Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. So, Tracy, Bitcoin
Speaker 1: has been surging again lately. Yeah, I think as we
Speaker 1: record this, it's currently above eight thousand, right. Yeah, it's
Speaker 1: been fluctuating a little bit, but obviously one of the
Speaker 1: things that happens that every time Bitcoin or other cryptocurrencies
Speaker 1: start to spike, interests follows soon thereafter. It's one of
Speaker 1: these things where when it's down suddenly people go quiet
Speaker 1: and stop talking about it and pretend they were never involved,
Speaker 1: and then when it's surging, everyone's like, oh, yeah, I'm
Speaker 1: I'm interested in that stuff at a very much a
Speaker 1: great example of narrative following price. Yes, indeed, I actually
Speaker 1: joked on Twitter earlier today that now we're going to
Speaker 1: see all the people that scrubbed blockchain from their Twitter
Speaker 1: bios and LinkedIn profiles, they're all going to start adding
Speaker 1: it back in. But I think when it comes to
Speaker 1: the bitcoin price, you know, I know a lot of
Speaker 1: people watch it sort of purely out of entertainment value.
Speaker 1: But we've talked before on the show about the importance
Speaker 1: of the network effect and the idea that if you're
Speaker 1: actually going to get people using bitcoin, you need to
Speaker 1: generate a buzz, right, absolutely, so obviously the buzz is
Speaker 1: picking up. Bitcoin itself has been around, uh for about
Speaker 1: a decade now, basically exactly ten years more or less.
Speaker 1: But what I think a lot of people don't know
Speaker 1: or they've never really thought about, is for for so long,
Speaker 1: many years prior to bitcoin, decades really, people had been
Speaker 1: trying to work on the problem of digital money and
Speaker 1: somewhere or other, whether it's anonymous payments online or payments
Speaker 1: that didn't have some sort of centralized clearinghouse to facilitate them.
Speaker 1: Bitcoin isn't just a new thing. It's kind of the uh,
Speaker 1: the solution to a problem that people had been focused
Speaker 1: on for a while. Right. So, I think the notion
Speaker 1: or the exploration of digital currencies kind of started growing
Speaker 1: in tandem with the Internet, right, and it was sort
Speaker 1: of a solution to a problem that the Internet and um,
Speaker 1: new technology suddenly threw up. Didn't you read a book
Speaker 1: on this, by the way, weren't you really excited about something? Yeah,
Speaker 1: there's a great book coming out this summer by Finn
Speaker 1: Brunton all about this, But yeah, exactly right. I mean, obviously,
Speaker 1: in the real world and the physical world, I can
Speaker 1: pay you in cash and no third party no uh,
Speaker 1: you know, legal authority has to know about it. But
Speaker 1: very early on people sort of intuitive that as our
Speaker 1: economy became more digital, that that would be a problem
Speaker 1: that would need to be solved. So today I'm very
Speaker 1: excited because we are going to be talking to a
Speaker 1: guest who was at the forefront of this search for
Speaker 1: a solution to this album. Truly, I think everyone in
Speaker 1: the space would agree. One of the godfathers of digital currency,
Speaker 1: a true pioneer, an inventor of digital currency long before
Speaker 1: bitcoin ever came around, who could tell us all about
Speaker 1: this prehistory of cryptocurrency and where he sees the space now.
Speaker 1: So that further Ado, I want to bring in David Chaum.
Speaker 1: He is the CEO and founder of Elixir, but very
Speaker 1: early on for decades. Like I said, one of the
Speaker 1: godfathers of the space. Really appreciate you joining us. It's
Speaker 1: so great to be here with you both. Let's start. David,
Speaker 1: just tell us how did you when did you get
Speaker 1: interested for the first time in solving this problem and
Speaker 1: seeing that as the world got more digital there would
Speaker 1: need to be away for transactions to be at least
Speaker 1: in some sense anonymous. Well, actually eighty two I published
Speaker 1: a paper about blind signatures, which was the e cash
Speaker 1: technology that I later deployed in in the mid nineties.
