are useful. So the first place where chains can be useful, I think, is account management, right? And the problem that I think uh you might call key revocation, you know, key recovery, like just generally like making cryptographic keys not count anymore in case you want to replace them or you're worried that one of them got lost or stolen. Uh so the basic problem is that like if you don't have something that can hold some kind of state, then if I have a key and I tell people, hey, you know, here's my public key. If I sign things with this key, then they come from me, then I uh have no way to kind of repudiate that. Like I can't go and say, well, no, no, no, that's not me anymore. Because, well, what happens if I do send a message to repudiate, but then five years later, someone manages to hack that key, and then they go out to the internet and they say, Oh, no, no, no, that repudiation message that was a hacker. I'm still the real Vitalik. So what blockchains do is they do kind of keep track of time. And as I'm sure you remember many times, I've talked many times about social recovery wallets, and um, you know, in this the uh Solbag paper, you also talk about community recovery. And so having on-chain accounts that can actually, you know, have smart contracts, have the functionality for doing key changes, doing key recoveries, um, and uh those kinds of things. Like you need some infrastructure to do that sort of thing to have a good identity layer, right? So that's the first point. And then the other really big one is uh negative reputation. So I think uh the simplest kind of tame use case for negative reputation that I think is uh pretty compelling is uh if you want to take out loans, right? If you want to take out a loan, then one thing you might want to be able to do is prove that you haven't taken out um any other loans or prove that you haven't taken out more than a certain number of other loans, right? Because if you don't have that and you just say, hey, look, I'm reputable enough to take out $100,000, and then you go and just do that with um, you know, 20,000 lenders in parallel, uh then you could just you know run off with $200 million. But if uh on the other hand, taking out a loan gives you a negative reputation token, and uh, well, I mean, I shouldn't say negative, right? Because taking out a loan isn't bad, but it's like a reputation token that you can't hide even if you wanted to, then what that actually empowers you because it lets you prove the absence of those tokens or prove that you have less than a certain number of those tokens in order to show that like you haven't actually taken out many loans yet, and so it's still okay to give you another one. So

If we want to like really unlock kind of the full potential of these things for the economy, social media, better forms of communication, then there are going to be places where negative reputation has to apply. And there again, like you have to prove a negative, right? And uh cryptography can't prove a negative, blockchains can prove a negative, blockchains are definitely not the only thing that can prove a negative, but um, you know, they are one thing.

Evan, what about whatever Vitalik just said piqued your interests? Anything that came to mind there?

Yeah, I think it's a very interesting thing for us to discuss these negative or unintended externalities that come from sending a token from one party to another. So, you know, Vitalik, you've mentioned some of the critical needs that we have in an identity system, the ability to rotate keys, the ability to issue non-transferable traits, the ability to have resolvable public key infrastructure so we can tell whose keys are who. And it's so wonderful that you've highlighted these things because these are things that decentralized identifiers and verifiable credentials can already do today. In talking about the sort of externalities, if Vitalic sends a token to my wallet, he's saying something about me that is public to everyone on earth and in space forever. If he sends me ETH, which I hope he does, he's making a financial statement. But if he sends me a soul bound token saying Evan's a total Chad, he's saying something much more directed and specific about me. So if this token has some data about me in clear text, then we have the externality that apps and people will be able to read it and access it easily forever. So everyone can see that Vitalik has made a statement about me if we assume that everyone knows whose keys are whose.

