How ZK Tech Can Fix the Internet's Original Sin | Matthew Green | Ian Miers | Elena Nadolinski |

to uh that's the crypto vertical on axios.com you got two seconds right now you should all just subscribe to it right now um thank you for coming sticking around uh to this late in the day panel uh looking forward to talking about uh zero knowledge proofs uh and the original sin of the internet which of course is the fact that the internet spies on us constantly all the time and everything that we do um just to kick it off just one thought I want to give for everyone which is relevant to the Great prior talk that we had by Matthew um and uh and this whole conversation is you know if you guys are on crypto Twitter you know that there's always that like one group on there that cries every time crypto comes up and it's like crypto doesn't mean cryptocurrency it means encryption it's just like cry harder guys serious encryption is a bigger and bigger part of cryptocurrency every day so you know what that conversation's over words can mean more than one thing um Let me let our panel introduce themselves let's just go down the row here and just give us a quick line about uh what's your doing why you're relevant to the space and then if you if you can like really quickly like what's the most sci-fi thing that you can imagine that you would like to imagine doing with like ZK technology start with you Elena cool um my name is Elena I run a project called iron fish we started way back in 2020 2019 era um I actually approached Matthew I don't know if you remember me even that the first zon in Montreal ever and I was just I don't think I said anything intelligent but very exciting times um so what iron F is is a proof of work layer one fully encrypted or fully private chain and we're the only main privacy chain that actually supports custom assets and so our goal is to build Bridges to transparent chains like ethereum uh optimism based Etc to allow users to actually move those assets over to iron fish and have private USC private wbtc private e Etc um so it's definitely work in progress but um yeah that's part of the reason why I'm here wait sci-fi give us sci-fi oh sci-fi I mean this is not a positive thing but this is like the thing that I think about a lot lot which is what would happen if our efforts were not here like you know a fast forward to you know 5 10 years let's say we all are in cbdcs we're all using crypto payments and it's all transparent uh what are the secondary effects that we're going to have in society if everything you do is out in the open um how does that change how people interact with one another or think or how they even police their own thoughts dystopian very dystopian world so that's you know that's part of the reason why I'm so motivated to work on iron fish and other privacy Tech cool so my name's uh Ian Myers I'm a professor at the University of Maryland get a little bit closer Ian my name is Ian Myers I'm a professor at the University of Maryland uh my PhD thesis was on with Matt here on a thing called zeroc cach which turned up to be the protocol in zcash tornado cash iron fish and most of the other second generation privacy coins that are coming online now um and let's see Sci-Fi uh I'm kind of curious what would happen if we had a version of the internet where you were completely anonymous but we had a way to ban you or give you reputation if you were a dick and get rid of you I'd be out um all right okay uh I'm Matt again um I think the easy answer on should I give more introduction or is it no you've we've met you okay um I don't think we need sci-fi and I don't think we need dystopia when the whole world is kind of one already um so I actually think like the weird dystopian maybe utopian thing is and I seriously believe this that this technology that people are building and including those folks in the other room is going to eat the entire existing Financial system and I know that like people in this room are the kind of people who believe that I say that to my like Professor colleagues and they laugh at me but I do think that in 10 to 15 years it is going to be the financial system but if you look at the financial system right it's going to be Bank of America it's going to be Wells Fargo it's going to be all of these companies you know but using this is a low back end and the terrifying thing for me is if they're using ethereum as it looks right now to move your money your private banking doing that on public chains is the worst possible thing I could imagine and they're not going to do that that's why this technology is so important cool um I'm going to do one more intro question if that's okay um and I want to ask each of you to tell me uh your favorite like maybe obscure pet peeve of the way the internet spies on you now and I'll start I've got one I know everybody loves Google Maps but you know that like Google Maps is just like making a record of everywhere that you've like ever gone right which is just like seems horrific to me so that's my favorite pet peeve so this is not an existing pet peeve this is again something you worry about a lot maybe it's a paranoid human I'm not sure um but I think like the Darkhorse event that we're about to embrace is like Ai and AGI and how that relates to privacy like right now it actually takes effort to like scrape your data and to like index you and figure out who you are and with AGI or AI or whatever the thing that's going to come next or like super intelligence um our privacy is basically gone and so that to me is like very very scary unlik many levels of what that means um but yeah that's what I think about a lot so it's not a current thing but it's like definitely