Zcash privacy

Crypto Bites: A conversation about crypto and privacy with Zcash creator Zooko Wilcox

In the latest Crypto Bite episode, Abra founder and CEO Bill Barhydt sat down with Zooko Wilcox, the creator and CEO of Zcash.

Their conversation covers a lot of ground — both have been working on encryption and secure internet technologies since well before the launch of Bitcoin.

One main focus of the conversation is how privacy relates to everyday internet users and to the function and future of cryptocurrencies.

“There’s been a shift,” Wilcox said. “That whole notion that nobody cares about privacy is actually being disproven. It turns out that people do care.”

Wilcox also explained the importance of the Bitcoin breakthrough — and about how it solved for the decentralization of money problem, which allowed people to conduct peer-to-peer transactions over the internet without a trusted third party for the first time.

Early forms of digital cash, which Wilcox worked on, failed to gain traction because they still relied on some kind of central hub, like a company or organization to make them work. In other words, they were just a new version of an old system and not necessarily a full-fledged alternative way of conducting transactions on the internet.

“The world had to wait for Satoshi (Nakamoto) to figure out how to make decentralized money before we could start making progress again.”

Wilcox goes on to explain, “But Bitcoin sacrificed privacy. Satoshi and Hal Finney (the first developer to work on Bitcoin with Nakamoto) and others tried to figure out how to build privacy into Bitcoin because they valued it and they knew it was important,” Wilcox said. “But they couldn’t figure it out. There was no way to keep the decentralization and also add privacy in Bitcoin in those days.”

Zcash privacy

In the ten years since the launch of Bitcoin, researchers have continued to improve the technologies underlying cryptocurrencies. One development is a cryptography system that allows both high levels of privacy and complete decentralization.

“Some other scientists came up with a breakthrough that allows you to prove the truth of information without disclosing that information and making yourself vulnerable to some third party to hold that information,” Wilcox said. “That’s called zero-knowledge proof and it could eventually turn out to be a solution to our pressing social problems of our increasing centralization.”

While zero-knowledge proof is often mischaracterized as a way to hide illicit behavior, Wilcox explained that the technology is really a fundamental security layer for general internet users.

“More and more people are more and more vulnerable to having their data exploited,” Wilcox said. “Well, potentially the zero-knowledge technique might allow us to decentralize and protect that data, while still getting all of the functionality that you want.”

What crypto can learn from the http to https migration

Barhydt and Wilcox then talked about the parallels between crypto and when the internet moved from http to the more secure https.

Twenty years ago,” Barhydt said, “I remember the first sites, they would crawl when you typed https instead of http. So you wouldn’t do it unless you were at secure checkout or looking at your bank account. But then fast forward to literally five years ago when Google makes https the default — I’m not even sure that you can use http on Google anymore, I think you have to use https, for everything — but we don’t notice the difference anymore form a performance perspective… it’s become mainstream.”

And continuing to draw out the comparison between https and crypto, Barhydt and Wilcox talk about how when https was first proposed, it was nearly banned by regulators — and at one time the encryption tech was even considered “weapons grade cryptography” by government officials. Now, after twenty years of incremental evolution, it is now used daily by everyone on the internet (including the very government agencies that tried to ban the technology in the first place).

“That’s where I think having a sense of history and looking back is important,” Wilcox said. “What would the world be like if the United States government had successfully prevented the development of a secure internet 20 years ago? Well, I suppose some other country would have developed a secure internet and Silicon Valley would be there and not here.”

The value of privacy

“We talked about internet history and how https came around, but let’s fast forward,” Barhydt said. “Everyone is screaming about Facebook and privacy, but as it relates to this new world of cryptocurrencies, why should I care about privacy? Let me put it in context. Unfortunately, our perspective here is that when you try to explain like a non-custodial key, for example, to the average user, they just don’t care until they’ve been hacked. And then they care.”

“Well one thing about privacy is that it’s too late to take it back after you’ve been hacked, similarly with having your private keys stolen,” Wilcox said. “You should care ahead of time if possible.”

As the episode draws to a close, Barhydt and Wilcox discussed some of the on-the-ground applications for a privacy-centric cryptocurrency.

Over the summer, Zcash funded research in Venezuela to try and glean some new insights about the utility of crypto in places where traditional fiat money is not working.

“I think it’s fascinating how this global, decentralized money is effectively teleporting money into this place. There’s no other way — you can’t use a bank transfer, you can’t use PayPal, there’s no other way to get money in there,” Wilcox said. “There is a lot of experimentation in getting teleportable money into the country.

One project Wilcox mentioned was AirdropVenezuela, a campaign led by Airtm, the Mexico City-based digital payment service provider. AirdropVenezuela is looking to send donations of crypto to people in Venezuela.

At the end of the conversation, Barhydt asked Wilcox “What would you like to see in our world in the next five years?”

I would like to see Zcash gain exponential takeoff for the first time. Bitcoin has seen linear growth in usage — it had exponential growth in valuation at one point — but it’s only seen linear growth in terms of usage. And I would like to see someone figure out that this thing is usable and that it makes sense to them and that it is safe and fast and it becomes more and more valuable to them and more and more valuable to their friends and neighbors and people they do business with,” Wilcox said. “And it just explodes.”

About Abra

Established in 2014, Abra is on a mission to create a simple and honest platform that enables millions of cryptocurrency holders to maximize the potential of their assets. Abra enables both individuals and businesses to safely and securely buy, trade, and borrow against cryptocurrencies – all in one place. Abra’s vision is an open, global financial system that is easily accessible to everyone.

Why Abra

Based in the United States, Abra is available in over 150 countries and makes it easy to convert between crypto and a wide variety of local fiat currencies. With over 2MM customers, $7B in transactions processed, and $1.5B in assets under management, Abra continues to grow rapidly. Abra is widely loved and trusted – in April 2022, pymnts.com reviewed and rated Abra amongst the top 5 most popular crypto wallets in the market. Abra is backed by top-tier investors such as American Express Ventures and First Round Capital.

How Abra Protects Your Funds

Abra places clients’ financial objectives and security first. Abra practices a culture of risk management across all levels and functions within the organization.

Abra employs a state-of-the-art enterprise risk management framework that comprises a comprehensive set of policies, procedures, and practices detailing all applicable risk-related objectives and constraints for the entirety of the business. Abra has instituted a complete set of requisite systems and controls that continuously enforce these policies, procedures, and practices to manage all operations, including credit and lending. Abra’s independent Risk Committee comprises experienced compliance, risk, securities, and fraud operations professionals with backgrounds in industries ranging from traditional and digital assets banking, payments, remittance, to fintech.

Please visit our FAQ to learn more.