1 00:00:00,160 --> 00:00:02,320 Speaker 1: But knowledge to work and grow your business with c 2 00:00:02,520 --> 00:00:06,680 Speaker 1: i T from transportation to healthcare to manufacturing. C i 3 00:00:06,760 --> 00:00:10,559 Speaker 1: T offers commercial lending, leasing, and treasury management services for 4 00:00:10,600 --> 00:00:13,480 Speaker 1: small and middle market businesses. Learn more at c i 5 00:00:13,560 --> 00:00:25,560 Speaker 1: T dot com put Knowledge to Work. Hello, and welcome 6 00:00:25,600 --> 00:00:30,520 Speaker 1: to another episode of the Odd Lots Podcast. I'm Joe Wisenthal, 7 00:00:30,680 --> 00:00:36,440 Speaker 1: Managing editor at Bloomberg Markets. Sadly, I am alone today. 8 00:00:36,800 --> 00:00:41,440 Speaker 1: My partner in crime and colleague Tracy Alloway as away, 9 00:00:41,479 --> 00:00:47,480 Speaker 1: so it's just going to be uh me on today's episode. Uh. Nonetheless, 10 00:00:47,560 --> 00:00:52,360 Speaker 1: I am very excited about today's episode because we're going 11 00:00:52,400 --> 00:00:55,520 Speaker 1: to be talking about money. We're going to be talking 12 00:00:55,560 --> 00:00:58,720 Speaker 1: about digital money, and we're going to be talking to 13 00:00:59,000 --> 00:01:04,000 Speaker 1: someone who has created their own currency. Everyone is for 14 00:01:04,160 --> 00:01:08,640 Speaker 1: most people are probably familiar by now with Bitcoin, the 15 00:01:08,880 --> 00:01:14,960 Speaker 1: cryptocurrency or digital currency that was started by someone under 16 00:01:15,000 --> 00:01:19,120 Speaker 1: the pseudonym Satoshi Nakamoto. But of course Bitcoin is not 17 00:01:19,240 --> 00:01:23,360 Speaker 1: the only digital currency in the world. There are hundreds, 18 00:01:23,520 --> 00:01:26,560 Speaker 1: and in the case of many of them, the creator 19 00:01:26,800 --> 00:01:31,880 Speaker 1: or creators are well known, and we have the creator 20 00:01:32,400 --> 00:01:35,440 Speaker 1: of one of the new coins on the show today. 21 00:01:35,480 --> 00:01:38,919 Speaker 1: It's a coin that has received a lot of attention 22 00:01:39,319 --> 00:01:44,520 Speaker 1: a lot of enthusiasm in the digital currency community. It's 23 00:01:44,560 --> 00:01:49,040 Speaker 1: called z cash, and we are going to be talking 24 00:01:49,080 --> 00:01:53,520 Speaker 1: to Zuko Wilcox. He is the CEO of the company 25 00:01:53,560 --> 00:01:57,240 Speaker 1: that has created z cash, and we're going to talk 26 00:01:57,280 --> 00:02:01,400 Speaker 1: about how you create a new currency, why you create 27 00:02:01,440 --> 00:02:06,040 Speaker 1: a new currency, why anyone would use it, and in 28 00:02:06,120 --> 00:02:19,519 Speaker 1: general this sort of fascinating new world of digital currencies. Zico, 29 00:02:19,680 --> 00:02:22,240 Speaker 1: Thank you very much for coming on, Thank you for 30 00:02:22,280 --> 00:02:25,799 Speaker 1: having me. Glad to be here. Yeah, So, uh, why 31 00:02:25,800 --> 00:02:29,480 Speaker 1: don't we just jump right into it? Uh? What is 32 00:02:29,560 --> 00:02:35,360 Speaker 1: z cash. It's a cryptocurrency like bitcoin, and it's different 33 00:02:35,360 --> 00:02:39,519 Speaker 1: from bitcoin in that it adds some cryptography. It uses 34 00:02:39,600 --> 00:02:44,520 Speaker 1: some improved cryptography to make it so is that your 35 00:02:44,600 --> 00:02:50,079 Speaker 1: transactions are not traced in the blockchain, invisible to the public. Right. 36 00:02:50,160 --> 00:02:54,080 Speaker 1: So people currently think of bitcoin as being you know, 37 00:02:54,200 --> 00:03:00,399 Speaker 1: anonymous secret um secret digital transactions. But people will say 38 00:03:00,440 --> 00:03:02,720 Speaker 1: that it's not really that anonymous, that you could sort 39 00:03:02,760 --> 00:03:05,920 Speaker 1: of figure out, um, who is buying what, and you 40 00:03:05,960 --> 00:03:12,040 Speaker 1: could trace purchases and transactions. Ultimately, explain why this explained 41 00:03:12,040 --> 00:03:17,200 Speaker 1: the misunderstanding and explain the innovation behind z cash, Uh 42 00:03:17,240 --> 00:03:22,320 Speaker 1: that allows it to be untraceable. Yeah. The misunderstanding is 43 00:03:23,000 --> 00:03:27,880 Speaker 1: that bitcoin doesn't require the use of your your legal 44 00:03:27,960 --> 00:03:31,000 Speaker 1: name or your home address or anything like that, uh, 45 00:03:31,120 --> 00:03:36,840 Speaker 1: in order to transfer bitcoin currency from one person to another. Instead, 46 00:03:36,840 --> 00:03:42,280 Speaker 1: it just uses these cryptographic, random looking strings to represent 47 00:03:42,320 --> 00:03:47,440 Speaker 1: your account identifier. And so in the early days, people 48 00:03:47,440 --> 00:03:53,240 Speaker 1: thought of this as making it anonymous or making it 49 00:03:53,280 --> 