 And our next speaker is Zuko and I don't think I need to introduce him because there is a huge crowd of people who probably came to this hall just to listen to this talk. Maybe even came to the Congress just to listen to this talk. So the founder of Zcash, Zuko, round of applause, a huge round of applause. Thank you. Oh my God, there's so many people. I think I've never stood in front of this many people before in my life. Thank you, thank you, thank you all for being here. I'm Zuko and I'm the founder of Zcash. And a long time ago I worked on DigiCash which was the first cryptocurrency in 1996 for David Chom who was one of the first cryptographers who made cryptography into an open public science instead of a military secret. But then three years ago I got an opportunity to create Zcash with a bunch of other scientists. And Zcash is a combination of Bitcoin technology with encryption. But this talk is not mostly about that. It's not about Zcash, it's about what I've been doing and learning in the last three years as I travel the world talking to people who are using Zcash and building all these related technologies, all these other coins and Ethereum and smart contracts and all that other stuff. So this talk is a brief survey of 50 different weird things that I've learned in the last couple of years. And it's very much just, this is just my opinions and biases and there's a whole bunch of important stuff that's not included in this talk because that's blind spots. So don't take it as objective truth. And my main questions that I hope to tell you my opinion about is all of this cryptocurrency technology and blockchain and Ethereum and all that, is it just hype? Or is it a real thing? Is it really revolutionary or what? And is it revolutionary for good or for evil? Okay, real quick. Bitcoin was a revelation when Satoshi Nakamoto came up with it in 2008. Bitcoin as you probably mostly know is this amazing technique to maintain a global consistent ledger that everyone on the planet can simultaneously agree roughly to within the last few hours of the contents of this ledger and it uses this concept of proof of work which enables mining, which is one of the things that helps prevent this ledger from being fragmented so different people believe different things or getting rolled back or reverted. And then the whole point of it, of using all that breakthrough technology is just to be digital cash, electronic digital cash without relying on any central party. That's the whole point of it. So you have this ledger and then all you do is keep track of who owns how many bitcoins in the ledger. And that's an awesome breakthrough. It was a computer science and cryptography breakthrough when it came out. And it meant a lot to me personally because I had struggled for at least a decade to invent such a thing and failed and so I had concluded that it was probably impossible and so when Satoshi did it, it was quite the revelation and it has led to everything else in this talk. There's a typical pattern I think that new inventions take about five years to get traction and really become mature enough for people to rely on them and get more than a fringe degree of usage. And then they typically take another five years after that so about ten years total before they reach their potential and start providing value in large and large amounts to larger and larger numbers of people. So Bitcoin has passed the first five years mark. It has reached maturity and has proven that people actually use it for things. And then in 2013, Vitalik Buterin came up with the concept of Ethereum. Ethereum is, the question is, it's a world computer. So like Bitcoin is a worldwide ledger. Ethereum is a worldwide computer and there's just one computer and everyone has to line up and take turns submitting their programs. So it's in fact a time-sharing machine if anybody knows what those were. It's the world time-sharing service. And the way it works briefly, Ethereum, is that all of the miners or validators that in Bitcoin all of those nodes are just making sure the ledger is kept up to date and is internally consistent. And in Ethereum what all those nodes are doing is running the programs that the users have submitted and then they're all agreeing on the result of the program. And that's how everyone can rely on the programs to get run correctly. But that's very inefficient. And in fact both Bitcoin and Ethereum have the exact same scaling limitation or flaw which is that there's sort of one bucket of service. Yeah, in Bitcoin's case there's one total amount of transactions which is about three transactions per second averaged over like a day. And in Ethereum's case there's one sort of number of programs that we can run on the Ethereum universal shared time-sharing system. And it doesn't scale up so if you get twice as many people who want to make transactions or who want to run programs then either half of them just don't get to do it or in the case of Bitcoin the price goes up, the price doubles or whatever until whoever can't afford it doesn't get to do it and the other half who pay more do get to do it. That's a fundamental problem. Then there's Blockchain which I'm not going to talk much more about in this talk. It's the a few years ago a bunch of bankers and industrial enterprise companies said, ooh this Bitcoin stuff is weird and revolutionary and scary and creepy and they didn't touch it with a 10-foot pole but let's take this component out of it which we call Blockchain and use that for our businesses. And I actually think that's a good idea for some things but it'll probably be five years since 2014 so it'll probably be a couple more years before we find out if it's really a good idea. And in the meantime I'm really amused that in 2017 a lot of those same banks and enterprises have decided that Bitcoin is cool after all and Ethereum is cool after all and they're actually going to use that. So forget about Blockchain because there's way too much else to talk about in this talk. Hey, cryptography is super awesome. That's one of my favorite things. In the 1970s David Schaum is the man that I mentioned and Whit Diffie and you know Revest and Shamir and all these other people were, they acted as activists. They courageously arrested control of the nascent science of cryptography and made it part of our communal public knowledge and our heritage instead of being military secrets and almost all of the cryptography that underlies the whole internet and every computer and every database and every cell phone and everything today grew out of this flourishing starting in the 70s and in neat fact is that Bitcoin and Ethereum are built with only two of the concepts two of the building blocks from cryptography, digital signatures and secure hash functions. So for one thing it's really awesome that you can invent a whole new thing using just digital signatures and secure hash functions and for another thing it's a really good question as to what else you could invent if you start using some of the other primitives from cryptography like encryption and zero knowledge proofs which is part of the Zcash project to do that, to use encryption and zero knowledge