a like we might be like two years out near term near-term you're still on sci-fi but I'll allow it all right um I'm not sure it's my favorite but uh there's this whole interesting Shadow Market of collecting data about people to build reputation and profiles and one of the interesting uses of this is Airbnb runs a whole system that will decide whether we want to actually rent you a a room or not based on probability you're going to like film something or throw a party there and if you get on that block list you have absolutely nothing you can do about it and you don't even know how or why or where they got the data from and yeah it's a interesting little yeah Edge case of the internet that's a good one my pet peeve is that it's gotten so bad and nobody I know cares everybody is just fine with it nobody realizes how much data is being sold of theirs and it's just part of life um so for the rest of this I said this the others uh uh but I'll say it to you Matthew I'm just GNA ask questions throw it to one of you and then ask another question unless one of you just jumps in which I encourage you to do so we just don't do the you know down the row thing every time so um okay so here's my first question for you you know Matthew did a good job of talking about the technology that's out there and kind of how everything is working so far um maybe Ian you know we know zcash is one but maybe you can give us one interesting use case that of something that's live right now um using zero knowledge technology uh I think the other major use case Beyond payments is we're starting to get identity protocols okay where you can like register an account and then later prove something about yourself so you can like convert a US passport into an identity on a blockchain and they go prove to a website that you're say over 18 or that you've had the account for this long or any number of things like this and we're starting is that live uh I think there were like four or five protocols that claim to have things live I have not double clicked on exactly what their definition of live is and if it's yeah cool yeah I know well I know uh kind of along those lines at um I don't know the crazy town that vitalic started uh their uh their tickets were all zero knowledge right it like proved that you were allowed in but it didn't say like it wouldn't say mine was Brady right it yeah that's a that's a cool example it's out there all right cool anyone else want to jump in on that one no all right cool um so uh Elena I'll ask you this question because you're the one who's on here representing a company that you're building yourself uh but others can jump in too um what is a an interesting near-term problem uh that your team is working on you know it feels solvable but it is a thing that is sort of holding you back right now as you as you build out what you're working on I mean I think we we always believe to solve simple problems first and make that a really great user experience and then continue to carry on because I think in ZK in particular people get too excited and they want to build out everything they want to build like their own language model and their own IDE and like just like everything right and so that is like pretty hard for for people people to kind of grasp and so for us it's like we want to solve payments like how do you send private usdc safely and very easily and in a way that actually make sense for people um and so for us like we've been made it launch since April 20th of last year right now we're working on those bridges and right now we're very close to getting to that experience of having a private usdc and and then like making that experience really solid and understanding do people even want privacy and how do they want privacy um and then kind of going from there so that is like maybe 3 months out so fairly close or I shouldn't well you know engineering road maps but finger fingers crosses are you and I'm curious are you on the bridge to ironfish are you trying to make the bridge like the fact that you went into the bridge and went over there are you trying to make that private too uh no I mean every time you're exiting a transparent system into a private system like the fact that you are depositing money into a privacy pool that will always be public okay there are some actually cool ZK Bridge ideas but they require that you kind of own both the minting capabilities of both assets and that that's kind of pretty hard um in in practice but yeah we're trying just to get to like private Bitcoin experience private UC like how do we get to payments or payroll or like just any some sort of simple experience and do that really well before we move forward and do something more complex okay cool um and so I feel like uh an ongoing story here well okay so stepping back you know Matthew talked about how folks just don't super care about this issue ly and um one of the more depressing stories I mean to me I people could disagree but that we saw in crypto this year I mean it wasn't a major privacy coin um but formerly zencash then Horizon um just you know sort of bragged as it was like this great announcement that they are taking all the Privacy features out of their coin and I guess it's just a normal coin now I don't really know like uh but you know that's what it was created to do and and it took it out I don't know if it was the greatest one in the world but whatever was there is now gone which is not an encouraging sign I guess I'll throw this to you uh Matthew like what's your what's your take on that will we see more crypto projects that sort of claimed privacy as a feature give up like that so I I've been talking to some VCS uh about this and they