00:03:57,200 Speaker 1: so that people couldn't tell what you were doing with bitcoin. Um, 50 00:03:57,200 --> 00:03:59,480 Speaker 1: but that's actually a mistake. It reminds me of the 51 00:03:59,480 --> 00:04:03,320 Speaker 1: early days of the Internet because I P addresses. They're 52 00:04:03,360 --> 00:04:07,440 Speaker 1: just four numbers with a dot between them, right, and so, uh, 53 00:04:07,480 --> 00:04:09,680 Speaker 1: there was a cartoon that said on the Internet, no 54 00:04:09,720 --> 00:04:12,560 Speaker 1: one knows you're a dog. Um. People thought that it 55 00:04:12,640 --> 00:04:15,280 Speaker 1: was inherently impossible for people to tell what you were 56 00:04:15,280 --> 00:04:17,800 Speaker 1: doing with the Internet, And now we know that's that's 57 00:04:17,880 --> 00:04:20,599 Speaker 1: quite wrong. And we also know that with bitcoin nowadays, 58 00:04:20,640 --> 00:04:25,920 Speaker 1: it's quite wrong because the Bitcoin protocol leaves a complete 59 00:04:25,960 --> 00:04:29,560 Speaker 1: trace of all of the transactions between all of those 60 00:04:30,160 --> 00:04:34,320 Speaker 1: Bitcoin addresses. What did you accomplish with this currency and 61 00:04:34,440 --> 00:04:39,679 Speaker 1: sort of the you know, computer science breakthrough that solves 62 00:04:39,720 --> 00:04:43,680 Speaker 1: this problem. Ah. So the change we made in z 63 00:04:43,839 --> 00:04:50,360 Speaker 1: cash is that the transactions are optionally encrypted using cryptography, 64 00:04:50,440 --> 00:04:53,880 Speaker 1: so that no one who's looking at the open public 65 00:04:53,880 --> 00:04:57,040 Speaker 1: blockchain can see the details about which address the money 66 00:04:57,160 --> 00:05:01,640 Speaker 1: came from, to which address it went, how much was transferred, UM, 67 00:05:01,680 --> 00:05:05,400 Speaker 1: and UM other transaction data like the memo field that 68 00:05:05,440 --> 00:05:08,400 Speaker 1: you write in what the purpose of this payment is. Now. 69 00:05:08,640 --> 00:05:13,080 Speaker 1: One of the reasons people are skeptical about digital currencies, 70 00:05:13,160 --> 00:05:16,400 Speaker 1: or maybe they're negative on them, is they say, well, yes, 71 00:05:16,480 --> 00:05:19,560 Speaker 1: there may be some justification for them, but you know, 72 00:05:19,640 --> 00:05:22,719 Speaker 1: the only thing it makes sense is for crime and 73 00:05:22,800 --> 00:05:26,080 Speaker 1: circumventing governments and so forth. And then you come along 74 00:05:26,200 --> 00:05:28,520 Speaker 1: and say, ah, yeah, not only have we built on 75 00:05:28,560 --> 00:05:30,800 Speaker 1: top of these digital currencies, but we've even made it 76 00:05:30,880 --> 00:05:34,880 Speaker 1: more anonymous, which would lead people to think that so 77 00:05:34,920 --> 00:05:37,440 Speaker 1: they've just made a currency that's even better for crime 78 00:05:37,640 --> 00:05:41,120 Speaker 1: and the black market. Is that what your currency is 79 00:05:41,160 --> 00:05:44,400 Speaker 1: good for? No, that's what That's what a lot of 80 00:05:44,440 --> 00:05:48,480 Speaker 1: people sort of jumped to. But that's not what it 81 00:05:48,520 --> 00:05:52,039 Speaker 1: gets used for in practice. UM. Neither z cash, which 82 00:05:52,080 --> 00:05:54,919 Speaker 1: is brand new UM. It just launched at the end 83 00:05:54,960 --> 00:05:57,160 Speaker 1: of October, right, Yeah, it's only been out there for 84 00:05:57,200 --> 00:06:01,679 Speaker 1: a few weeks UM, but it's gotten this incredible uptake 85 00:06:01,720 --> 00:06:05,520 Speaker 1: all across the world. There are thousands of UH computers 86 00:06:05,640 --> 00:06:09,440 Speaker 1: and probably more than a hundred countries right now that 87 00:06:09,480 --> 00:06:12,560 Speaker 1: are running z cash UM and there's no reports or 88 00:06:12,600 --> 00:06:15,440 Speaker 1: even rumors of any use of it for anything illegal. 89 00:06:16,320 --> 00:06:18,640 Speaker 1: And I remember this when the same UH sort of 90 00:06:18,720 --> 00:06:21,080 Speaker 1: question was asked about bitcoin, like you alluded to, When 91 00:06:21,080 --> 00:06:24,400 Speaker 1: bitcoin was new, a lot of people either they couldn't 92 00:06:24,440 --> 00:06:28,880 Speaker 1: get their head around why it could be valid and valuable, 93 00:06:29,279 --> 00:06:31,200 Speaker 1: or they were just more excited and interested in the 94 00:06:31,279 --> 00:06:34,279 Speaker 1: in the crime story. But as the years have gone by, 95 00:06:34,400 --> 00:06:38,760 Speaker 1: the non criminal uses of bitcoin are increasingly important. Right 96 00:06:39,200 --> 00:06:42,080 Speaker 1: I expect the same will probably happen with z cash. 97 00:06:42,160 --> 00:06:47,480 Speaker 1: That the use of a currency like this for crossing 98 00:06:47,520 --> 00:06:52,280 