proofs in a cryptocurrency. Okay, then there's this completely other different kind of technology that came out in 2015 called Lightning Network and by the way I'm talking fast because I want to have lots of questions Lightning Network is a new idea that was just discovered in 2015 as an attempt to overcome this scaling limitation in Bitcoin and the idea of it is if you have a ledger which can't scale so as you have more and more people who want to make transactions they exceed the capacity of that ledger to hold new transactions then we'll use that ledger to record deposits which can then be leveraged by this other off-chain protocol called the Lightning Network and that one can scale and can do zillions of transactions at very small amounts, microtransactions and the reason that one works in a decentralized way without relying on any third party is that if there's a conflict or disagreement over who got the micropayments that can be resolved by reference to the central non-scalable shared ledger. Okay, so when we started coming up with this stuff wait don't start reading if I put up a bunch of words you'll start reading and stop listening to me when people were coming up with these kind of ideas like Satoshi's original paper said this is a way to make decentralized digital cash so he had a clear idea about what the purpose was and people who invented these other technologies may have had imaginations about what people would use it for but what have people actually used it for so far I think it's really useful to learn from real-world experience and what people are using it for as of today may be surprising the most important by monetary if you measure importance by money the most important use of all of these is gambling or maybe it's investment for the long term or maybe it's funding new startups by using these coins as a funding mechanism so the top line here is people who buy and sell coins including Bitcoin and Ethereum and Zcash on exchanges and it's pretty mind-boggling since this just really blew up during 2017 but right now as of the end of 2017 there's half a trillion dollars worth of money which is a pretty unreliable sort of potentially illusory measure it's like take all the coins of all kinds all the Bitcoins and all the Ether and all the Zcash and whatever and then multiply by how much someone paid today for one of those coins and add all those numbers up and it comes up to 500 billion dollars but I don't know how meaningful that number is but it's absolutely clear that a large number of people around the world who are spending or risking or investing a whole lot of money and just hoping that the price will go up and I think in my opinion that's both good and bad or it could be both good and bad but you'll have to form your own opinion but it's definitely big and then the other big thing that happened in 2017 was people discovered they could use these coins as a way to fund their new project or their new startup so they invent a business or a technology or both and then they invent a new coin to go with it and all those coins, the newly generated coins that they just invented to buyers and 5 billion dollars worth of such coins have been sold in 2017 in innumerable new projects like hundreds I guess of new projects some of the biggest ones have raised hundreds of millions of dollars each like for one particular project well that's really interesting and that could be both good and bad in different ways I think it's good and bad, it's both good and bad in different ways in my opinion the thing that I like best about it is that there's a combination of a scientific breakthrough because bitcoin turned out to work like remember I said this was a great breakthrough it wasn't just for me but for all of computer scientists like bitcoin basically did a thing that computer scientists had been confidently telling one another in rigorous proofs was impossible and so that broke open this whole field of things that were previously believed to be impossible and now with bitcoin and ethereum we know that a lot of those things are actually possible so there's this sudden frontier of new technologies that were previously thought to be impossible that are now suspected to be possible and it's combined with 5 billion dollars worth of money now in the hands of either inventors or scammers or whatever but at least some of that 5 billion is going to be funding people to try to implement and deploy these new possibilities of course by my rule of thumb it might take 5 years before we find out for sure whether any of them actually which of the new possibilities really work I'm sure some of them will but we probably won't know for a while and I also wonder what will happen to the market and the money in the interim of 5 years because that's a long time for those buyers who bought those coins bitcoin was actually used at the beginning of 2017 for retail purchases but not for very much there was about a billion dollars in 2017 of people buying stuff with bitcoin on the internet mainly buying games from steam I think but okay that was already not big but it was something and it was growing so that was good in my opinion but now it's dead because of the aforementioned scaling problem now the cost of sending a bitcoin transaction is skyrocketed from something on the order of ten cents or a dollar maybe at the beginning of 2017 and now it skyrocketed to at least ten dollars on a bad day it might cost I don't know forty dollars or something to make a bitcoin transaction and it doesn't matter how much bitcoin you're transferring so if you're transferring a million dollars worth of bitcoin or a hundred dollars worth of bitcoin it's still going to cost you ten or twenty or forty dollars for that transaction well that totally kills the use case of buying steam games over bitcoin so that billion dollars a year may fall to like zero next year for all I know unless someone very rapidly solves the scaling problem okay the next thing is crypto kiddies behold this is this was surprising and hilarious to me it turns out that if you give people a world computer that can compute any computation they screw around with it for like two years trying to figure out how it works they sell five billion dollars worth of investments in their new startups and then they invent a game with collectible cute kittens kitties that you can collect and own and buy and sell and each kitty is unique and then you can breed two kitties together to make kittens and the world computer is crunching away making sure that your kittens are the real correct offspring of the parent kittens so that nobody can counterfeit kittens and so far and this launched one month ago like three weeks or something ago and so far apparently about twenty million dollars worth of cute kittens have been traded around and I think this is a harbinger of things to come I think next year we will see more and more games on these networks except the scaling problem is also going to hit Ethereum next year like it hit bitcoin this year momentarily already the Ethereum pipes were clogged with crypto kitties and so people couldn't get their important ICO funding through and they were complaining