are terrified of privacy and they're terrified of privacy because they see their investment disappearing in a sanctions action or they see something terrible happening with people sending money to North Korea and and look that's part of this right but you know maybe maybe the answer and I don't love this answer but it's something I've been working on maybe the answer is we try to have privacy that answers those questions maybe the answer is we try to make privacy that you know the people who are very afraid of that kind of stuff are comfortable with and so there are ways to do that so we got to find a balance but it is very worrying to me that that is a thing happening today yeah get a little closer on your mic too Matthew if that's okay sure um other folks on that one I mean I think the the hard problem Ron trummer a colleague of ours had this quote of like convincing people in blockchains to Value privacy is like selling people on seat belts and cars in like 1920 right you conser of tell if cars get faster and whatever you might need them but right now it's like for everything that's on there it's not quite worth it and then now with all the risks of of sanctions and such it's like well it's really not worth it in a lot of people's eyes so convincing them to care is quite hard yeah yeah I mean I've seen projects pivot pivot away from privacy to do other things and so like the comparison that I make is that the Privacy space is like squid games like you see one project get sanctioned like two people like pivot in like the same you know several months and you're like oh my God like we literally either have projects that have a really hard time shipping and like always delay their timelines or we have projects that again pivot or get sanctioned and it's like you know we like crypto has been around for more than 10 years now and we still can't get private us DC so it's like you know it is very much like a squid game sort of situation but I think Matthew is correct like um if we build a privacy solution that is safe and that actually addresses questions of sanctions and how do we make sure that malicious actors don't use it that is the solution that is going to win and on one hand like yes like crypto is very cyber Punk and like very Anarchist and very like libertarian that's great but that is not what's actually going to work here uh and at the end of the day like we're not working you know lawn hours and like putting like all of our efforts into this to help you know hackers and the bad people of the world we're making sure that uh crypto users get kind of the the vision that they're PR promised um so yeah so I think like it is it is a very depressing time in privacy right now but um but in a in a weird way it's also very encouraging because it's like the the people that actually stay in privacy and work in privacy there's very few of them and they're very very Mission aligned um and that's really cool to see too I mean let me push back on one comment you made there a little bit because I I do hear this a lot from folks working on this stuff I mean isn't it it's kind of the Monero thesis right that like we can just push back and eventually it gets build big enough and they just won't be be able to stop us right like isn't there some argument for folks out there doing that sort of like hell raising devil mayare strategy isn't there some chance that that could work out or or do you guys really think that we should just that folks the the space should just abandon that approach Ian you do that one um I think it's yet to be seen um there are interesting discussions if you know the reason mon Aro sticks around is because it's uh tolerated or if because its privacy is actually weak enough that no body it doesn't actually cause a problem for law enforcement MH um so this this is a dynamic that plays out there certainly are people of the position we're going to build this thing and just make it big enough and not interact with um with regulators and it's like just come and take it attitude and the flip side is you have people like Matt you who have built sort of compliant systems and I'm I actually don't have an opinion on which one of those is going to work out or which one of them is the right idea I'm sort of hedging my bets I mean I think for us like we're philosophically aligned and and also we're kind of forced to think about how do you protect our privacy like how do we protect iron fish from Bad actors you know um and so like morally like I don't want to work on a project that helps the Bad actors of the world and so that that feeling kind of aligns with what we're seeing what makes regular like Regulators more comfortable of like if we talk to them about how we protect iron fish from sanctioned addresses and so on we get a much better response so let's talk about talking to Regulators you know a lot of times I think i' write about you all's technology like reasonably okay but it's not unusual that when I do it I I'll I'll say something the cryptography can do and write something like trust me it's sort of like magic I don't know it works like that's that's a line that I default to sometimes and like it's tough to imagine like you know two options for Regulators is one everything's just in plain text and they can read it whenever they want or two you go through this regulated portal and everyone who's on some chain or in some network has been verified but you got no freaking clue what's going on inside there it's all just like you know it's totally encrypted like how do you explain that to law enforcement in a way or you know to Regulators that they believe you that that's still just as good as everything being in plain text you