Speaker 1: borders UM, circling the whole globe UM, and being an 99 00:06:52,320 --> 00:06:55,320 Speaker 1: open and permission list thing that anyone can plug into 100 00:06:55,400 --> 00:06:58,520 Speaker 1: and anyone can add their own service or their own 101 00:06:58,520 --> 00:07:03,440 Speaker 1: business into it without thus making themselves dependent on some 102 00:07:03,600 --> 00:07:06,919 Speaker 1: you know, third party like PayPal or UH some foreign 103 00:07:07,000 --> 00:07:11,080 Speaker 1: government or anything like that. With bitcoin, you know, one 104 00:07:11,120 --> 00:07:14,840 Speaker 1: of the challenges that I've had with sort of wrapping 105 00:07:14,880 --> 00:07:19,160 Speaker 1: my head around is why is there any value to 106 00:07:19,240 --> 00:07:21,880 Speaker 1: it in the first place? UM. And it's sort of 107 00:07:21,920 --> 00:07:25,360 Speaker 1: like this difficult philosophical question that I think actually applies 108 00:07:25,400 --> 00:07:30,080 Speaker 1: to all money, and it applies to gold arguably and 109 00:07:30,160 --> 00:07:32,000 Speaker 1: lots of things. So it's not just a bitcoin, but 110 00:07:32,200 --> 00:07:35,600 Speaker 1: in other words, like we all you know, people somehow 111 00:07:36,360 --> 00:07:40,680 Speaker 1: except that there's value to these currencies sort of x nilo. 112 00:07:40,760 --> 00:07:42,480 Speaker 1: I mean with the dollar, with the U. S Dollar, 113 00:07:42,560 --> 00:07:44,520 Speaker 1: you could say, well, you have to use the dollar 114 00:07:44,640 --> 00:07:48,240 Speaker 1: to pay your taxes. Uh, And so that sort of 115 00:07:48,320 --> 00:07:53,800 Speaker 1: creates a reason that dollars inherently have value. Um, what 116 00:07:54,240 --> 00:07:58,320 Speaker 1: how do you answer this question a with cryptocurrencies in general, 117 00:07:58,640 --> 00:08:01,680 Speaker 1: and then be with a brand new one like why 118 00:08:01,800 --> 00:08:04,600 Speaker 1: do two separate people on different parts of the globe 119 00:08:04,920 --> 00:08:08,800 Speaker 1: agree that a z z cash has value to it? 120 00:08:09,160 --> 00:08:11,760 Speaker 1: And and see, like you say, with with any other 121 00:08:11,880 --> 00:08:14,360 Speaker 1: kind of currency or or or a gold coin or 122 00:08:14,360 --> 00:08:17,280 Speaker 1: anything else, it's a there's a mystery to it. And 123 00:08:17,520 --> 00:08:20,280 Speaker 1: sometimes people mistakenly think that a gold coin or a 124 00:08:20,760 --> 00:08:24,080 Speaker 1: or a hundred dollar bill is valuable because it's backed 125 00:08:24,120 --> 00:08:27,360 Speaker 1: by something else. But that's got to be a mistake 126 00:08:27,520 --> 00:08:29,960 Speaker 1: because if that were the only value it had, you 127 00:08:30,000 --> 00:08:34,360 Speaker 1: could just use the something else. Well. Well, I mean, 128 00:08:34,440 --> 00:08:38,440 Speaker 1: like you know, the the US dollar is arguably backed 129 00:08:38,480 --> 00:08:41,800 Speaker 1: by a gigantic army, and there's a law that says 130 00:08:41,960 --> 00:08:44,440 Speaker 1: you will go to prison if you don't pay the 131 00:08:44,480 --> 00:08:47,240 Speaker 1: government a certain amount of dollars relative to your income 132 00:08:47,280 --> 00:08:50,160 Speaker 1: at the end of every year. So, I mean, you 133 00:08:50,160 --> 00:08:52,760 Speaker 1: could you could see how there are these structures that 134 00:08:52,880 --> 00:08:57,080 Speaker 1: buttress the value of fiat money. Yeah, there's there's a 135 00:08:57,240 --> 00:08:59,720 Speaker 1: there's a buttress, But that can't be the full explanation, 136 00:08:59,760 --> 00:09:02,520 Speaker 1: because people value it and desire it and use it 137 00:09:03,120 --> 00:09:07,559 Speaker 1: for purposes beyond paying taxes and getting along with the army. Um. 138 00:09:07,600 --> 00:09:10,800 Speaker 1: And in fact, you can see with fiat currencies like that, 139 00:09:10,960 --> 00:09:14,240 Speaker 1: if the people collectively start to value them less and less, 140 00:09:14,480 --> 00:09:17,880 Speaker 1: then eventually the army and the revenue service also start 141 00:09:17,960 --> 00:09:21,000 Speaker 1: valuing them less and less. Right, But how do you 142 00:09:21,040 --> 00:09:23,320 Speaker 1: get But you know, it seems to me, how do 143 00:09:23,360 --> 00:09:26,320 Speaker 1: you germinate that in the first place. Yeah, it's a 144 00:09:26,360 --> 00:09:32,480 Speaker 1: really good question. I remember years of consternation and and 145 00:09:32,480 --> 00:09:36,200 Speaker 1: and confusion among people when bitcoin was new, where a 146 00:09:36,240 --> 00:09:40,199 Speaker 1: lot of people said, very decisively, this is impossible, this 147 00:09:40,280 --> 00:09:43,200 Speaker 1: is a scam, This makes no sense. It you know, 148 00:09:43,360 --> 