and that's going to happen a lot more next year and then the last thing is dark markets this was what bitcoin was supposedly for originally with the silk road and all that and it may have been important to bitcoin at some point in like 2013 or whatever but nowadays it doesn't seem that important to me actually because a hundred million dollars a year is just my estimate it's hard to tell different researchers scrape dark market websites and try to sum up what they see but of course not everything is shown is visible that way and then law enforcement busts these markets and then you find out from court cases what they learned so this is a very rough estimate but basically 700 billion dollars a year is a very very rough estimate for total illegal drugs around the whole world that's about 1% of the global economy is maybe illegal drugs but that's also extremely rough because no one knows how to count that either but online drug markets are a teeny tiny fraction of that and they're also a teeny tiny fraction of speculation and ICO funding and I wouldn't be surprised if crypto kitties are more important than dark underground drugs on the internet next year what's next here? so every time I talk to people from my industry they blow my mind by espousing this new technological invention they've thought of like prediction markets they're going to tell the future and like replacing Uber with an Ethereum program and all these things and I'm not even going to try to summarize and I don't even have the time and brain power to tell how many of these ideas are even plausible I'm going to wait five years and see how many of them have actually worked but I do know very much about what some of the problems are the first one I keep telling in this talk is scaling scaling scaling it's completely changed what people can and do use Bitcoin for during 2017 and I guess it's going to completely change what you can use Ethereum for in 2018 so I guess maybe no one will be able to afford to trade their crypto kitties at a certain point although I guess you can prove that you still have it so that's interesting like if you trade crypto kitties then once Ethereum fills up and nobody can afford to make an Ethereum transaction for such a low value thing as trading crypto kitties then I guess you just keep yours after that that's cool I just thought of that and he is a huge ongoing problem the total amount of Bitcoin that's probably been lost or stolen here's another number that nobody really knows how to measure but this is an estimate the total amount of Bitcoin that's probably been lost or stolen ever since it was invented is about $10 billion worth of Bitcoin today and the total amount of Ether that's been lost or stolen in like two years or however many years that it's been running is $1 billion worth of Ether lost or stolen and a lot of that it's almost even worse with Ether than with Bitcoin because you can lose or get or make vulnerable your money by a coding error in the script you're writing to run in Ethereum so I think this is a pressing issue that's likely to get even worse next year and a lot of those numerous projects that are trying to improve on the state of the art innovate technologically are aiming to improve on one of these two things yeah like I said earlier I think we'll see more gaming if we can afford it maybe people will switch to other coins that have less loaded networks or somebody will make a breakthrough in scaling here's a snapshot of the marketplace for trading this is the thing that all those people who are trading $500 billion worth of trading look at all day long and there's a whole bunch of different coins here all of these well there's like this is just the first 14 lines of like a 900 line website because there are literally hundreds and hundreds of coins of various kinds that one with a red circle slash in the middle there that's not even a coin it's actually a Ponzi scheme and like I don't just mean it's a bad investment I mean it's literally a Ponzi scheme where they actually take your money and put it in your pocket and lie to you about what you got put it in their pocket I mean but anyway but a lot I think basically all the rest of them are more or less legitimate technology projects with interesting users and enthusiastic communities and these are my five these are the five that I'm most interested in and that I wanted to tell you something about what they have in common is that they have really active and sort of impassioned user communities and developers that are improving them Bitcoin I guess you know about and one thing that I love about it is that it's super stable they have now as of 2017 they've conclusively demonstrated that they won't change that the Bitcoin protocol will not get changed in a backward and compatible way and so it's extremely stable and predictable now and it has this very broad widespread and very committed impassioned users who it's basically like a cult and that's cool that's awesome and the other ones actually have really impassioned user communities as well and there's they tend to be separate communities because you know people tend to clump together and between some of them there is like tribal enmity I try to set the example in the Zcash community that we have a much more porous community boundary and we're all members of the other communities as well because we love them too and we're all just friends here but not everyone is like that the 300 billion is again that's somewhat mysterious number about the total numbers of Bitcoins that exist multiplied by the current price of a Bitcoin which is some kind of estimate of how important it is to somebody rich people I guess Ethereum is the next biggest from that same measure and Ethereum is super important because it's got the developer like the network effect of developers because developers who are inventing new stuff they're making a new game or they want to make a new app that they're going to sell access to or whatever or they're just hacking in their bedroom and they want to see what they can do and share them with other people almost all of those people go to work on Ethereum because it's inviting and easier than working on the other systems and that's really important history of the computer industry tells us that the network effect of developers is super important for the long term what's going to be the most important technology and the most widely used because that's what we learned from Microsoft like the World Wide Web for example that's something super important about Ethereum Bitcoin Cash is an interesting case it just now sprang out of nothing this year and what it is is it's a fork of Bitcoin so they they copied the Bitcoin code base but they also copied the Bitcoin ledger right so everybody who at that moment owned Bitcoin then the next moment they also owned they still owned this Bitcoin but they also owned the same amount of Bitcoin Cash because they copied the ledger makes sense and then they they made some tweaks but the important thing about it is that they're the refuge from the Bitcoin Civil War that's raged for the last like three years between liberals who wanted to upgrade the