like this is a good Matthew question oh wow um okay uh we we've kind of come to this weird accommodation where like some people believe that this kind of on-ramp off-ramp thing is good but very few people are willing to settle with it and big part of the problem is we're we're starting in a different place we're starting in this place where Financial surveillance is the kind of expected law of the land right and we're we're trying to ask them to give all that up and it's very very hard to imagine them giving that up even for something that's partial and so you know part of the answer is either make it inevitable which is kind of what signal did right signal and its ilk and WhatsApp just made it so easy to use that one day everyone was using it and liked it and nobody complained the other option is give them something that gives them the capabilities they want and lets them you know do more than onramps and off-ramps and it's both things have to be tried at the same time and I I think that'll happen it just takes time soena how how do you explain to Regulators that you really can trust that your regulated approach even though a lot of stuff is dark uh is trustworthy for the law enforcement folks of the world yeah so the the way we approach it is there's like three ways for or three places where you can potentially monitor transactions uh on the inass like when transactions are going from a transparent chain over to a privacy pool you can can monitor transactions within the Privacy pool although that is extremely hard uh and kind of Impractical or you can monitor transactions going out of the Privacy pool back into a transparent chain and so when transactions are going from a transparent chain to a privacy pool like let's say ethereum into iron fish that is when you have the most information about who is trying to interact with iron fish and so for us like we're right now we're working with a bridge operator that is very comfortable saying that we are going to freeze funds if they're going from a sanction address or if they're going from an address that is responsible for a defi hack or or is it somehow associated with that um and they have you know real-time threat detection model and they operate like a you know like a non- crypto you know regular company in terms of like how they like how they screen transactions and so on and so that's part of part of the reason why we worked with that company in particular um is to make sure that you know no screen no sanction address and no bad actor is actually going to get on iron fish and I think when we explain it in very clear terms of like look we are working with a partner who's doing the same exact level of screening that a non-crypto company would do when they screening malicious actors using their product um you know and that is the only entry we go to iron fish right now and within iron fish because we don't have Smart contracts uh we only kind of have um you know multi-asset control um they're not there's not much of the damage that they can do because then they would have to exit out out of iron effici to a transparent chain again um and so I think right now that is resonating um so that's how we explain it I think the the biggest thing you have to do is you have to explain that there are a bunch of tools that you have even if you can can't see the entire transaction graph and run chainalysis on your blockchain right because the the interesting thing about all these defi hacks is when the money gets stolen right the guys who had it usually notice and so it's enough to slow down the money no they don't they don't notice well they notice eventually somebody flags that that's the entire thesis um it's not quick that's the problem like and this is the whole de debate if you look at things like the anity sets Association sets Protocols of like just how much time do we have to say you have to wait s days before Bridge the money over into a privacy pool or is it 7 hours or is it 7 minutes and the entire question is how long does it take for somebody to notice that this def protocol got hacked and the money moved in can I just add like a coding to that which is it would be amazing if di stopped getting hacked like I know that sounds a little factious but like if def kind of cleaned up its act and had better monitoring of like something bad happened 95% of these problems that are being attributed to the Privacy protocols wouldn't exist I do I think defi is I mean there's tons of giant hacks that happen but like it's kind of true that defi protocols that exist for a certain amount of time like if you're a 2-year-old protocol probably you're not getting hacked anymore it's like it's the it keeps me the new stuff right like anyway it's probably not really on on topic right now um so uh oh and maybe this is for Ian and maybe you guys don't know about this but is how do you all feel I think it's zcash and correct me if I'm wrong about this but I I think zc didn't zcash implement thing where certain people like law enforcement kind of can peer into the transactions but most people can't what what's the window thing that they made no there there's a there's a view key that you have so you can see your transactions if you wanted to hand that to somebody they could see the things you made I'm screwing that up so bad okay not a law enforcement window well actually was a pretty cool experiment by espresso systems they're one of the projects that pivoted away from privacy but one of the projects that they uh worked on was called Cape okay and essentially um it allowed a person to make their own privacy asset so for instance Circle could make their own private usdc and then whoever made that asset in this