Speaker 1: So e cash it was not a cryptocurrency as we
Speaker 1: know it. Now, why don't you explain what was the cash? Well, actually,
Speaker 1: the cash is slightly different and in some sense slightly
Speaker 1: better than perhaps cryptocurrencies, in that current cryptocurrencies are generally
Speaker 1: think of the more like digital checks. They move money
Speaker 1: from one wallet I d one account, your account to
Speaker 1: someone else's accounts, whereas with e cash, it was a
Speaker 1: the first digital bearer instrument. It was a number that
Speaker 1: was worth money. And one of the additional features of
Speaker 1: the cash was because it was a digital bearer instrument,
Speaker 1: in the first such thing, it could have this special
Speaker 1: blind signature property, which meant that when you withdrew one
Speaker 1: of the is from your bank account, and you know
Speaker 1: your bank account was reduced in value, and they gave
Speaker 1: you this signature publicly digital signature, the cryptographic operation they
Speaker 1: performed on a number that you sent them, that that
Speaker 1: signature was worth let's say one dollar, that came out
Speaker 1: of your account. Well, you were able to transform that
Speaker 1: signature into a different and unrelated form that was still
Speaker 1: clearly signed worth one dollar, but absolutely uncorrelatable to the
Speaker 1: number that you sent to your bank, So that meant
Speaker 1: that you had the money. There was no way that
Speaker 1: they could stop you from spending it or even noo
Speaker 1: where you would spend it or if you had spent it.
Speaker 1: So this is an actual improvement over these check based
Speaker 1: systems where much can be traced. So I have two
Speaker 1: questions based on that. But one was e cash dependent
Speaker 1: on the banking system? Could it own work if you
Speaker 1: had a bank accountant? It was sort of deriving the
Speaker 1: number from that transaction, And be what was the problem exactly?
Speaker 1: We alluded to this in the intro, But what was
Speaker 1: the problem that you were trying to solve with this invention. Well,
Speaker 1: to answer the part A, we issued what we're called
Speaker 1: cyber bucks. This is what today is called an air
Speaker 1: drop in effect. So what I said was we're only
Speaker 1: going to issue a million of these, and anyone who
Speaker 1: wants to put up a digital shop, we will give
Speaker 1: them a hundred. And there were like over a hundred
Speaker 1: shops set up and if you go to my website,
Speaker 1: you can still see their logos and click on them
Speaker 1: and see kind of what their homepages looked like. In
Speaker 1: many cases in those days, this was way before really
Speaker 1: the web or an electronic commerce was very early days.
Speaker 1: So I invented de cash more truth be told to
Speaker 1: demonstrate that it was possible to do all the things
Speaker 1: that you need to do in the digital world as
Speaker 1: a consumer while still maintaining your privacy yourself. Is it
Speaker 1: like a today called digital sovereignty, keeping your own keys
Speaker 1: so that you didn't have to rely on others to
Speaker 1: safe you know, do not look at your personal data
Speaker 1: or stored safely. Just before we move off the specifically,
Speaker 1: I want to make sure people understand exactly how the
Speaker 1: mechanism works. So the idea was, I mean, we don't
Speaker 1: have to get too technical, but the idea was essentially,
Speaker 1: if this had spread and if this had become well adopted,
Speaker 1: the idea was one could take money out of their
Speaker 1: bank and have it would be on a card, or
Speaker 1: they'd have some sort of card that would represent this.
Speaker 1: This was a purely digital process, so your computer would
Speaker 1: create a random number at itself, which no one else
Speaker 1: could predict. Or imagine right, and then it would we
Speaker 1: say blinded. It would hide it in a second in
Speaker 1: a key, and then it would send that hidden random number,
Speaker 1: which is like this would be the serial number of
Speaker 1: your digital one dollar bank note. Later it would hide
Speaker 1: the digital serial number by encrypting it with another random key,
Speaker 1: send that hidden serial number in the bank would use
Speaker 1: the secret key that only it has, which it gives
Speaker 1: it the exclusive ability to validate these digital bank notes.
Speaker 1: It would then return that signed hidden number to you.
Speaker 1: And then because of the magic of commutativity, and like
Speaker 1: you know, three times four is equal to four times three,
Speaker 1: you could divide out the hiding layer and now you
Speaker 1: would have the signature, the actual bank's validating signature on
Speaker 1: your seal number, without any residue from the hiding And
Speaker 1: then the recipient of this money, so you get the
Speaker 1: money out of your bank. The recipient then has something
Speaker 1: that they can deposit in their bank account. Absolutely. And
Speaker 1: but then there was the old little double spending problems,
Speaker 1: So there's the bank would that have to send it
Speaker 1: into the bank to make sure that you hadn't spent
Speaker 1: it elsewhere. But there was a more sophisticated version that
Speaker 1: we developed that was enjoyed work with money or and
Speaker 1: names fiat that if you did double spend it, you
Speaker 1: would in effect be digitally signing a confession to this effect,
Speaker 1: whereas if you spend each one only once, you would
Speaker 1: never reveal enough information to allow your identity to be linked.
Speaker 1: And that's because when you spent those those special types
Speaker 1: of coins, you would have to answer a random query.