protocol the Bitcoin protocol and conservatives who wanted to keep the Bitcoin protocol stable and the conservatives won on Bitcoin and all of the people who wanted to change the Bitcoin protocol have started migrating on mass all together and they're heading toward Bitcoin Cash I was sort of annoyed when this happened because they could have headed toward Zcash which I was the you know we launched it a year ago and and Zcash is just as good as Bitcoin Cash is at which is not very good at scaling up and sending more transactions like you can send a few more transactions than Bitcoin can but not a lot more however what we didn't have was giving every current Bitcoin holder some of our coin see so when Bitcoin Cash launched just a few months ago they both had a social moment that the people who had lost in the in the social battle needed somewhere to go and to be together and they gave everyone free coins if they would come there so that was really interesting how successful that was and now it's more important than Monero and Zcash and less important than Bitcoin and Ethereum if you believe that number as a measure of importance Monero is a really important coin it's one of the older ones and I love it because the Monero community really values privacy um and it's a very community oriented site corporate decentralized site geist in their community and I really don't like to talk shit about other coins because that doesn't do anybody any good and I really want more and better um more and better invention and sharing and creation and value creation but I do have to say I have a problem with Monero which is the technology is just not good enough for security and I can't go into the details right now because it's complicated and I don't have slides um but basically Monero was invented before certain breakthroughs in cryptography that we were able to use in Zcash and so in Zcash we can use we can leverage encryption we can make it so that in order for an attacker to extract private information about the users the attacker has to literally break encryption like crack at ES or uh to curve cryptography um it has to do something which would also enable them to destroy the whole internet and all the computers in the world or take over all the computers in the world and uh and Zcash isn't quite there like we've deployed encryption in Zcash um which is a a victory and I'm very proud of it but it's not ubiquitous enough and good enough in Zcash um so we have a lot of work to do but it's possible to make much more uh reliable privacy technology than Monero currently has and something that's really good about Monero is that they have this active and um enthusiastic uh community also occult and that's great because they um they encourage and support researchers to improve it and unlike Bitcoin Monero is not averse to backwards incompatible upgrades and improvements so they will hopefully continue to improve their technology um Zcash I'm not gonna say too much about we launched it more than a year ago it's based on a bunch of like hardcore science um it it includes backwards compatible clear text transactions and that's the worst thing about it's security as contrasted with Monero where there's no backwards compatible clear text transactions so you have to kind of leap all the way to um the higher tech transactions and in Zcash we decided to make it easy to get Bitcoin users to get on board by giving them a Bitcoin like starting point um so that's a good thing for Zcash adoption and usage but it's a bad thing for Zcash privacy um the other thing I want to say about Zcash is that I'm really not gonna be satisfied if by the end of like let's say 2018 people still call it a privacy coin because it's like when Netscape added encryption to the web browser it didn't make a privacy browser it didn't make it good for browsing the privacy web no it's just encryption is a necessity for the web like you can't have you can't use the web for anything that's important without encryption and similarly I don't think you can really use decentralized networks, world computers or cryptocurrencies for anything that's important I mean for anything other than speculation um if you don't have encryption or something similarly strong to protect privacy um so yeah in fact one of the things that we're probably gonna be focusing on in the Zcash development team in 2018 is the scaling question um I have a little bit of time to go into that so I told you a little bit about lightning right and it's a beautiful idea and I may just totally misunderstand it and a lot of the makers of lightning are here they told you to tell you wrong things then they should come up uh to the microphone uh right away at during Q&A which is in 15 minutes um but from my understanding there's a fundamental there's a couple of potential fundamental problems that prevent lightning from being a scaling solution um so remember the first step in lightning is that you take your bitcoin and you commit it to to be leveraged for to be able to do off chain lightning payments well currently it costs like at least 10 20 dollars to do that step so if you only have 10 dollars worth of bitcoin you just can't use lightning right am I missing something so that doesn't seem like a complete scaling solution for like the entire world in my opinion because most people don't have 10 dollars worth of bitcoin and never could have no matter what um but maybe there's a solution that someone is already thinking about that I don't understand and if so I hope it doesn't take 5 years to deploy it but that's one possibility and we're what I want to do with Zcash is watch that carefully because the lightning people have done a lot of really solid engineering they have multiple teams working on it and they just finalize their 1.0 specification and they've done interop testing and there's a button somewhere in this building where if you go poke the button it sends a micro payment over the bitcoin test net um to demonstrate that lightning actually works over the bitcoin test net but I don't think it could work on the main net because well I guess it could you just have to put in like 20 bucks into your button and then that would work anyway so lightning network is a really great possibility then there's the um the bitcoin cash approach that resulted in that like 3 year long civil war that's finally over thank god was just we'll just make the blocks bigger and tune up the parameters like increase the capacity of the network um there are a lot of detail arguments that I'm not sure how to evaluate about whether that's good or bad or indifferent um but one thing I'm really sure is that it's not gonna result in a whole lot more scaling I don't think I mean so far Zcash and bitcoin cash have roughly quadrupled the capacity but if we get 4 times as many users in 2018 as we got in 2017 then we'll be back to where we started and I really don't know if you can just keep doubling it every year what happens so that's a possibility it might work uh I would tend to try to wait and see both scientific and empirical validation of how it works in practice um there's a third thing oh ethereum is working on this concept called