example Circle would have a global vew key for that asset okay and so they would be responsible for monitoring all the transactions and if something bad happened they could hand over that Global vuki over to you know FBI or law enforcement and so on um now the project is it exists and is open source but you know they did PVE it away from it um and part of the reason is it's it's really risky to hold that GL that Global fuy so nobody nobody really wants that responsibility um and then actually there's a lot of other complications of like okay if you are um in control of whether or not transactions happen or don't happen on your protocol does that make you an MSB like a money transmitter business and the answer is maybe and if that's and if the answer is yes then all of a sudden you have a lot more other regulatory requirements and so no one really wants to touch that I'm sorry to any zcash fans out there for screwing up that feature incorrec me somewhere Zuko got very tense and didn't know why um but uh yeah so sorry about that um but that was cool thanks for clarifying that that was a great addendum Elena um I do actually want to point out that the idea of we will have a key that can decrypt everything and it will only be held by some trusted party who's the good guys is a terrible idea no yeah because that key will get stolen what was that thing what was that thing they built into phones that that's like the F like there was the Clipper chip maybe what you're talking about which was a number of years ago and even more relevantly I guess I'll let you explain this with with juniper uh that yeah no that that's all a little off topic I was just going to say I've talked to a lot of regulators and the minute you go beyond privacy and you say okay who do you want to appoint to give that key to they panic because it turns out that legally they have obligations to make sure that people's privacy like that's the second part the bank secrecy Act is called the bank secrecy act it's the law in the US that gives them access to all this data but secrecy is a big part of it and the minute you anoint someone then you have this terrifying question about how do you keep that information secure and they do care about that a lot so a thing I'd like to hear you all talk about because um you know a lot of this stuff does feel a lot like magic and only a small number of people in the world like really understand it how can a user feel confident that you know a good privacy protocol out there a good privacy service really is honoring the claims it makes like just because nobody else can see anything how can you really know that like there isn't someone who has a secret path in there how how can how can that how can you be confident about that I mean I think time right like none of the Privacy protocols have been hacked per se um and when privacy protocols do fail it's not the super duper like heavy cryptography it's maybe like the obsc around it um so I mean I think like we've had years now of privacy protocols delivering what they promised um and so I think it's just time but I mean also like trust and math I don't know okay oh that the Privacy protocols that were vetted and people looked at and people said were good though I've also been in a number of sort of ones that had much worse guarantees and got broken but the ones that were like best of breed the people said yes there is nothing here we did these security audits reputable people talked about them yeah they've delivered on what they've said yeah and just to add on to that like zcash did have quote unquote leaks but it wasn't in the Privacy protocol itself it was like the wallet for like accidentally was pining something that it shouldn't have Etc so again it's like it's not the heavyduty technology that was failing it was like the quote unquote easy stuff around it that maybe Engineers weren't paying as much attention to that that quote unquote failed let me ask a crazy dumb question uh so you build uh you know a private blockchain right and you you publish the code that runs the blockchain and everyone looks at the code and they're like yes this is good and trustworthy um but that's like on GitHub and they look at it there how do I know as a user that that's actually what's running you you know yeah how you download it you compile it yourself no no no no seriously we we well someone can someone can do that a third part some third party can do that they should yeah yeah I mean every person doesn't need to do it but if like you Matthew green go yes I downloaded and compiled it myself this isn't garbage then yes and and there's a whole system called reproducible builds that basically does that let you not only download it compile it yourself but you get exactly the same binary that you would have gotten from the App Store and so you can check on behalf of the other 10 million users or whatever and that that gives people Assurance oh great that's a great answer that makes me feel better about the world yeah but the the follow-up question which none of us know the answer to Is how many projects actually do that and it certainly is not all of them I don't know how many yeah but it's good it's good to know that there is a way and and and and a thing that even people don't understand normal people can demand that from projects they can say like you know please do this and um yeah so looking forward um what are let's let's have everyone do this let's start at Matthew this time what's every one um excited about in the near term for this for this technology in deploying in the world okay so I I think two things are going to happen one is that we're starting to see people doing private Defi and uh private smart