00:09:46,960 Speaker 1: it cannot last. It is only somebody's ripping someone else off. 149 00:09:47,000 --> 00:09:49,720 Speaker 1: And once they're done this is over. And you know, 150 00:09:49,840 --> 00:09:52,600 Speaker 1: I thought at the time, I disagree. I think this 151 00:09:52,720 --> 00:09:55,480 Speaker 1: can last. I think it makes sense. But I'm never 152 00:09:55,520 --> 00:09:57,320 Speaker 1: going to convince these people. But what is going to 153 00:09:57,400 --> 00:09:59,200 Speaker 1: convince them is if a few years go by and 154 00:09:59,240 --> 00:10:02,600 Speaker 1: it's still here. And that's what happened with bitcoin after 155 00:10:02,720 --> 00:10:05,319 Speaker 1: like you know, about four four years or so of that, 156 00:10:05,440 --> 00:10:08,040 Speaker 1: then the voices saying that it was impossible and meaningless 157 00:10:08,080 --> 00:10:11,319 Speaker 1: sort of faded out. Um so, and then how do 158 00:10:11,440 --> 00:10:17,120 Speaker 1: we germinate it? Well, you know, ze cash has been, 159 00:10:17,400 --> 00:10:20,720 Speaker 1: like you mentioned at the beginning of this podcast, remarkably 160 00:10:20,760 --> 00:10:24,920 Speaker 1: sort of popular, widely, widely anticipated, and widely accepted. And 161 00:10:25,600 --> 00:10:27,760 Speaker 1: ever since it's launched only a couple of weeks ago, 162 00:10:28,400 --> 00:10:32,960 Speaker 1: there have been dozens of companies have announced that they've 163 00:10:33,000 --> 00:10:36,520 Speaker 1: added z cash integration. So there's a company called Purse 164 00:10:36,679 --> 00:10:39,440 Speaker 1: and you can buy anything you want off of Amazon 165 00:10:39,480 --> 00:10:41,800 Speaker 1: dot com and pay with the cash, and they give 166 00:10:41,840 --> 00:10:47,480 Speaker 1: you a discount because they have access to discounted Amazon points. Um. 167 00:10:47,520 --> 00:10:50,480 Speaker 1: And there's you know, there are merchants that will sell 168 00:10:50,520 --> 00:10:52,960 Speaker 1: you T shirts and Neon signs and things like that 169 00:10:53,000 --> 00:10:55,520 Speaker 1: over the internet and charge you in ze cash. It's 170 00:10:55,520 --> 00:10:58,520 Speaker 1: a social it's a social activity. It's the fact that 171 00:10:59,160 --> 00:11:01,000 Speaker 1: it has to be something thing that you care about 172 00:11:01,000 --> 00:11:03,800 Speaker 1: and you value. But in addition to that, you have 173 00:11:03,920 --> 00:11:06,400 Speaker 1: to have a group or a community of other people 174 00:11:06,440 --> 00:11:08,560 Speaker 1: who also care about it, you know. And I first 175 00:11:08,640 --> 00:11:11,080 Speaker 1: started trying to wrap my head around bitcoin, I thought 176 00:11:11,160 --> 00:11:14,319 Speaker 1: that the you know, it's kind of like Facebook in 177 00:11:14,360 --> 00:11:16,920 Speaker 1: the sense that Facebook would have no value if nobody 178 00:11:17,040 --> 00:11:20,720 Speaker 1: was there. That's right, And you could create another social 179 00:11:20,760 --> 00:11:23,600 Speaker 1: network that had all the functions of Facebook and perhaps 180 00:11:23,679 --> 00:11:26,839 Speaker 1: arguably better. And some have existed, but they've never had 181 00:11:26,840 --> 00:11:30,199 Speaker 1: any value because nobody was there. It's still not totally satisfying, 182 00:11:30,600 --> 00:11:33,479 Speaker 1: but it's it's sort of gets there. That's what economists 183 00:11:33,520 --> 00:11:37,160 Speaker 1: call the network effect, right, a network effect, it's definitely 184 00:11:37,200 --> 00:11:40,559 Speaker 1: true of It's definitely true of Facebook and social networks UM, 185 00:11:40,559 --> 00:11:43,080 Speaker 1: and it's also definitely true of currencies. Currencies are very 186 00:11:43,120 --> 00:11:46,160 Speaker 1: strongly affected by the network effect. UM. So it's kind 187 00:11:46,160 --> 00:11:48,680 Speaker 1: of both. It's both that there's a lot of people 188 00:11:48,720 --> 00:11:51,960 Speaker 1: out there who value z cash for itself, and there's 189 00:11:52,000 --> 00:11:57,280 Speaker 1: also a widespread um belief that other people are valuing 190 00:11:57,360 --> 00:11:59,600 Speaker 1: z cash, so that it's going to you're gonna you know, 191 00:11:59,600 --> 00:12:02,600 Speaker 1: it's gonna have currency, so to speak. But what really 192 00:12:02,760 --> 00:12:05,640 Speaker 1: inspires me the most is the people who are who 193 00:12:05,720 --> 00:12:09,240 Speaker 1: just love it because they love privacy and they think 194 00:12:09,240 --> 00:12:14,040 Speaker 1: it's it's helpful to underprivileged people. Uh that it empowers 195 00:12:14,080 --> 00:12:16,800 Speaker 1: people because it crosses borders and allows people to cooperate 196 00:12:16,800 --> 00:12:19,640 Speaker 1: who previously weren't able to reach each other to cooperate. 