So we know that the issuer, Vitalik, has said something about me, Evan, the subject. So now all of ETH knows that Vitalik and I are talking. So we've started some really fun rumors. But if that token has encrypted data, David can know that Vitalik has said something about me, but not exactly what he said. So the rumors that Evan and Vitalik are talking swirl faster and we're relying on encryption, which is not necessarily a bad thing, but it is a time-based privacy method. So it's only a matter of time until that data becomes public, whether in my lifetime or the next. Also, Vitalik did not secure permission, my consent to send me a token, which is why someone was able to send him billions of dollars of SHIBA token. And I'm sure that Vitalik would send me something really nice, but if it's a mean or unwanted token, normally I'd be able to burn it or send it away, although that's going to cost me some gas. But as I understand them at this point, allowing for consent in the soulbound token paradigm is a norm proposed by teams like Sismo, but it's an unenforceable one from a technical perspective, requires an additional reputational system around it. There's nothing to stop anyone from not gaining consent before issuing you a soulbound token, as with any other kind of token, even if it's possible to secure consent first. So I think, you know, if gaining consent is seen as inconvenient, it's going to be routed around. So this token is only going to be accessible and relevant to users in the EVM verse. So it might require a bridge or cost, some additional complexity if I want to leverage my token from Vitalik in my adventures in Bitcoin or email or Solana. So if it were a verifiable credential, it would be immediately readable by more than 90 different sets of keys. So I wouldn't have to translate it just to provide a little bit of comparison for the benefits and drawbacks in different use cases. So let's say instead of getting a token from Vitalik, I get a token from SheFi, which is an educational initiative and community aimed at onboarding more women into the new financial economy. So then everyone knows that I likely identify as a woman. The assurance would increase significantly if I received a diploma, soul bound token from Smith or Wellesley College, and a membership token from Boys Club, She 256, and Metagamma Delta. However, when we talk about loans, I've got all these cool tokens now. Women are less likely to be approved for loans. And when they are, they are more likely to be offered costly rates. And I'm sure you guys know only, you know, 2.8% of VC funding goes to female entrepreneurs. So my chances of getting investment might take a hit based on revealing this facet of my identity, depending upon the context. Personally, I struggle to see how publicizing my gender is going to avoid negative consequences on chain that already happen today when people see me as a woman. But, you know, what about other traits? So if I have a diploma token from, or a token at all, from Bennett College, there's a high likelihood that I'm a black woman. So in real life, black women earn 63 cents on the dollar compared to white men. If I have a token representing my membership in a local religious organization such as my mosque, you might discern that I'm likely a Muslim. And in real life, Muslim women are 65% less likely to be hired for a job than Christian women. So you can imagine that even receiving a minimal token from a certain address can leak some information that unintentionally affects your experiences immediately. Public tokens from refugee agencies can signal you as a persecuted ethnic minority. Public tokens from adult content sites can signal you as an entertainer. Public tokens from law enforcement can signal your criminal record. So I think, you know, in this opportunity, in this moment, self-ownership and positive reputation systems can take us incredibly far first without these unintended consequences. And, you know, Helen Nissenbaum's work on contextual integrity highlights these ways that public data can be used out of context and lead to these kinds of unintended consequences. But the permanence of our public chains, where we send these tokens, or Vitalik has sent me this awesome token that we're talking about, we can unintentionally diminish freedom for disenfranchised communities by publicizing the very traits used to discriminate against them right now. So to avoid this very real, immediate, concrete consequence, we can explore solutions anchored first to a shared vision for human identity before we anchor it to a chain. You know, once something is public, there is little going back. So we've got to get it right the first time for all time. And I think this moment is perfect for us to slow down as a community before we write in pen or perhaps even more permanently on chain.

So, Evan, to articulate, I think what you just said, there's this potential of like a, you know, a very easy to identify use case for like what Vitalik was talking about with like a loan token, right? Where you can tag this address and say, hey, this address has an outstanding loan, which is good information for other loan originators because that is relevant information to them. And so in that one particular instance of a siloed use case, I think that we can all agree that that's probably pretty useful. But I think what you're saying is when we have many, many, many instances of many use cases, we start to have interactions on these soul bound NFTs where if an Ethereum address has these four soul bound NFTs, we can start to infer things about that person that they did not willingly give up. Is that a good summary of what you were talking about?

Definitely. Yeah, I think, you know, correlation is one of the risks with making data public. And so that's why one of the sort of seven laws of identity that were put forth in 2005 by Kim Cameron, one of those seven laws is minimal disclosure. So your data on a need-to-know basis is one of the pillars that help us build identity systems that minimize risk and harm to human beings.

And so Vitalik, is there a way where we can have soul bound NFTs and have privacy too? Can we have our authority over our own disclosures and also still have soul bound NFTs?