Speaker 1: And if you'd answer two questions, it's kind of like
Speaker 1: when the police interrogate you. You know, if you answer
Speaker 1: two questions, they don't fit together and then they realize, oh,
Speaker 1: it's you. So I'm guessing you know we're talking about um,
Speaker 1: I guess the early nineties. When when you did this?
Speaker 1: The early eighties, right, Well, I wrote a technical paper
Speaker 1: on e cash in two, which was the same year
Speaker 1: that I or canize the International Association for Cryptologic Research
Speaker 1: and held the first really scientifically sponsored conference on cryptography
Speaker 1: to counter the National Security agency directors threatening to scientific
Speaker 1: organizations draconian legal measures if they were to even have
Speaker 1: sessions little own conferences on cryptography, so I organized a
Speaker 1: conference without using any electronic communication that created in effect
Speaker 1: in international scientific association. And then when the people all
Speaker 1: appeared there. I said, okay, now you're all members by
Speaker 1: virtue of having paid your registration fee, and we'll have
Speaker 1: our next events in Italy in the spring. And here's
Speaker 1: the you know. And so I did all that without
Speaker 1: ever using the phone. So the guys in the front
Speaker 1: row were all from the n s A. And they
Speaker 1: all turned green. So you're developing this in the eighties,
Speaker 1: and then in the nineties, I guess, well, the idea
Speaker 1: was published in the eighties, and then in the nineties
Speaker 1: the Dutch government because I was based in Amsterdam at
Speaker 1: the Center for Mathematic Computer Science and whole leading group
Speaker 1: of crhotography of search there, and the Dutch government came
Speaker 1: to us said we want to do a road toll
Speaker 1: pricing like sort of like I think it's often called
Speaker 1: easy paths these days on the highway speed on without
Speaker 1: lane constraints, and uh, we don't want the drivers to
Speaker 1: have to reveal their identity or they're there, who they
Speaker 1: are to these to these radio frequency transceivers that they
Speaker 1: passed under. And can you do this? And I said yes,
Speaker 1: I've just happen to have the answerd blind signatures this decash.
Speaker 1: So they said, great proof to us that it can work.
Speaker 1: I recruited like a dozen college students, said you guys,
Speaker 1: build this in ten days. I'll send you and your
Speaker 1: girlfriends to Disney World for for two weeks. And they
Speaker 1: turned their like student housing into a lab or twenty
Speaker 1: four hours a day and they did it. We started
Speaker 1: Dutch government and they were like, wow, that's cool. One
Speaker 1: in one yard of road travel at two a like
Speaker 1: at a hundred kilometers an hour could make this privacy
Speaker 1: protected payment. And so I just took the contract they
Speaker 1: gave us to the bank and said, hey, we got
Speaker 1: this contract from the government to make this and they said, oh, great,
Speaker 1: you can borrow against that, no problem. And that was
Speaker 1: digit cash. So what I was going to ask is,
Speaker 1: you know it's now and clearly we're not using digit cash.
Speaker 1: We're arguably not even really using a lot of other
Speaker 1: cryptocurrencies for for payments. So so what happened, like what
Speaker 1: went wrong? Why wasn't there more adoption? The real question
Speaker 1: that I was fighting for it at that point was
Speaker 1: the web over the like what I used to call
Speaker 1: the five channel guys that the set top boxes. I
Speaker 1: don't know if you recall, but it wasn't a done deal.
Speaker 1: That we'd all be using the Internet and the web right.
Speaker 1: It was more like you have this closed box and
Speaker 1: it would deliver video but also like the web interface,
Speaker 1: but it would be a closed system and that would
Speaker 1: you know you have an account with it, and that
Speaker 1: there would be no real need for payments. And it
Speaker 1: all seemed quite plausible and there were a lot of
Speaker 1: big actors supporting that, and it was kind of a
Speaker 1: uh an insurgency that was pushing for an open web.
Speaker 1: And I think that the Scientific American article that I
Speaker 1: published in the mid eighties would show that you could
Speaker 1: do all these interactions online protecting your own privacy and
Speaker 1: your own information, using your own keys, was instrumental in
Speaker 1: getting people to realize that the web was could work
Speaker 1: for everything that would be needed in future, and was
Speaker 1: a much better option than this kind of closed set
Speaker 1: up box option. Do you think the the closed set
Speaker 1: top box people are kind of winning again, because I
Speaker 1: think that's a big people look at the web and
Speaker 1: it doesn't feel as open, and it feels dominated by
Speaker 1: a handful of companies, and people don't use much uh
Speaker 1: technologies that could obfuscate their privacy. Is this is this
Speaker 1: is part of the reason that we see this revival
Speaker 1: of interest in cryptocurrencies in blockchain as a response to
Speaker 1: the fact that the open web is losing. Well, that's
Speaker 1: a that's a really interesting way to look at it,
Speaker 1: and I think the open web has one because my
Speaker 1: definition of winning is deployment wins. So we have now
Speaker 1: used this approach to get a very powerful and very
Speaker 1: easy to use computer in the hands of everyone half
Speaker 1: the people on the planet, and that that's a huge win.