197 00:12:20,120 --> 00:12:22,880 Speaker 1: And I've had this wonderful experience of people coming up 198 00:12:22,920 --> 00:12:26,320 Speaker 1: to me just to say, we care about this. My 199 00:12:26,400 --> 00:12:30,040 Speaker 1: community is on board, and we're glad that this has happening. 200 00:12:30,160 --> 00:12:32,120 Speaker 1: We think it's important. It kind of makes the head 201 00:12:32,160 --> 00:12:34,720 Speaker 1: hurt thinking about where these things come from. But in 202 00:12:34,760 --> 00:12:36,920 Speaker 1: a way, I think all the good things in life 203 00:12:37,480 --> 00:12:40,600 Speaker 1: make the head hurt if you try to think them through. Yeah, 204 00:12:40,640 --> 00:12:43,640 Speaker 1: you know it's it rises from human behavior, and human 205 00:12:43,640 --> 00:12:46,800 Speaker 1: behavior is one of the biggest mysteries. I want to 206 00:12:46,800 --> 00:12:49,599 Speaker 1: take a quick break for a sponsor and we'll be 207 00:12:49,720 --> 00:12:54,800 Speaker 1: right back. But knowledge to work and grow your business 208 00:12:54,880 --> 00:12:59,000 Speaker 1: with c i T from transportation to healthcare to manufacturing. 209 00:12:59,200 --> 00:13:02,600 Speaker 1: C i T offer commercial lending, leasing, and treasury management 210 00:13:02,640 --> 00:13:05,960 Speaker 1: services for small and middle market businesses. Learn more at 211 00:13:06,000 --> 00:13:14,199 Speaker 1: c i T dot com. Put knowledge to work and 212 00:13:14,240 --> 00:13:17,920 Speaker 1: we're back with Zuko Wilcox. He's the CEO of the 213 00:13:18,000 --> 00:13:21,839 Speaker 1: z cash company um, which is a company that has 214 00:13:22,000 --> 00:13:26,679 Speaker 1: launched a new cryptocurrency. You know, when we talk about bitcoin, 215 00:13:26,920 --> 00:13:30,319 Speaker 1: we uh everybody. Most people know that there's this mysterious 216 00:13:30,480 --> 00:13:35,719 Speaker 1: creator who went by the pseudonym Satoshi Nakamoto. No one 217 00:13:35,760 --> 00:13:40,720 Speaker 1: really knows for sure who it is. That mysterious origin 218 00:13:40,920 --> 00:13:44,120 Speaker 1: kind of helps, uh uh sort of adds to the 219 00:13:44,280 --> 00:13:49,720 Speaker 1: fascination and allure with bitcoin. Obviously, Zuko z cash is 220 00:13:49,720 --> 00:13:55,000 Speaker 1: different because there's a company with investors that have launched 221 00:13:55,000 --> 00:13:59,360 Speaker 1: this currency. Uh explained to us sort of the advantages 222 00:13:59,520 --> 00:14:04,040 Speaker 1: and this advantages of having specific founders and backers and 223 00:14:04,120 --> 00:14:08,080 Speaker 1: investors associated with your launch. Well, there are advantages and 224 00:14:08,120 --> 00:14:12,600 Speaker 1: disadvantages in terms of people's trust. The fact that we 225 00:14:12,679 --> 00:14:15,520 Speaker 1: have these investors causes some people to trust us more 226 00:14:15,520 --> 00:14:18,480 Speaker 1: and other people to trust us less. And the fact 227 00:14:18,480 --> 00:14:22,160 Speaker 1: that we have a company with employees and a CEO 228 00:14:23,000 --> 00:14:26,720 Speaker 1: causes some people to have more confidence in the future 229 00:14:26,840 --> 00:14:29,400 Speaker 1: of our project and other people to have less. Um 230 00:14:29,560 --> 00:14:33,479 Speaker 1: But the reason we did it was not that consideration. 231 00:14:33,600 --> 00:14:37,240 Speaker 1: It was in order to be able to fund the work. 232 00:14:37,840 --> 00:14:40,440 Speaker 1: There's been a lot of engineering effort that we've already 233 00:14:40,440 --> 00:14:42,920 Speaker 1: put into get this far, and we have a roadmap 234 00:14:43,320 --> 00:14:46,760 Speaker 1: for pouring in years more of engineering effort to improve 235 00:14:46,840 --> 00:14:50,800 Speaker 1: the protocol over the coming years. Tell us about your 236 00:14:50,840 --> 00:14:55,720 Speaker 1: ceremony when you officially launched the currency. You put put 237 00:14:55,800 --> 00:14:59,800 Speaker 1: up a blog post about this sort of extraordinary, extraordinarily 238 00:15:00,280 --> 00:15:04,080 Speaker 1: complex launching event that you did to sort of ensure 239 00:15:04,160 --> 00:15:07,960 Speaker 1: people that UM you know, is safe and secret and 240 00:15:08,040 --> 00:15:11,320 Speaker 1: wasn't going to be hacked. Walk us through this sort 241 00:15:11,360 --> 00:15:14,840 Speaker 1: of elaborate launch that you did. Well, there's a cryptographic 242 00:15:15,040 --> 00:15:18,720 Speaker 1: value that we needed to produce, uh to use it. 243 00:15:18,720 --> 00:15:22,200 Speaker 1: It's kind of a public key, crypto public key that 244 00:15:22,440 --> 00:15:24,400 Speaker 1: needs to be used in the protocol. He has to 245 00:15:24,440 --> 00:15:29,920 Speaker 1: be used by all the users, and the