Um, yeah, I mean, I think uh the uh encryption is definitely like a very important first place to start. And like I would definitely totally not support a system that doesn't have like at least that available as an option, but um you know, I think you totally can go much further, right? Um so like you know, with ZK Starks, for example, you could make a guest system where you're encrypting not just the content of the soulbound token, but also you know, the sender and the recipient, right? You know, imagine we're doing this all in a layer two and transaction fees are cheap and the gas is um you know paid through tornado or through you know some relay or whatever, then the stuff that goes um on chain is just a record. Record is um, you know, encrypted to the destination uh public key. And if you want to do a proof of uh that you have some particular bit of reputation, then uh you can just do a zero knowledge proof that says, hey, you know, here is the decryption of one thing, and that one thing is sitting on a chain.

If you want to have a proof that says, I have never received something of this type, then you can make a ZK start that just walks over the entire set of records, and then um

You know, basically show that if you decrypt everything in that set, then like none of those are going to be a yeah record of this type, right? And you know, possibly you can make a kind of privacy efficiency trade-off somewhere, kind of split it into 100 buckets if you only want to decrypt 1% of everything. Uh, but you know, you can like really reduce um a lot of uh information there. Now, once uh you have that, um, then basically uh, you know, what you're left with is just as just a bunch of uh records containing encrypted data. And the thing that is leaked is the fact that someone said something about someone at uh some particular time. Um and so um, you know, definitely you'll be able to do analysis and figure out like, you know, how many North American and uh Latin American people are using it versus how many Asian people. Um and uh, you know, to a mathematician, that's a a a pretty significant data leak, but it does get pretty low already. I do think that the point about uh

Encryption, having a risk of eventually breaking, I think it is something that's fair. Though on the other hand, I would also say that like this gets to the point where, like, you know, if you don't make some information available, then like that, you know, that starts really going against us some of the positive use cases as well. Right. Like at some point, um, you know, like you have to kind of pass some bar of capability. Because if you don't pass that bar of capability, people will just create centralized providers that do, right? So like I do think that it is possible to kind of reduce the privacy issues a lot, um, especially once like broken encryption comes into your model, like, you know, you definitely can't do it to 100%, though, you know, 10-year-old information getting revealed is uh less bad than zero-year-old information getting revealed and still only happens occasionally and so forth. And like there's definitely kind of like a place to trade off on the boundary. Um, and so I like I do think that there is a case that uh if there is some NFT where like the contents are sensitive, then you know, you might even want to like put a hash of it on chain. And like the thing that okay, well, actually no, here's what you do you uh put the recipient on chain, and you would just send the contents of the uh NFT to the recipient, and then you put the hash on chain, right? So the recipient holds the data off-chain, but then if the recipient wants to kind of walk over the entire data and prove it, then like they can still, you know, make a proof using the information that they have personally. And then if they want to prove that a record isn't theirs, they just so show that like look, I'm you know, the ID in this particular position is different, right? So there are lots of technical tricks that you can do, but you know, I do sympathize with the idea that like you can't bring the issues down to exactly zero. Um and I think like, you know, there is some trade off at the end, um, though at the same time, I mean, as I'm sure Justin told you, never underestimate the power of cryptography to do quite a lot. Um so I mean, I guess at some point it does um, you know, get into kind of just being application specific.

I want to ask the question, and this is a little bit beyond my technical expertise to really understand. But if we have this world of like soul bound NFTs and that's leaking all of this data that we don't want leaked, but we have the solutions to stop those leaks from being leaked with a combination of encryption and ZK proofs, if we plug up all the holes of the leaking of the data with ZK proofs and encryption, do we actually kind of ultimately just work back down to the same properties of off chain credentials in the first place?

I mean I th the key property that we keep, right, is this abil I I think uh one, this ability to prove negatives.

Mm-hmm.