contracts those systems are coming online in the next year or two and like some of them are really really nice like you can use them they have great wallets they're like a whole different level of usability from past systems so I think that's huge and and just the thing I want to add to that other than these new systems coming online is that we're all in these like super early days right everybody here even 14 years after um Nakamoto right we're all in the super early days so it may seem clumsy you may not want to use some of this Tech but it is getting better really quickly and it's going to be a lot better in the next few years yep uh so I'm excited that it seems like we're finally starting to see this like demand for privacy we used to use this fictitious example of suppos you wanted to settle payroll on a blockchain and when it was just Bitcoin that was more than a little ridiculous but now there are actually companies trying to do this on ethereum and running into the literal like you paid person a you paid person B they found out they get paid more than the other one um so we're starting to get demand and then on the same side we're finally getting these more flexible ZK privacy protocols that have like programmability in them where you can actually do custom assets or custom authorization logic or identity in kyc in a way that might meet real world requirements in a way that things like zcash and tornado cach were a little too awkward and clunky to do yeah I think for privacy protocols in particular you do get a hit on user experience and that's probably what Matthew was alluding to like right now if you wanted to just figure out your balance you have to index a lot so like you couldn't have like a metamask INF your experience without losing some of your privacy for instance um but there are a number of teams that are trying to solve this problem right now um and once we make that experience better then all of a sudden we can do better defi or privacy plus defi uh applications uh what I'm personally excited about you know like we sponsored a hackathon like azik hackathon on and people did pretty incredible things that they didn't actually expect like someone did you know um Iron fish transactions using a chatbot but have spend limits using Noir I was like whoa that's amazing that kind of shows how interoperable all these things are and how we can like kind of tie them in together um and then another person did private donations to campaigns which uh I think in light of like Ukraine donations and people actually getting arested for it and Russia is pretty relevant um and so we're kind of seeing uh innovation of people using privacy in a very applicable way um and that to me is very exciting the the other thing that's really exciting to me is um defi inherently is very transparent and there's a lot of things that actually like like like nfts like people want to show off their nfts and so transparency is actually a feature ad not a you know uh not a bug so to speak um and so there's a lot of kind of projects that are doing intermix of private State and public State as how it relates to defi um that's pretty exciting for me as well so another side of cryptography that I think is really cool that I don't think it's talked about as much but is the whole um signing things the attestation thing like you know it's like you can say this came from there or this person did it or or or whatever and in the age of AI uh we're going to have a lot more crap flowing out onto the internet um are we going to be able to get like ZK protocols to be fast enough that they could handle signing lots of legitimate stuff and that could get out there and it could verify things quickly enough so you could kind of have an internet where you could know what's trustworthy and what's not Matthew what's your yeah I think we're going to start to see that Tech and I think the ability to do that cryptographically is a big piece of it and uh I hate to say I hate to say it I hate to say it but worldcoin GH I hate it everything about it but wow they at least have figured out some of that stuff and they're using privacy Tech everything else about it is really scary and so I'm not in favor the problem with worldcoin is the Optics bump um yeah uh wait I want to hear we got like one minute left any other thoughts on like Ai and cryptography from the from the crew no Ian come on I mean uh I guess I'll say that I think you're you're fairly far out from the days of the zkl we're going to do a proof of chat GPT and so that would take a while on the other hand um might have more simple things you might have uh ZK proofs about the origin of a photo something that's been active B of research it turns that we now have signed images from certain sets of professional cameras and their active projects looking at how to do like I know this photo is legitimate and not a deep fake MH that's interesting but there is a dark side to that which is that the ability to do things that people don't want you to do like use your phone the way you want it to do ZK may be used to prevent that so we may get even more locked down wait what do you mean I don't mean right now we already have our phones locked down by Apple in terms of what we can do with them but they're you know not everywhere but like ZK may start enforcing more limits on what we can do on our phone inside of the programs I see this big thing saying wrap up yeah yeah totally I tell us get out of here well thanks to time for everyone hopefully some aspects of this made you feel a little bit better about the present dystopia that we live in and uh like I said sign up for XS crypto thanks everyone bye all right thank [Applause] you