associated private key, 246 00:15:30,040 --> 00:15:35,280 Speaker 1: if it existed, could be used to counterfeit money, so 247 00:15:35,440 --> 00:15:40,120 Speaker 1: counterfeitsy cash. So we came up with a protocol and 248 00:15:40,120 --> 00:15:43,280 Speaker 1: a ceremony which allows us to generate that public key 249 00:15:43,360 --> 00:15:46,960 Speaker 1: without the corresponding private key ever coming into existence. And 250 00:15:47,000 --> 00:15:50,360 Speaker 1: we call that thing the toxic waste private key UM. 251 00:15:50,400 --> 00:15:52,400 Speaker 1: And our analogy is if you have a factory that 252 00:15:52,480 --> 00:15:55,520 Speaker 1: produces something and as a side effect, it produces these chemicals, 253 00:15:55,520 --> 00:15:59,320 Speaker 1: These precursors, and individually, each precursor is harmless. But if 254 00:15:59,320 --> 00:16:01,840 Speaker 1: they all get together and it turns into toxic waste, 255 00:16:01,880 --> 00:16:03,920 Speaker 1: that's really dangerous and difficult to deal with. So we 256 00:16:03,960 --> 00:16:08,880 Speaker 1: designed this system to produce the necessary public key and 257 00:16:08,960 --> 00:16:11,800 Speaker 1: keep all the precursors separate until they could be safely destroyed. 258 00:16:12,320 --> 00:16:16,120 Speaker 1: And we executed this protocol with six different people that 259 00:16:16,200 --> 00:16:18,920 Speaker 1: we recruited from I was one of them, and then 260 00:16:19,160 --> 00:16:23,360 Speaker 1: five different people that we recruited who we trusted to 261 00:16:24,240 --> 00:16:26,680 Speaker 1: be competent and not to get hacked while they were 262 00:16:26,720 --> 00:16:29,560 Speaker 1: doing this, And as far as we can tell, none 263 00:16:29,600 --> 00:16:32,400 Speaker 1: of us got hacked, so all six of the precursors 264 00:16:32,400 --> 00:16:36,040 Speaker 1: got destroyed. The details of this ceremony, as you call it, 265 00:16:36,080 --> 00:16:39,600 Speaker 1: are pretty interesting. Explain some of what you did, uh, 266 00:16:39,720 --> 00:16:42,760 Speaker 1: to sort of coordinate these five different people, Well, there 267 00:16:42,760 --> 00:16:47,000 Speaker 1: were six different people, and uh, the the main goal 268 00:16:47,120 --> 00:16:51,040 Speaker 1: was to prevent some attacker from hacking all six of 269 00:16:51,120 --> 00:16:54,560 Speaker 1: us at once and stealing the precursor from each of us. Right. 270 00:16:55,360 --> 00:16:58,480 Speaker 1: So one thing we did was that we recruited people 271 00:16:58,480 --> 00:17:04,200 Speaker 1: who were themselves exceptional computer security experts, and we let 272 00:17:04,240 --> 00:17:07,399 Speaker 1: them have a degree of autonomy about what sort of 273 00:17:07,400 --> 00:17:10,560 Speaker 1: defensive measures they would take um so that there would 274 00:17:10,560 --> 00:17:13,000 Speaker 1: be a variety of defensive measures in play, so that 275 00:17:13,040 --> 00:17:14,840 Speaker 1: even if an attack or figured out how to hack 276 00:17:14,880 --> 00:17:16,520 Speaker 1: one of us, you wouldn't figure out how to attack 277 00:17:16,600 --> 00:17:18,760 Speaker 1: how to hack the others. And then each of us 278 00:17:18,800 --> 00:17:22,119 Speaker 1: had an air gapped machine. We went. We did this 279 00:17:22,160 --> 00:17:25,399 Speaker 1: thing called random purchase, which is you drive to a 280 00:17:25,480 --> 00:17:29,000 Speaker 1: random computer store without like calling ahead in case the 281 00:17:29,040 --> 00:17:32,080 Speaker 1: attacker is spying on your phone. Uh So we turned 282 00:17:32,080 --> 00:17:34,800 Speaker 1: off our phones and we drove. We got an old 283 00:17:34,800 --> 00:17:38,600 Speaker 1: paper map, remember those got out of paper map, found 284 00:17:38,640 --> 00:17:41,639 Speaker 1: the computer store on the map and drove there and 285 00:17:41,680 --> 00:17:44,119 Speaker 1: we walked down the computer store and said, we want 286 00:17:44,320 --> 00:17:48,280 Speaker 1: one of these here computers. And then the salesman said, okay, 287 00:17:48,320 --> 00:17:50,679 Speaker 1: there's there's two sitting here in a box, you know 288 00:17:50,720 --> 00:17:52,919 Speaker 1: in boxes on the showroom floor, and you can have 289 00:17:52,960 --> 00:17:54,720 Speaker 1: this one. And we said no, no, we want the 290 00:17:54,760 --> 00:17:58,119 Speaker 1: other one. He said, okay, fine, you can have the 291 00:17:58,119 --> 00:18:02,080 Speaker 1: other one, which we did. The whole random purchase process 292 00:18:02,240 --> 00:18:07,320 Speaker 1: is to prevent the possibility that an attacker could plant 293 00:18:07,400 --> 00:18:10,320 Speaker 1: a backdoor into the machines. So if you just order 294 00:18:10,480 --> 00:18:14,000 Speaker 1: machines from Amazon, it's possible. And in fact, the