And which I do think is uh

Important. I think uh just to kind of expand on why I think like proving negatives is important, like I think uh

it is definitely true that there are like things that people have um where if they get revealed, then uh the those properties can get used against them. And I do think that like there is a really big and important role for privacy to play in uh kind of fighting against that. And I think even you know the crypto space itself is like a really good example of that, right? And uh like, you know, lately we've been having more and more of these um, you know, anons on Twitter, um, and they can just get kind of you know respected for who they are as um as anons, and um, you know, we don't even necessarily need to know what their faces look like and unless and until they show them, right? And I think that's uh you know, like people having the option to do that is beautiful. But at the same time, I think kind of the two caveats I would give there is uh

One, um, that there is a way in which uh like proving negatives can be kind of even more egalitarian and um empowering than having to prove positives in some cases. And like one particular example of this, right, is uh in the real world, like in the non-crypto world, there are applications where like one side needs to know that the other side is at least reasonably trustworthy. And one thing that they might do is like prove that the other side doesn't have a criminal record, right? And that's nice because it's like a very simple test that someone is like at least not in, you know, the bottom kind of few percent of trustworthiness, kind of probably. Um, and it's something that like most people have by default, right? Now, if we did not have the ability to prove the absence of a criminal record, then the thing that people would probably be forced to do instead is they would be forced to like look, like basically say you have to provide positive evidence of good character. And once you have to find positive evidence of good character, then like that's going to be something that's harder for people to find, right? Like some person who had just has some stall on the street where, you know, uh she's been selling bananas for a dollar for 25 years, like um, you know, never did anything wrong, trustworthy. But just uh because um, you know, she's not part of the system, she might not even have that evidence of uh good character, right? So I think like that's one important sense in which kind of like a lack of negatives can be a more egalitarian thing than uh presence of positives. And also presence of like there are a lot of cases even today where uh presence of positives is uh something that can be used to exclude, right? Even a simple one is like just uh applicate like requiring proof of citizenships, right? Like uh, you know, a uh a developed country passport, something that 86% of people in the world don't have. Um, and uh, you know, I think crypto really tries and cares about being global. Um, and uh that's uh

Even if you create a system that just allows checking that, then you're already allowing for the possibility of excluding people on that basis, right? Uh so I think uh my general kind of b view on this is um that I don't think you really can kind of like finally

kind of target properties just by making it possible to prove positives and not possible to uh prove negatives. Like to what extent a system is going to have like the the good outcomes and not going to have the bad outcomes is going to be based on these kind of much more kind of finely grained and uh detailed economic properties. And I think uh you know in probably both kinds of systems there's like a utopia way to do it and a dystopia way to do it.

Mm-hmm.

Evan, no question, but what thoughts have come to mind?

Well, Vitalik, I'm really glad that you brought up inclusion, because, you know, as much as we would like for it to be the case, right, Ethereum does not provide the only API of data about people on the planet. And so if we want to be able to make utterances that are relevant to people who use websites and email addresses and Solana and Bitcoin, we are going to need tools that allow us to communicate with the keys that they already have, as opposed to requiring the exclusionary need for them to hold the keys that we prefer to interact with our chosen system. That said, I also think that, you know, there's a prioritization opportunity for us here. Which problems are most urgent for us to pursue, right? Which need the most love right now. And so I think that there is a robust set of these opportunities where we might explore positive reputation in terms of enabling better governance, as you were suggesting, right? For every community of well-meaning members, there's one Brantley. And so I think to the extent that we might think about, you know, how reputation positively can impact the systems that we have today to unblock us immediately, I think that's a really great place for us to start focusing our effort while we studiously and collaboratively define, you know, what is the identity system that's going to work for everybody. So I mentioned earlier, you know, Kim Cameron's laws of identity that set forth the sort of industry standard framework for identity systems that minimize risk and harm to people. And I think there are a few of these things that I want to pull out that I think are relevant for us to discuss here today. I think, you know, user control and consent, as I mentioned earlier, is a poor pillar, right? Just like how World of Warcraft loot screens, you know, allow players to consent to put something in their inventory, even if it's non transferable afterwards.