sharding and I love the ethereum people because for like for years now ever since I first heard about ethereum like before it even like the first moment it was being designed I've always said that's awesome but way too complicated and ambitious to actually work and then they would go ahead and do it and it would actually work and so then I would be amazed and then it would iterate again they would say we're gonna do this next thing and I would say that's brilliant and I love that but you'll never pull it off and then they would pull that off so the next thing that they're doing which I don't think they could ever really succeed at is taking ethereum and making it so it's still a single world computer but it parallelizes the computations to like thousands of like sub networks and then nits the computations back together again uh in time for you to receive your newly bred crypto kitty so that's what they're working on it's called sharding and I don't know with lightning sharding and just turning up the parameters I don't know I think we'll learn a lot in the next year from people's attempts to do that all three of them and so that's what we're doing at zcash is sort of watching those like hawks trying to figure out what's gonna work and what we should copy or if we need to come up with a fourth idea ourselves to make zcash more widely usable okay I'm almost out of time thank goodness oh good this is my last slide so I've been traveling the world I like to say I'm an imaginary coin salesman I've been traveling the world telling people about the virtues of zcash it's been really nice giving this talk which is mostly not about the virtues of zcash but these are not the most important countries in the world there are several important continents with billions of people that are not even mentioned on this slide but these are six interesting ones the top three are the most important if you believe in total amount of coins bought and sold that day as being a measure of importance so um Japan buys and sells more crypto coins every day than any other country does ten minutes still questions actually I might stop before ten minutes so you guys should start coming up with your questions and I think it would be cool if the first question came from a woman so if you're a woman and you have a question you should hurry to the so there's this perfect storm of things happening in Japan which is that the government has this very simple and reasonable regulatory framework which makes it apparent to all the businesses and the industry on the right hand side and all the people who might want to gamble their savings that um the government considers cryptocurrencies to be a legitimate normal real thing and I think that's actually because of mount gox you know which was the biggest cryptocurrency exchange ever and then it was all the bitcoins disappeared we all closed our eyes and counted to ten and when we opened them the bitcoins were gone and it was like the most bitcoins ever that disappeared and that thing was headquartered in Japan so and that was what five years ago now um so maybe in addition to technologies being turned into products or in conceptions being turned into products also it takes five years for disasters to be turned into laws but as of this year uh the government of Japan passed some laws explaining what businesses and people would be required to do around cryptocurrencies and just the fact that the laws exist has encouraged people to buy and sell them at high rates of speed that's why Japan is the most important country. US is the second most important country I spent a lot of time talking to United States regulators and law enforcement and people like that and they gradually have their hearts in the right place like they want to not discourage the development of potentially valuable technology and they want to protect consumers from being robbed or or scammed and so forth but on the other hand it takes them for fucking ever to get anything done and uh and there are literally dozens like 60 or 80 different agencies in the United States that are potentially are empowered to regulate and oversee different kinds of financial and technological things so nobody even knows which agency has actually got the authority to make which kinds of rules about stuff and they're making progress over the last couple of years they're heading in the right direction and the fact that they seem to have their hearts in the right place from the perspective of entrepreneurs and be heading in the right direction from the perspective of entrepreneurs has encouraged the industry and the United States in Silicon Valley and people in the United States are buying lots and lots of bitcoins and other coins every day and South Korea is a really fun interesting case it's one of the biggest markets in terms of people buying it and it's really mainstream in South Korea like I think more so than almost anywhere else and like half maybe of all people are aware of bitcoin as a thing that they might consider buying and there are these major the chat app that every single Korean person uses all day long the company behind that chat app has bought a cryptocurrency exchange and the gaming service like Steam that half of Koreans are playing games on every day that has launched its own cryptocurrency service so there's a lot going on in the industry and the community but the Korean government, South Korean government can't seem to have it's mind. The other day the Prime Minister of South Korea was publicly wringing his hand saying that all this coin stuff might lead the nation's youth into corruption or maybe lead them to drugs and I wasn't sure why I thought that was funny what he's worried about but China's interesting case is there anything else to say yeah okay so there's all this interesting stuff going on like the government of Venezuela just announced that they're going to launch their own cryptocurrency but they don't appear to know what one is okay but I'm going to save some more time for questions so my original questions at the time was is this all hype and mania and craziness and tulips or what and my answer is it's definitely not just hype there's definitely a lot of hype and I don't know if it's like 50% or 99% of the money that's currently at stake is going to disappear or flee in the future or 10% or whatever there's definitely a lot of hype but there's definitely a lot of things going on here which are not which are real things that were previously impossible and are now definitely possible and are demonstrated to be valuable to people is it going to be used for good or ill well I didn't actually say anything about that you have to make up your own mind I try to give just a lot of empirical facts about things I've observed but for my personal conviction this kind of technology is inherently empowering and my conviction is that when you empower people them using it for good and to help each other and lift each other up is going to outweigh them using it in order to oppress smaller groups or harm each other do ill that's just what I think that's my beliefs about humanity so I think in the long run at the large scale these technologies are