Snowden 295 00:18:14,080 --> 00:18:20,400 Speaker 1: disclosures revealed that it's actually practiced that sometimes people intercept 296 00:18:20,480 --> 00:18:23,159 Speaker 1: your shipment of your computer and open it up and 297 00:18:23,240 --> 00:18:24,720 Speaker 1: plant a bug in it and then seal it back 298 00:18:24,760 --> 00:18:27,120 Speaker 1: up and deliver it to your house. Um, so that's 299 00:18:27,119 --> 00:18:29,520 Speaker 1: why we did random purchase. So people went around in 300 00:18:29,520 --> 00:18:32,360 Speaker 1: all six in the six different locations across the globe 301 00:18:32,880 --> 00:18:35,480 Speaker 1: and purchased a random computer from the store. And then 302 00:18:35,560 --> 00:18:38,280 Speaker 1: we air gapped them, which means we you know, unscrewed 303 00:18:38,320 --> 00:18:42,119 Speaker 1: the lid of the computer and pulled out all the radios, 304 00:18:42,160 --> 00:18:46,359 Speaker 1: all the WiFi and Bluetooth and any kind of networking 305 00:18:46,400 --> 00:18:49,639 Speaker 1: so that these computers couldn't connect to any network. And 306 00:18:49,680 --> 00:18:51,399 Speaker 1: then we did all that before we first turned them on. 307 00:18:51,560 --> 00:18:54,080 Speaker 1: So now that they're random purchased and air gapped, we 308 00:18:54,119 --> 00:18:57,440 Speaker 1: feel pretty sure that there's no attacker out there who 309 00:18:57,800 --> 00:19:00,000 Speaker 1: has a backdoor in any of these computers, at least 310 00:19:00,040 --> 00:19:02,320 Speaker 1: not a back towards that they can they can use. 311 00:19:03,640 --> 00:19:06,680 Speaker 1: And then, uh, now that we have these air gapped computers, 312 00:19:06,720 --> 00:19:12,040 Speaker 1: we still need to deliver the the protocol messages to 313 00:19:12,200 --> 00:19:15,640 Speaker 1: each computer so that each one can perform it's part 314 00:19:15,680 --> 00:19:18,439 Speaker 1: of the computation and send its answer back to produce 315 00:19:18,520 --> 00:19:21,959 Speaker 1: the shared public key. So we decided to use DVDs 316 00:19:22,560 --> 00:19:27,600 Speaker 1: to deliver those messages. Yeah, paper maps and DVD this 317 00:19:27,680 --> 00:19:32,680 Speaker 1: is throwback all the way. So uh so, the messages 318 00:19:33,280 --> 00:19:37,399 Speaker 1: that got exchanged between the air gapped computers were only 319 00:19:38,119 --> 00:19:42,359 Speaker 1: exchanged by means of right ones append only DVDs, and 320 00:19:42,400 --> 00:19:47,160 Speaker 1: that means it produced and an evidence trail of all 321 00:19:47,200 --> 00:19:50,040 Speaker 1: of the communications that we did during the ceremony. And 322 00:19:50,080 --> 00:19:55,120 Speaker 1: afterwards we collected those um the recordings of those messages 323 00:19:55,119 --> 00:19:58,840 Speaker 1: and uploaded them to the Internet archive for historians to analyze. 324 00:19:59,359 --> 00:20:02,879 Speaker 1: What else, some of the people did some some fun things. 325 00:20:02,920 --> 00:20:06,080 Speaker 1: One of them. Three of the participants in the ceremony 326 00:20:06,119 --> 00:20:10,240 Speaker 1: were anonymous. At the time, only I knew their identities, 327 00:20:11,080 --> 00:20:14,359 Speaker 1: and three of them were some known computer scientists and 328 00:20:15,080 --> 00:20:21,440 Speaker 1: Washington d C policy UH experts and me. And then 329 00:20:21,520 --> 00:20:24,520 Speaker 1: at the end of the ceremony, as soon as we 330 00:20:24,560 --> 00:20:29,400 Speaker 1: had finished producing the correct public key and everyone had 331 00:20:29,480 --> 00:20:33,200 Speaker 1: deleted their own precursor, then we revealed one of the 332 00:20:33,240 --> 00:20:39,320 Speaker 1: three anonymous people was a well known large information security 333 00:20:39,359 --> 00:20:42,000 Speaker 1: consulting firm and that they were running their part of 334 00:20:42,040 --> 00:20:45,320 Speaker 1: the ceremony in their lab under surveillance, and that they 335 00:20:45,320 --> 00:20:49,400 Speaker 1: were in parallel trying to hack into a copy of 336 00:20:49,480 --> 00:20:52,119 Speaker 1: their computer to see how hackable it was. And it 337 00:20:52,200 --> 00:20:56,199 Speaker 1: all sounds extraordinary, like it sounds like something out of 338 00:20:56,200 --> 00:20:59,840 Speaker 1: a movie where you that you like a hacker movie, 339 00:21:00,280 --> 00:21:02,359 Speaker 1: and I get that, like I haven't even told you that. 340 00:21:02,480 --> 00:21:04,720 Speaker 1: The last let me tell you the last few parts. 