In these systems that are intended to minimize risk and harm to people, users should consent to those data interactions. And that may mean also consenting to participate in a system that involves negative reputation, right? We participate in the society, therefore we are subject to certain facets of our state. Pluralism of operators and technologies is, you know, sort of a sort of agreed-upon element of a strong foundation for a global identity system that does not bring harm. So we avoid a monolithic solution. And, you know, minimal disclosure, as we talked about before, so you can share data with a minimum number of parties required. It's on a need-to-know basis. And this is kind of at odds with the 24-7 data availability that we've come to get used to in web two, where apps have 24-7 access to our information. And so I think that, you know, this is a really wonderful opportunity, as I mentioned, for us to explore like what are the relative merits of these tools based on the needs that we have as humans and how do we find that spectrum of use cases, Vitalik, as you suggested earlier, where some are more optimal than others, and we have a pretty good understanding of what we think those first externalities are going to be.

Vitalik, any thoughts?

I mean first of all, you know, I do t I mean I definitely totally sympathize with the goal of technology neutrality. Like I think uh, you know, if someone um hates or just does not want to use Ethereum or then uh you know they uh should not be forced to use it in order to be part of um you know the you know identity web of the future. Um I think uh you know they should totally be able to be uh you know use Solana. Um and um you know if uh you're uh David Girard, then you should totally be free to kind of not bother with a blockchain at all and just um you know have your open ID and let Google or Facebook run your identity. Um, you know, I think if someone wants to do that, that's fine too. I do think that it is possible to create standards that cover that. Like I know that, like, for example, Juan from uh Filecoin, right? Like he is uh in IPFS, like there's been there's a lot of work that's been done and you know being able to kind of support multiple types of hash functions and like support multiple algorithms for pretty much everything, um, and creating kind of these data standards that can actually do that. Um, and I think it should, you know, totally be possible. I mean, I don't uh you know, I'm not deep enough in the verifiable credentials in a community to know maybe this already has been done, um, to but um you know to make it so that like you know you can have an Ethereum account that um interfaces uh with the system or a Solana account um or um a Google Open ID app.

We can. We can

Okay.

we can sorry to jump in. We can do that. We can do that. We can use a verifiable credential to bidirectionally bind together our Ethereum address with our Bitcoin address, with our Solana address. I can send a credential signed by my Ethereum address to someone else's address that is a Bitcoin address or a Solana address. And we can be on the same page already. So I would love to explore this more with you.

Okay. Actually like so one kind of detailed question there. Um let's say like I want my uh I mean okay, let's uh

I'll jump to another team just for fun. Let's say I'm a Solana Maxi and I want my Solana address to be my route, right? So, I mean, it does the system give the possibility for me to say the Solana address is my route and the Solana address is the thing that has the right to kind of reset my Ethereum address and my Bitcoin address and the address and the public key that I use to send all the other attestations.

So we are currently working on that approach, starting with Ethereum keys at Disco. But our friends over at Encore in the Solana ecosystem are thinking about what that means for their world. So we'll keep you posted on what those discoveries look like. But we think, you know, it's an exciting opportunity to become your first personal. You are your own multi-sig. You are your personal API. And so that means incorporating multiple facets of your personhood.

So I was trying to keep up with that. And so I think what you guys were talking about with a root conversation is that with these off chain verifiable credentials, off chain decentralized identifiers, and like I just spun up my disco data loop bag yesterday. But does that mean that Evan, like disco is like opinionated as in like disco's home is Ethereum, even though it can link to other Ethereum addresses? Is that the conversation that you guys are having?

So we are starting in the Ethereum ecosystem because that is where we have the most experience and you know we see the most exciting opportunities, of course. And so as we explore the relationships that people have between different keys, we're going to figure out what does it look like? Is it hierarchical? Right now, based on the decentralized identifier spec, not especially. But you know, identity is an emergent thing. And so I think based on the way that people start to interact, deliberately engaging multiple chains at once or their physical space with their on-chain activities or even web2 app activities, we'll start to see more of this structure emerge. So at Disco, the very first thing that we're doing is enabling everybody to create decentralized identifiers out of their existing Ethereum addresses so they can get some uh, so they can use their existing MetaMask keys to sign off-chain data in the form of verifiable credentials that they can write about themselves, they can send to their friends, they can receive from the DAOs in which they are members, like Boys Club or ShiFi, uh, DAOs and Syndicate and Seed Club as well in the future. And so we are starting off with the Ethereum ecosystem because as Vitalik noted earlier, we are hitting a ceiling of fun that we can have together when we're limited to on chain data.