Speaker 1: And what that has done to answer come back to
Speaker 1: your your point is the transparency and the east access
Speaker 1: to information like what your show provides it. It is
Speaker 1: revealing that the web isn't kind of what it could
Speaker 1: be and what end that all these strange things are
Speaker 1: happening behind the scenes, and people are have become very
Speaker 1: upset about it. I thought's the sense of the public
Speaker 1: that I get. They really are starting to recognize that
Speaker 1: it's not just you know, strong end end encryption. It's
Speaker 1: needed is the protection of the metadata, the whole social graph,
Speaker 1: who you talk to and when, where you are, how
Speaker 1: you interact with things, all that inciliary information which you
Speaker 1: know they've been distracted from being concerned about now is
Speaker 1: something the public is aware of and so I think
Speaker 1: we're it's it's all tied up to the just the
Speaker 1: perfect point where the Maslowian level is about to do
Speaker 1: a phase change. So now we have smartphones that are
Speaker 1: so handy and cheap and work great and can do everything,
Speaker 1: and now people are saying, Okay, it works. Now what
Speaker 1: I what I really need is privacy. Something that's striking
Speaker 1: to me listening to this is you two, Like very
Speaker 1: few people were thinking about any of these problems, even
Speaker 1: just this idea that there would be something called an Internet,
Speaker 1: or that there were different versions of how it could
Speaker 1: have gone, the more closed version, and anticipating that privacy,
Speaker 1: which is incredibly salient topic in twenty and nineteen, would
Speaker 1: ever be have to be a thing that we have
Speaker 1: to worry about. Setting aside digital money for a second,
Speaker 1: just tell us about, like, how this became something that
Speaker 1: you anticipated in the group of people who were thinking
Speaker 1: about this. How did it tell us about that scene
Speaker 1: and anticipating all this stuff. I'm not sure there was
Speaker 1: much of a scene. It was me and I wrote
Speaker 1: about this very extensively, at so much so that my
Speaker 1: work was invited to the best journals and republished in
Speaker 1: a bunch of languages, and then I laid out two scenarios.
Speaker 1: Basically is what's played out right, that that privacy technology
Speaker 1: could protect people, allow them digital sovereignty, if you will,
Speaker 1: in tony sterm alogy, or it could go the other way,
Speaker 1: and that is that all this information could be used
Speaker 1: to control society under the pretense of, you know, preventing
Speaker 1: criminal use of of systems, and that this would lead
Speaker 1: to a kind of battle between these two approaches. The
Speaker 1: winner would determine whether we'd have like a free, democratic
Speaker 1: society or we'd have a kind of totalitarian society that's
Speaker 1: orchestrated by let's say, AI helping evil actors control everything.
Speaker 1: And I think that that choice is now, finally, after
Speaker 1: all these years, become quite a parent to people. And
Speaker 1: also it's much more imminent than people realize because all
Speaker 1: the AI and and and and message data and all
Speaker 1: that stuff is going way ahead behind the scenes. And
Speaker 1: I think people are starting to get a sense of that,
Speaker 1: and they're saying, hey, wait a minute, this is this
Speaker 1: is a pretty dangerous situation. Democracy is a key aspect
Speaker 1: of all this too, And not to be left out
Speaker 1: and done a lot of work, I'm voting and I
Speaker 1: think that all this digital privacy is a critical and
Speaker 1: necessary ingredient for democracy. And and that's kind of to me,
Speaker 1: that's kind of the meta issue that the public gets
Speaker 1: to decide what kind of world they want, and the
Speaker 1: only real way to do that is if they have, uh,
Speaker 1: the ability to see whatever they want, to communicate with
Speaker 1: people and to pay for be paid for information or
Speaker 1: supplying if its subscribed to your your show, whatever, if
Speaker 1: they had to pay for it without anyone being able
Speaker 1: to notice that or stop them. So, David, I have, um,
Speaker 1: what might be a stupid question, but when it when
Speaker 1: it comes to that metadata issue, when it comes to
Speaker 1: the problems of sovereignty, it seems like we expend collectively
Speaker 1: so much energy, or at least the cryptographic community expends
Speaker 1: so much energy trying to solve this problem, you know,
Speaker 1: creating anonymous payments and similar things. Would it not just
Speaker 1: be easier for the government or the regulators to limit, um,
Speaker 1: the use corporation's use of information of metadata or is
Speaker 1: the issue that you don't trust the government at all
Speaker 1: to do that in a fair and um unbiased way.