341 00:21:04,760 --> 00:21:06,760 Speaker 1: There were three anonymous people. One turned out to be 342 00:21:06,800 --> 00:21:11,440 Speaker 1: an infosyc lab one it turned out nobody. Nobody knew 343 00:21:11,480 --> 00:21:13,879 Speaker 1: this at the time, but it turned out that he 344 00:21:14,000 --> 00:21:18,400 Speaker 1: was a well known bitcoin developer, and that he performed 345 00:21:18,440 --> 00:21:21,160 Speaker 1: his part of the ceremony in a moving car on 346 00:21:21,160 --> 00:21:25,639 Speaker 1: an empty Canadian highway in the far North because he 347 00:21:25,720 --> 00:21:27,800 Speaker 1: figured that would make it harder for anyone to hack 348 00:21:27,840 --> 00:21:31,320 Speaker 1: into his computer during the process. And the last one 349 00:21:31,400 --> 00:21:35,040 Speaker 1: remains anonymous. So there's your there's your mystery. If you 350 00:21:35,080 --> 00:21:38,080 Speaker 1: want to have something like Satoshi Nakamoto, it's the sixth 351 00:21:38,080 --> 00:21:41,399 Speaker 1: participant in the ceremony. That's exactly what I was about 352 00:21:41,440 --> 00:21:44,199 Speaker 1: to get at. So part of the ceremony, and we 353 00:21:44,200 --> 00:21:45,800 Speaker 1: just have a few minutes left. But part of the 354 00:21:45,800 --> 00:21:49,960 Speaker 1: ceremony obviously is to prove forever in history and theory 355 00:21:50,000 --> 00:21:54,560 Speaker 1: that there's no way anyone could make counterfeit z cash. 356 00:21:54,840 --> 00:21:58,320 Speaker 1: But also part of it is just too it appears 357 00:21:58,520 --> 00:22:02,560 Speaker 1: create a sort of aura and mythology around it that 358 00:22:02,720 --> 00:22:07,400 Speaker 1: sort of befits the uh sort of mystery of all currency. Well, 359 00:22:08,280 --> 00:22:11,000 Speaker 1: I guess that's a convenient side effect. But you know, 360 00:22:11,080 --> 00:22:13,880 Speaker 1: like since like all currency and language and all these 361 00:22:13,880 --> 00:22:17,959 Speaker 1: sort of shared social conventions have mysterious origins, it seems 362 00:22:18,000 --> 00:22:20,959 Speaker 1: like it very much helps to have a sort of 363 00:22:21,000 --> 00:22:24,960 Speaker 1: fascinating creation myth that would come out of a movie 364 00:22:25,000 --> 00:22:28,159 Speaker 1: about hackers. Yeah, and and some of the some of 365 00:22:28,160 --> 00:22:31,119 Speaker 1: the participants destroyed the hardware with fire after, so in 366 00:22:31,160 --> 00:22:33,840 Speaker 1: future generations children have an excuse to use fireworks on 367 00:22:33,880 --> 00:22:37,400 Speaker 1: that day. I'm very eager to see how this works out. 368 00:22:37,440 --> 00:22:39,880 Speaker 1: I actually, uh, a friend of mine and I had 369 00:22:39,920 --> 00:22:43,760 Speaker 1: sort of have seriously have jokingly launched our own currency 370 00:22:43,800 --> 00:22:47,199 Speaker 1: a couple of years ago, called us stalwart bucks uh, 371 00:22:47,320 --> 00:22:50,120 Speaker 1: named after my Twitter handle. At one point on an 372 00:22:50,160 --> 00:22:54,240 Speaker 1: Indian exchange. The total outstanding value is about forty dollars. 373 00:22:54,280 --> 00:22:57,040 Speaker 1: Of all of them, it's now probably zero because I 374 00:22:57,040 --> 00:22:58,600 Speaker 1: don't think a single one is traded in a year 375 00:22:58,600 --> 00:23:03,040 Speaker 1: and a half. We gotta leave there, Zucho Wilcox, Uh, 376 00:23:03,200 --> 00:23:07,280 Speaker 1: the backer of z cash. We're going to be watching 377 00:23:07,320 --> 00:23:09,879 Speaker 1: it to see if you can make a dent in 378 00:23:09,920 --> 00:23:13,200 Speaker 1: the cryptocurrency world. And hopefully maybe we'll have you back 379 00:23:13,200 --> 00:23:15,520 Speaker 1: on here in a year and we can see what 380 00:23:15,640 --> 00:23:17,919 Speaker 1: we've see what you've learned. But I really appreciate you 381 00:23:17,960 --> 00:23:21,280 Speaker 1: coming on today, Thank you very much. But by and uh, 382 00:23:21,440 --> 00:23:24,560 Speaker 1: that'll do it for today's Odd Lots podcast. Here's normally 383 00:23:24,600 --> 00:23:27,800 Speaker 1: where I would talk to Tracy and talk about what 384 00:23:27,840 --> 00:23:31,000 Speaker 1: we learned on the episode, but um, she's not here, 385 00:23:31,080 --> 00:23:33,679 Speaker 1: and so I don't think I have anything to add. 386 00:23:34,520 --> 00:23:37,119 Speaker 1: Thanks for listening everyone. You can find me on Twitter 387 00:23:37,240 --> 00:23:40,159 Speaker 1: at the Stalwart and you can follow Zoko on Twitter 388 00:23:40,359 --> 00:23:52,600 Speaker 1: at zooko z z o o Ko. Put knowledge to 389 00:23:52,680 --> 00:23:55,280 Speaker 1: work and grow your business with ce i T from 390 00:23:55,320 --> 00:24:00,439 Speaker 1: transportation to healthcare to manufacturing. C i T offers commercial lending, leasing, 391 00:24:00,480 --> 00:24:04,159 Speaker 1: and treasury management services for small and middle market businesses. 392 00:24:04,320 --> 00:24:07,000 Speaker 1: Learn more at c I T dot com. Put Knowledge 393 00:24:07,040 --> 00:24:07,400 Speaker 1: to Work.