going to be very very good and very powerful and disruptive and that's what I think okay thank you so much we have a lot of time for questions so step up to the microphones and okay microphone 6 okay hi thanks for the talk we're 6 here hello since Christmas just passed and you talk to normal people at the family table and try to explain cryptocurrencies which is a hard time how would you explain to people to invest into cryptos so what's the motivation for them which is not just speculation so what should be a motivation for normal people to buy cryptocurrencies that's a good question I think the only good reason right now is just speculation which you excluded and I try not to give investment advice I guess if somebody were like my family at Christmas were demanding investment advice I would tell them not to invest more than they could afford to lose we're going to take the next one from microphone 3 hi thanks for the talk how is your view on this child in this parent child chain approach that some cryptocurrencies are doing at the moment is it solving the problem it's one of those things that goes into that slide called new technology that I don't know yet I don't really know how to evaluate there's a lot of those there's a lot of different ideas that people who are way smarter than me seem to think are great ideas and I'm very empirically oriented so I'm going to wait and see if they can get it running first thanks now we have a question from the internet from someone who's watching the stream right now thank you in one of your slides you said that only a tiny fraction of transaction is actually used for illegal stuff where does this number come from what is the source that's a good question this estimate of illegal drugs is from there's a couple of studies one was by the RAND Corporation and one was by some academic researchers who I can't remember right now I'm sorry and mostly what they were doing was just visiting darknet websites and counting up how many drugs were for sale at what price which would be expected to underestimate and so therefore I doubled the number when I wrote this slide so it's that kind of estimate nobody knows but at least I'm honest about it next phone number four that's what the little tilde means it's really uncertain before the thank you for your talk and what are you thinking about proof of stage or alternatives to proof of work that's a good one proof of stake is this really interesting concept it seems very promising and it's to switch you know how bitcoin uses proof of work where your computer is doing some unfortable it's basically paying a cost in a way that it can prove to everyone else that it paid a cost that's proof of work and the cost in this case is the cost of computing bazillion shot 256 hashes in Zcash it's a different thing that is more friendly to GPUs instead of ASICS or it's still the whole point is just you're proving that you paid a cost and then that is the basis of where we don't think anyone will attack the network by paying so much cost that they can outweigh all of the other miners in the whole network that's the whole concept of proof of work which was the breakthrough really in Satoshi's paper and then there's this newer concept called proof of stake which is that we could replace that by instead of proving very showing that you did something costly you could verifiably lock up some of your money some of your crypto money in order to show that you're in order to limit how much someone could attack the network by doing this because they would have to lock up a whole bunch of crypto money and then there's a really neat thing about proof of stake which is that you can then confiscate and redistribute their money if they if you can verify that they were lying or attacking the network so that's interesting but basically it is boils down to another one of those technologies that I'm not sure about yet there are a lot of smaller coins that have deployed proof of stake but they're not big enough and important enough for people to attack them or for them to be stressed tested yet so I'm not convinced by the empiricism of that observation and there's a lot of good scientific research on proof of stake which looks pretty promising so I consider it a really promising thing for the future hope that helped thank you the next question is microphone 1 hello I have a question regarding the usability of cryptocurrencies as real currencies for everyday use as we have seen with bitcoin it's insanely valuable and insanely volatile and it's insanely expensive to do transactions and it's all things that make currency useless equally useless and they are worth nothing you can't use a currency if it's too yeah if it's too valuable you can't use it either what would be needed from a technical standpoint to make cryptocurrencies everyday currency that actually can be used to do real stuff well I don't know if the volatility and the value is the most important factor it might be but I could imagine if we could solve the other problems which we know about like safety like it's UX is the number one thing if you ever tried to help some random newbie who's not a total geek use a cryptocurrency for anything it's just hell it's ridiculous so we can't really go blaming economics when that's the UX is an obvious stumbling block and then there's the scale problem that we just talked about where a currency by necessity is only useful and valuable when like everyone else you know is also using it and so A we would have to bootstrap to get to that scale but B none of the current technology could support it if we did so that's another obvious fundamental stumbling block where we can't really blame economics when we can't even supply the fundamental behavior in the first place okay then yes there's an economics question and my sense my very vague sense is that you can fix you can people will be willing to spend money in order to gain value despite the volatility and other questions because either you could hold your money and there's a lot of ways maybe that's my answer thank you thank you huge hey look women nice you're late I tried some anyway you know where else you have a lot of women the internet and they also have a question about cats on the internet so many things okay I have a lot of questions but I'll limit it to one to sort of touch on what you were saying about UX being super important I found even during the course of this conference it's been challenging talking to people with a really strong technical focus of the importance of UX and actually you know adopting and using technology and useful and so what would your persuasive argument to technically minded people be for like you know if you had to do the hard sell I'm not so good at that but I'm empirical we're empirically persuasive you know Moxie Marlin Spike I love that guy is he here Moxie Marlin Spike gave it a talk once and he said the strategy for the first sort of era of the CypherPunk project was well make tools that are really good for us to use then step two we'll make everyone else be like us right and I was like oh you're right that was what we were doing back then wasn't it yeah so I mean I'm me too I was