Speaker 1: I came back, so to speak, into this space truth
Speaker 1: be told. When the snow and revelations were made public,
Speaker 1: and I went to my cryptography conference that I had founded,
Speaker 1: so that we have one every year, and there's two
Speaker 1: others that were sponsored by organization publics and journalist one.
Speaker 1: It was a big deal. Now we have like a
Speaker 1: half a dozen workshops around the world and there so
Speaker 1: the seven hundred league cryptographers in the world are there,
Speaker 1: and I know a lot of them, all the ones anyways,
Speaker 1: and just but I realized we didn't even establish that's
Speaker 1: your background, right, Yes, I'm generally thought of as like
Speaker 1: I published a bunch of articles on cryptography and for
Speaker 1: a long time, more than anyone else in the world,
Speaker 1: even five years after I stopped publishing. That's what the
Speaker 1: publisher told me. I don't really know, but I'm not
Speaker 1: academic really anymore. But I was at at this conference
Speaker 1: and no one seemed very concerned about the Stone revelations.
Speaker 1: But to me, it was really shocking because I never
Speaker 1: really believed or was certain that the government was spying
Speaker 1: on everything. I remained open to that. Yeah, would I
Speaker 1: like to believe there was a benevolent information security aspect
Speaker 1: to government spots. When it was revealed that they were
Speaker 1: really doing the worst possible things we could imagine, and
Speaker 1: and the people in the field were hardly shocked by
Speaker 1: it because they make a living kind of you know,
Speaker 1: being a part of the what do you call it,
Speaker 1: like the crypto industrial complex, you know, education that I
Speaker 1: just had to find a way to speed up all
Speaker 1: my old work, which I did, so I've made a
Speaker 1: thousand times faster we don't want have done in thirty
Speaker 1: five years. The mixing, and that was the missing ingredient
Speaker 1: in the e cap so that to hide where you're
Speaker 1: sending the money from. Let's talk about the sort of
Speaker 1: closer prehistory to bitcoin. So we as we established Bitcoin
Speaker 1: came out in two thousand nine, I think, or into
Speaker 1: two thousand eight, people had been working very towards this
Speaker 1: goal for a while. The cash was one of them.
Speaker 1: There was a famous mailing list called the cipher Punk
Speaker 1: mailing list. You I believe you participated in that mailing list, right.
Speaker 1: The cipher punks all maintained that that my work inspired,
Speaker 1: so your name is is mentioned all over those archives.
Speaker 1: It was the technology that I developed which enabled their position.
Speaker 1: So at that point, how much were you talking to
Speaker 1: the people working on this problem, thinking about the solutions
Speaker 1: that you would come up with talk about the opportunity
Speaker 1: is like, how much were you sort of uh in
Speaker 1: communication with the people who ultimately we're getting closer to
Speaker 1: solving bitcoin. Basically, I filed my dissertation at Berkeley into
Speaker 1: the library and two without releasing the copyright to dissertation abstracts.
Speaker 1: So the three copies in the library and the archive
Speaker 1: there were the only copies that were let's say, publicly
Speaker 1: available in principle. Now it turns out that there were
Speaker 1: some times that they were checked out, and it's very
Speaker 1: interesting to go look at those little slips of paper
Speaker 1: and see the dates and so on. But that dissertation
Speaker 1: laid out in code how to build a blockchain, and
Speaker 1: and recently there's a referee article that appeared in the
Speaker 1: Tripoli Security and Privacy is a pretty good journal, established
Speaker 1: that that dissertation included all the aspects of modern blockchain's
Speaker 1: permission I'm in un permission sort of corporate in the
Speaker 1: open ones except for the proof of work, which was
Speaker 1: presented like ten years later at the cryptocomis that I mentioned,
Speaker 1: and I was there in the audience thinking that's where
Speaker 1: they want to use this to protect against spam. Maybe
Speaker 1: you could use it for other things, but I'm not
Speaker 1: going to think about it because they both were working
Speaker 1: at IBM and it's probably bad that completely and they
Speaker 1: already thought about it, so I didn't think, oh, maybe
Speaker 1: we could use this to solve, uh, you, improve electronic money.
Speaker 1: So in October two thousand eight, the you know, the
Speaker 1: famous Bitcoin Satoshi Knockamoto white paper comes out. What did
Speaker 1: you think when you write it or when did it
Speaker 1: first come to your attention and what was your reaction?
Speaker 1: Did you go like, oh, this sounds a lot like
Speaker 1: my dissertation. Well, it's kind of a blend of of
Speaker 1: my dissertation and the kinds of electronic money systems that
Speaker 1: we worked on back in the day. But honestly, what
Speaker 1: I thought it was, Gee, this is a potentially very
Speaker 1: powerful mechanism. Could possibly be used by government for various purposes.
Speaker 1: It might have bad implications for voting that's not done
Speaker 1: in a polling place in terms of vote buying. It
Speaker 1: might be able to be used to pay people to
Speaker 1: do things that are an athetical to democracy, or maybe
Speaker 1: that are supportive of democracy in emerging countries. It's like
Speaker 1: it's a very powerful extra uh state kind of mechanism,
Speaker 1: and that was to me the dramatic thing about it.
Speaker 1: You know, it's one thing to say that two cryptographers
Speaker 1: can do send messages back and forth all day long,
Speaker 1: but government can just like turn off their phones or
Speaker 1: you know, see that they're doing that. You can't be anonymous.
Speaker 1: You're not really protected unless you're in a large group.
Speaker 1: And what what Bitcoin did was it said, Hey, we're
Speaker 1: going to have so many people participating in this from
Speaker 1: so many different jurisdictions, that this is going to be
Speaker 1: outside of the control of government. And I think to me,
Speaker 1: that's the key thing, that's the real distinguishing factor. The
Speaker 1: the technologies arguably a bit crude and primitive, but it
Speaker 1: apparently gets a job done. And you're definitely not Setoshi, right,
Speaker 1: I don't into that. Okay, he tried, Joe. The state
Speaker 1: of things now, obviously Bitcoin is massively bigger than almost
Speaker 1: anyone could have guessed. We have thousands of other different coins,
Speaker 1: blockchain projects, spinoff ideas. What are you working on and
Speaker 1: what do you see as the opportunities today? Well, there's
Speaker 1: a tremendous amount going on in the blockchain space. Sort
Speaker 1: of a lot of it's kind of a little bit
Speaker 1: behind the scenes, and this is amazing how many big
Speaker 1: actors are kind of working on blockchain projects. So it's
Speaker 1: it's it's extraordinarily exciting. And there are sort of scenarios
Speaker 1: where these kind of mechanisms really helped maintain our kinds
Speaker 1: of civilization if the government really starts to weaken more.
Speaker 1: And I think a lot of people are worried about
Speaker 1: that to some extent because of the transparency of the web.
Speaker 1: But the real killer app, so we also used to
Speaker 1: call it that in the modern world, is clearly messaging
Speaker 1: integrated with payments, with popular applications in the same name space.
Speaker 1: This is what we chat has in China, and it's
Speaker 1: essentially what Facebook is turning into if you believe what
Speaker 1: they say that all the new users are basically just
Speaker 1: chat users, and so it's we chat with blockchain inside.
Speaker 1: So that means we don't keep the metadata. In fact,
Speaker 1: we have a way to destroy it using a mixing
Speaker 1: technology which I also published in the eighties, uh and
Speaker 1: found this way to speed up after the revelations. So
Speaker 1: it's a payment system based once again on digital bear
Speaker 1: instruments denominated digital coins, and a solution to the who's
Speaker 1: talking to whom the mixing the uh metadata problem integrated,
Speaker 1: and we have a way to allow the depths to
Speaker 1: run securely off chain so that it doesn't depend on
Speaker 1: the chain like the current major chain. So it's I
Speaker 1: think the killer app that will displace current dominant you know,
Speaker 1: just like so many times we've seen it seems like
Speaker 1: the major social network systems are undisplaceable and the next
Speaker 1: thing you know, everyone's moving over to the next new
Speaker 1: thing because because they get better privacy. That happened with
Speaker 1: like Telegram, right, So this is metadata protection a whole
Speaker 1: other level beyond what people are trying to recognize is
Speaker 1: the real issue, not the end and encryption that like
Speaker 1: Telegram provides. So I think we'll see people move over
Speaker 1: to our platform and they'll then their social graph, who
Speaker 1: they communicate with, and when they'll have integrated payments. As
Speaker 1: I mentioned for this is really essential for democracy, and
Speaker 1: we've got it all working on a blockcheam. We've got
Speaker 1: tremendous support from the community. We've got almost nine nodes
Speaker 1: that have volunteered to operate our system without making any
Speaker 1: money off it. So an anonymous payment system with an
Speaker 1: anonymous messaging platform attached, so that the entire sort of
Speaker 1: transaction becomes anonymous. Well, I would to me it's not
Speaker 1: so much the anonymity because you are able to establish
Speaker 1: who you are, and you do have the benefit of
Speaker 1: knowing who you're communicating with and so on, and you
Speaker 1: can always reveal this. This blockchain based you know, chat
Speaker 1: today doesn't really give you the ability to prove that
Speaker 1: you send a certain message, so it can be used
Speaker 1: as a replacement for email, which is an important thing
Speaker 1: for developing country. So and it's also censorship resistant, you know,
Speaker 1: it's hard to kind of stop people from be able
Speaker 1: to because they can access it through any one of
Speaker 1: our uh node. So it's a it's a pseudonymous self
Speaker 1: sovereign identity based messaging integrated with payments. But then it's
Speaker 1: also an open, two sided business model platform for debts. Okay,
Speaker 1: with that caveat This is something I often wonder about cryptocurrencies.