part of that so empirically what we've learned in the last you know 15 years is that UX is king and network effects positive network effects are king so that's why Facebook is super duper important and diaspora is not is that enough answer yeah that's thank you so now we'll have to take that question from the internet it will be right in a male voice it might be from a woman we'll never know thank you two brief questions first one how can you make a cryptocurrency private and traceable at the same time and the second one do you think digital currencies might be outlawed and what happens then good questions the first one alludes to my least favorite tweet that I ever made where I said we could make Zcash private and traceable so I forget exactly how I put it but if you read the whole thread instead of just the tweet I was saying that this will probably work at least as long as the criminals whom I was complaining about at the time want to cash out to fiat because the way our whole financial system works both with paper cash and bank transfers and Swift and everything else in credit cards and everything else is that the gateway between the different networks is controlled by financial institutions and it's the financial institutions job to spy on and report on their customers on behalf of their local governments anyway so basically I guess my argument is Zcash and Bitcoin are not really different or really much worse for that kind of regulation than the whole rest of the current system is if that makes sense and the other question was will governments outlaw cryptocurrency that's a really good question and we've already gotten empirical evidence about that because some have like China has outlawed various uses of cryptocurrency South Korea has outlawed like two out of three uses of cryptocurrency but has allowed the third Venezuela doesn't really have laws but the police go around extorting minors and stealing their money Russia like every other day they put out another announcement from a different part of the Russian government saying they will or will not outlaw cryptocurrencies and at the same time other countries like Japan is the leading example but a lot of other countries big and small are making completely different sorts of policies so that's pretty interesting patchwork of different policies my prediction for the United States is that there are no way going to outlaw cryptocurrencies in the United States and it's one of the most important countries by this measure and that they're heading towards instead legitimizing them more and more back to microphone one you didn't tell us anything about this ceremony maybe you want to say something about that thanks for saying that because I forgot to mention that there's a ceremony like training session happening today at some point I guess it will be on the schedule as a self organized event but the ceremony is this really complicated thing we don't have time to explain where the kind of zero knowledge proofs used in Zcash you require to generate the certain public like cryptographic value and you want to make sure it was generated in a correct way so that nobody could insert it backdoor into cryptographic value and so the ceremony is a process to get multiple people who are all like preventing each other from inserting a backdoor so the more people like an attacker would have to compromise all of the participants and like surreptitiously backdoor all of their computers at once in order to get a backdoor into the cryptographic value and we are we already did this more than a year ago for the first release of Zcash but we're currently in the process of doing it again with a lot more people because the first time around for performance computational cost reasons we couldn't only handle six people in the first ceremony and right now we're doing another ceremony which should be able to handle any number of people like practically like at least a hundred maybe and I mean if more than a hundred people like show up and offer to help then we could probably do that too but but also the new ceremony is not just for Zcash it's useful for this kind of efficient general-purpose zero-knowledge proof for any other cryptocurrency or even for non-cryptocurrencies for proving the correctness of your identity and some kind of future government ID system or proving that some kind of server computed correctly on your data so anyway it's just general-purpose zero-knowledge proofs which are a really powerful interesting new tool and if you look in the schedule I'm sorry I don't know if anyone knows but there's supposed to be a zero-knowledge ceremony too so that you can participate in the current second generation ceremony and it's supposed to be I think it's 630 today it's right after this talk right after this talk thank you and you are now responsible for another 50 meters along the line somewhere at CCL probably for the ceremony I'm responsible for what for the line to the ceremony I didn't understand sorry let's take another question ok involve me being responsible for something so I'm happy to not know what it was you're responsible for a lot of things by now you know including answering more questions hmm I'm responsible for a lot of things right now including answering more questions pick a microphone oh pick a microphone I pick Dara ok it seems like centralized protocols are winning I mean in social networks in payment systems they're in a very entrenched position you have visa you have mobile networks like impaser mobile and things do decentralized protocols and systems have sufficient advantages that they are going to take over that's a really super great question I don't know for sure and one I mean so the pessimistic thing like I'm a veteran of trying to produce decentralized privacy preserving user protecting things that turn out not to be as appealing as the centralized user vulnerable making alternative so the pessimistic answer is no sure like as soon as as soon as bitcoin and ethereum and zcash turn out to be a real threat then like facebook will just make facebook coin everyone use that but there's a better answer which is that those centralized systems they do they have the ability to scale up really high and fast and scale in terms of the network effect seems to be the most important thing but they also have like a self limiting factor like facebook can't get much bigger than it is right because I don't know because different countries are different people or different other social networks aren't willing to join it or something I don't know the same with like religions and nations like nations are super awesome and they're very high scale and there's a lot of value from having everyone be part of the same nation but they're also kind of like self limiting like the United States can't get it much bigger than it is no matter how it tries anyway and so I kind of hope that decentralized things can break that ceiling can be your than that because everyone can be willing to rely on a decentralized network even when they are unwilling to share a nation or religion or a language or in social network or whatever I hope so thank you we've been told that we are