Speaker 1: But again, it feels like developers spend a lot of
Speaker 1: time working on the underlying technology of crypto, trying to
Speaker 1: make the blockchain or whatever more efficient. How much does
Speaker 1: technology actually matter when it comes to cryptocurrencies? Are people
Speaker 1: basing their use case or they're buying and selling of
Speaker 1: you know, something like bitcoin on the underlying technology or
Speaker 1: is it just first mover or advantage. How much does
Speaker 1: it matter? I believe that being able to do untraceable
Speaker 1: messaging to solve the metadata problem at the speed needed
Speaker 1: for consumer transactions, which is like ten second latency from
Speaker 1: initiation and sending a message, receiving it or banking payment
Speaker 1: and having to be final, is they key enabler for
Speaker 1: taking the blockchain out of its current kind of huddles
Speaker 1: investment kind of mode and making it a mass consumer product.
Speaker 1: And I think that that phase change is what the
Speaker 1: technology breakthrough that I've established, like a thousand x speed
Speaker 1: up in this in the in the messaging privacy allows,
Speaker 1: So in that sense, I think technology plays a very
Speaker 1: key role there. And I think that there's also a
Speaker 1: second and part of the question is you know about
Speaker 1: good money. It's all about good money. And if if
Speaker 1: I think that a bitcoin or an etherorum or whatever
Speaker 1: popular crypto you think of could be displaced by one
Speaker 1: that is arguably stronger, and even though there's a lot
Speaker 1: of momentum, brand and and value and so on, because
Speaker 1: it's all about good money. And I think one of
Speaker 1: the things that our elicks are. Technology has going for
Speaker 1: it in that regard is that it is based on
Speaker 1: quantum resistant cryptography so called random functions. No one else is,
Speaker 1: and that makes it something that nation states can trust.
Speaker 1: And so that's a kind of cryptography. It's the only
Speaker 1: kind that they used to protect their national security information
Speaker 1: and commanding control systems and so on, and so it's
Speaker 1: it's actually very important for developing countries or even countries
Speaker 1: like Japan. We are worried that you know, China is
Speaker 1: coming in and dominating with with Alipai, that they if
Speaker 1: it's a kind of digital imperialism. What you want is
Speaker 1: a level playing field between countries so that the small
Speaker 1: countries can also introduce innovative products and safely allow sophisticated
Speaker 1: financial services to come in from abroad to create economic growth.
Speaker 1: We have to wrap up. But one less GUESSI do
Speaker 1: you ever worry about all this technology in the hands
Speaker 1: of people. I mean, obviously you look at something like
Speaker 1: the Snowden revelations or various other things, even financial collapse,
Speaker 1: and that gives rise to a lot of well deserved
Speaker 1: skepticism about centralized authorities, whether they be governments or banks.
Speaker 1: But do you ever worry about the sort of complete
Speaker 1: flip side and what happens when institutions that have essentially
Speaker 1: provided some sort of order to society for centuries or
Speaker 1: decades suddenly get deeply undercut and their ability to maintain
Speaker 1: control of communication and transactions. Yes, I think that it's
Speaker 1: obviously a vulnerability to stability if these major institutions were
Speaker 1: to be really disrupted, and I think they recognize that,
Speaker 1: and they are acting behind the scenes. I'm getting on
Speaker 1: a plane a couple of days to go visit one
Speaker 1: of the major central banks of the world. Invited me there.
Speaker 1: The people, you know, and I've been involved with these
Speaker 1: sort of folks for quite a while. They're all working
Speaker 1: desperately behind the scenes to try to find a way
Speaker 1: that they can issue a digital currency that's uh really
Speaker 1: you know, worthy of of their backing and and so
Speaker 1: I don't think that they'll just as as this technology
Speaker 1: goes mainstream, the regulatory you know, people recognize that it's
Speaker 1: really important for privacy and security and democracy, the regulatory
Speaker 1: impediments will will fall away and be you know, for good.