consistently ignoring the microphone number two sorry microphone number two no gonna be number two sorry have there been any useful applications for society for cryptocurrencies so far besides maybe donating to organizations like WikiLeaks where it's blocked which can't be done like applications which can't be done by traditional currencies yeah well I think the donating one is a good useful example and that's still ongoing there are a lot of organizations that maybe not because they're being targeted by a national a powerful major national government but for other reasons they can't accept like PayPal in their country or whatever I've also seen in the morass hell of Venezuela how both the fiat currency and the government and the banking system are all inoperable people can use cryptocurrencies to transfer money across the border in Venezuela but that's of limited scope and value right now but it's more than nothing I liked your question because it was empirical other empirical uses crypto kiddies make people happier besides that there's probably more than I'm not thinking of I tried so far pretty hard so who is it that we're overlooking that we're supposed to okay so people at the microphone number six are jumping and waving their hands why are you guys all shouting out why are they shouting five they just shout about this well the five is popular I guess okay five yeah thanks for the talk so my question was concerning why should I choose to make a contract on Ethereum or any other blockchain compared to a classic contract not on the blockchain I mean I have all these disadvantages coders are writing the contract which most of the time not legal experts just a single block problem I think they shouldn't have called them smart contracts on Ethereum they shouldn't have called them contracts they should just call them programs because we know what those are like so the point in my opinion the point very enthusiastic crowd anyway so maybe you can use programs to accomplish some of the same things that you would have used a contract for I don't know maybe not there's a lot of caveats but that's my starting point thanks okay so there is an acrobatic number happening next to the microphone number six I think we have to give them the voice wow could you please explain a bit about how ZK Snarks work ZK Snarks are a very sophisticated cryptographic technique so it's hard for me to understand myself much less explain there's one component of it that I think is helpful for people which is the notion of a zero knowledge proof by metaphor which is that if you if you're color blind and I have two billard balls that's one's red and one's green and I want to prove to you that they're different from each other but not by telling you this is the red one so this is a weird case but bear with me a zero knowledge proof is a weird concept because it means you can prove something to someone without giving them any other information other than that the thing you said is true so it's kind of like I am a truth teller and it's impossible for me to lie sort of but you want to not expose any other information so with the billard ball example I might want to prove to you that I have two different colored balls but I don't want to give you any information about which one's the red one and the way you can accomplish that is I can give you the balls and I can ask you to hold them behind your back and swap them back and forth or don't swap them but you're choosing whether or not to swap them and you're not telling me and then you reveal them to me and then I just tell you whether or not you swapped them and I don't tell you that's the red one because that's the thing I don't want to give away so when I do that so you bring it out from behind your back and I say you have to swap them and then you think to yourself well they might both be green and he's just fooling me and he just guessed so then what we do is we do it again you hold them behind your back again and you swap them or don't you bring them out again and this time I tell you nope you didn't swap them this time but then you keep doing that over and over so you do it like 100 times in a row and every time you do it I correctly tell you whether or not you swapped them but I never say that's the red one at the end of this you're convinced there must be two different colors but you've gotten zero information about which one's the red one so that's a very simple metaphor that shows the concept of a zero knowledge proof and there's still like 15 math ideas half of which I don't understand to explain ZK Snarks by the way thank you by the way there's an explainer series on our website z.cash.blog go to ZK Snarks explainers and that has much more technical detail how is that a question it's not we have people next to the microphone number 3 who don't shout, don't dance they just stand there in silence and I think we should reward patients and modesty by letting them ask the last question for this talk hello yeah thanks for your talk I actually have a bunch of questions but I'm just gonna ask two so the last two questions for this talk talking about centralization what do you think about the growing inequality so basically you have a few people who hold most of the bitcoins or also other coins and who are able to decide which you know if it's gonna fluctuate how much and it's gonna have a huge effect and the second one I recently read in the news that you started working together with JP Morgan so I mean I'm confused why would you do that and don't you think that the financial work will eventually destroy most cryptocurrencies because they can okay the first question, the second question is why would I why would we work with JP Morgan we have been able to help them make this blockchain that they could potentially use for their enterprise blockchain use cases in the financial industry so that might be valuable to them or their customers and it was also really helpful for persuading people from that world like the regulators and the startups and the enterprises over in USA that I could point to JP Morgan as an example of how privacy is important for business privacy is important for commerce a lot of people don't learn from argument or theory, they only learn from example so it was really useful instead of having to go around what I had done previously was go around saying privacy is going to be important for normal old mainstream tax-paying commerce and after we did that deal with JP Morgan I got to name drop JP Morgan and say for example this is why the most valuable bank in the world is working with our technology because privacy is necessary for commerce and that went a lot further with that crowd and you said don't I think the financial industry is going to destroy cryptocurrencies because they can no I don't think they can so no I don't think they can the first of your questions what was that again was a good one inequality oh yeah that's a really good one I don't have time for any more it's a really important question and hopefully future technology something something but it's definitely true there is a lot of inequality but thank you for the really important question thank you all okay