Speaker 1: And I think it's just like all financial services innovation,
Speaker 1: you know, when the eventually when it becomes mainstream. It's
Speaker 1: all happily accepted, and I think then the these mainstream
Speaker 1: organizations and major actors will continue to be a significant
Speaker 1: players and this will create a stable, gradual transition to
Speaker 1: a much better world. David Chum, thank you so much
Speaker 1: for coming out. Fascinating conversation. Thank you. It was really
Speaker 1: a blaste here. Thanks David. That was great, Tracy, I
Speaker 1: really loved that conversation. Yeah, that was really fascinating. And
Speaker 1: I think, Um, you hit upon something in one of
Speaker 1: your questions to David, which was just how early he
Speaker 1: was when it comes to talking about a lot of
Speaker 1: the problems that we are talking about today's such as
Speaker 1: privacy concerns, such as the idea that you know, our
Speaker 1: private data is going to be used by nefarious corporations
Speaker 1: or governments. He was just so early to all of that.
Speaker 1: It's it's kind of unreal like it was sort of
Speaker 1: at a time when a lot of that was in
Speaker 1: the realms of science fiction. Yeah, something that I thought
Speaker 1: of that I hadn't really thought of before is like, obviously,
Speaker 1: right now, among mainstream pundits and the tech press and
Speaker 1: uh analysts, privacy is a huge deal and people are
Speaker 1: really concerned about how much data companies like Facebook and
Speaker 1: Twitter and all these and Google and all these entities
Speaker 1: have on us. And yet in the conversation, and again
Speaker 1: I think it's sort of like mainstream, mainstream tech journalism,
Speaker 1: there's still quite a bit of dismissiveness, I would say,
Speaker 1: about the sort of crypto world, of the blockchain world.
Speaker 1: They think a lot of it is a snake oil
Speaker 1: or just weirdos and cranks who live in Silicon Valley
Speaker 1: or off the grid somewhere. But when you figure or
Speaker 1: when you sort of think of the big picture of that,
Speaker 1: actually it's a lot of the crypto blockchain people that
Speaker 1: have been warning about privacy concerns long before most tech
Speaker 1: journalists had even it occurred to them. It seems like
Speaker 1: it should be more a part of that conversation. Well,
Speaker 1: we've talked about that before, the notion that there are
Speaker 1: so many sort of value systems attached to cryptocurrencies, but
Speaker 1: there's also I don't know, just based on the conversation
Speaker 1: we had with David, it feels like there's something deeper here,
Speaker 1: you know, he mentioned digital imperialism. It feels like the
Speaker 1: world right now is sort of having to choose between
Speaker 1: which technological and which government system it wants. And I
Speaker 1: say that someone who's you know, technically in China at
Speaker 1: the moment, and it's sort of watching this unfold in
Speaker 1: various ways, but it does feel like we're at that
Speaker 1: moment of time where people are going to have to
Speaker 1: start making these decisions right and there. It almost doesn't
Speaker 1: feel like there's a big distinction between a government system
Speaker 1: and a Facebook coin, like whatever it is, it's some
Speaker 1: gigantic entity upon which the individual has no control one
Speaker 1: minor thing. Uh, and maybe it's a subject of a
Speaker 1: future conversation. Uh. David pointing out that the first time
Speaker 1: he came across proof of work, which is integral to UH, bitcoin,
Speaker 1: was it was presented as a spam fighting technology. I'm
Speaker 1: not sure how many people know that bitcoin kind of
Speaker 1: came out of work to to fight against spam. So
Speaker 1: it might be worth unpacking that one at a later day. Yeah,
Speaker 1: Bitcoin of fighting the good fight against junk email and
Speaker 1: privacy concerns. That's that's something, all right. This has been
Speaker 1: another episode of the Odd Lots podcast. I'm Tracy Alloway.
Speaker 1: You can follow me on Twitter at Tracy Alloway, and
Speaker 1: I'm Joe Wisenthal. You could follow me on Twitter at
Speaker 1: the Stalwart, and you could follow David on Twitter at
Speaker 1: Chalm dot com, and be sure to follow our producers
Speaker 1: on Twitter tofur Foreheads. He's at four Heast, as well
Speaker 1: as Laura Carlson at Laura M. Carlson and be sure
Speaker 1: to follow the Bloomberg head of podcast, Francesco Levy at
Speaker 1: Francesca Today. Thanks for listening.