WEBVTT - 56: How To Launch Your Own Form Of Money 0:00:00.160 --> 0:00:02.320 But knowledge to work and grow your business with c 0:00:02.520 --> 0:00:06.680 i T from transportation to healthcare to manufacturing. C i 0:00:06.760 --> 0:00:10.559 T offers commercial lending, leasing, and treasury management services for 0:00:10.600 --> 0:00:13.480 small and middle market businesses. Learn more at c i 0:00:13.560 --> 0:00:25.560 T dot com put Knowledge to Work. Hello, and welcome 0:00:25.600 --> 0:00:30.520 to another episode of the Odd Lots Podcast. I'm Joe Wisenthal, 0:00:30.680 --> 0:00:36.440 Managing editor at Bloomberg Markets. Sadly, I am alone today. 0:00:36.800 --> 0:00:41.440 My partner in crime and colleague Tracy Alloway as away, 0:00:41.479 --> 0:00:47.480 so it's just going to be uh me on today's episode. Uh. Nonetheless, 0:00:47.560 --> 0:00:52.360 I am very excited about today's episode because we're going 0:00:52.400 --> 0:00:55.520 to be talking about money. We're going to be talking 0:00:55.560 --> 0:00:58.720 about digital money, and we're going to be talking to 0:00:59.000 --> 0:01:04.000 someone who has created their own currency. Everyone is for 0:01:04.160 --> 0:01:08.640 most people are probably familiar by now with Bitcoin, the 0:01:08.880 --> 0:01:14.960 cryptocurrency or digital currency that was started by someone under 0:01:15.000 --> 0:01:19.120 the pseudonym Satoshi Nakamoto. But of course Bitcoin is not 0:01:19.240 --> 0:01:23.360 the only digital currency in the world. There are hundreds, 0:01:23.520 --> 0:01:26.560 and in the case of many of them, the creator 0:01:26.800 --> 0:01:31.880 or creators are well known, and we have the creator 0:01:32.400 --> 0:01:35.440 of one of the new coins on the show today. 0:01:35.480 --> 0:01:38.919 It's a coin that has received a lot of attention 0:01:39.319 --> 0:01:44.520 a lot of enthusiasm in the digital currency community. It's 0:01:44.560 --> 0:01:49.040 called z cash, and we are going to be talking 0:01:49.080 --> 0:01:53.520 to Zuko Wilcox. He is the CEO of the company 0:01:53.560 --> 0:01:57.240 that has created z cash, and we're going to talk 0:01:57.280 --> 0:02:01.400 about how you create a new currency, why you create 0:02:01.440 --> 0:02:06.040 a new currency, why anyone would use it, and in 0:02:06.120 --> 0:02:19.519 general this sort of fascinating new world of digital currencies. Zico, 0:02:19.680 --> 0:02:22.240 Thank you very much for coming on, Thank you for 0:02:22.280 --> 0:02:25.799 having me. Glad to be here. Yeah, So, uh, why 0:02:25.800 --> 0:02:29.480 don't we just jump right into it? Uh? What is 0:02:29.560 --> 0:02:35.360 z cash. It's a cryptocurrency like bitcoin, and it's different 0:02:35.360 --> 0:02:39.519 from bitcoin in that it adds some cryptography. It uses 0:02:39.600 --> 0:02:44.520 some improved cryptography to make it so is that your 0:02:44.600 --> 0:02:50.079 transactions are not traced in the blockchain, invisible to the public. Right. 0:02:50.160 --> 0:02:54.080 So people currently think of bitcoin as being you know, 0:02:54.200 --> 0:03:00.399 anonymous secret um secret digital transactions. But people will say 0:03:00.440 --> 0:03:02.720 that it's not really that anonymous, that you could sort 0:03:02.760 --> 0:03:05.920 of figure out, um, who is buying what, and you 0:03:05.960 --> 0:03:12.040 could trace purchases and transactions. Ultimately, explain why this explained 0:03:12.040 --> 0:03:17.200 the misunderstanding and explain the innovation behind z cash, Uh 0:03:17.240 --> 0:03:22.320 that allows it to be untraceable. Yeah. The misunderstanding is 0:03:23.000 --> 0:03:27.880 that bitcoin doesn't require the use of your your legal 0:03:27.960 --> 0:03:31.000 name or your home address or anything like that, uh, 0:03:31.120 --> 0:03:36.840 in order to transfer bitcoin currency from one person to another. Instead, 0:03:36.840 --> 0:03:42.280 it just uses these cryptographic, random looking strings to represent 0:03:42.320 --> 0:03:47.440 your account identifier. And so in the early days, people 0:03:47.440 --> 0:03:53.240 thought of this as making it anonymous or making it 0:03:53.280 --> 0:03:57.200 so that people couldn't tell what you were doing with bitcoin. Um, 0:03:57.200 --> 0:03:59.480 but that's actually a mistake. It reminds me of the 0:03:59.480 --> 0:04:03.320 early days of the Internet because I P addresses. They're 0:04:03.360 --> 0:04:07.440 just four numbers with a dot between them, right, and so, uh, 0:04:07.480 --> 0:04:09.680 there was a cartoon that said on the Internet, no 0:04:09.720 --> 0:04:12.560 one knows you're a dog. Um. People thought that it 0:04:12.640 --> 0:04:15.280 was inherently impossible for people to tell what you were 0:04:15.280 --> 0:04:17.800 doing with the Internet, And now we know that's that's 0:04:17.880 --> 0:04:20.599 quite wrong. And we also know that with bitcoin nowadays, 0:04:20.640 --> 0:04:25.920 it's quite wrong because the Bitcoin protocol leaves a complete 0:04:25.960 --> 0:04:29.560 trace of all of the transactions between all of those 0:04:30.160 --> 0:04:34.320 Bitcoin addresses. What did you accomplish with this currency and 0:04:34.440 --> 0:04:39.679 sort of the you know, computer science breakthrough that solves 0:04:39.720 --> 0:04:43.680 this problem. Ah. So the change we made in z 0:04:43.839 --> 0:04:50.360 cash is that the transactions are optionally encrypted using cryptography, 0:04:50.440 --> 0:04:53.880 so that no one who's looking at the open public 0:04:53.880 --> 0:04:57.040 blockchain can see the details about which address the money 0:04:57.160 --> 0:05:01.640 came from, to which address it went, how much was transferred, UM, 0:05:01.680 --> 0:05:05.400 and UM other transaction data like the memo field that 0:05:05.440 --> 0:05:08.400 you write in what the purpose of this payment is. Now. 0:05:08.640 --> 0:05:13.080 One of the reasons people are skeptical about digital currencies, 0:05:13.160 --> 0:05:16.400 or maybe they're negative on them, is they say, well, yes, 0:05:16.480 --> 0:05:19.560 there may be some justification for them, but you know, 0:05:19.640 --> 0:05:22.719 the only thing it makes sense is for crime and 0:05:22.800 --> 0:05:26.080 circumventing governments and so forth. And then you come along 0:05:26.200 --> 0:05:28.520 and say, ah, yeah, not only have we built on 0:05:28.560 --> 0:05:30.800 top of these digital currencies, but we've even made it 0:05:30.880 --> 0:05:34.880 more anonymous, which would lead people to think that so 0:05:34.920 --> 0:05:37.440 they've just made a currency that's even better for crime 0:05:37.640 --> 0:05:41.120 and the black market. Is that what your currency is 0:05:41.160 --> 0:05:44.400 good for? No, that's what That's what a lot of 0:05:44.440 --> 0:05:48.480 people sort of jumped to. But that's not what it 0:05:48.520 --> 0:05:52.039 gets used for in practice. UM. Neither z cash, which 0:05:52.080 --> 0:05:54.919 is brand new UM. It just launched at the end 0:05:54.960 --> 0:05:57.160 of October, right, Yeah, it's only been out there for 0:05:57.200 --> 0:06:01.679 a few weeks UM, but it's gotten this incredible uptake 0:06:01.720 --> 0:06:05.520 all across the world. There are thousands of UH computers 0:06:05.640 --> 0:06:09.440 and probably more than a hundred countries right now that 0:06:09.480 --> 0:06:12.560 are running z cash UM and there's no reports or 0:06:12.600 --> 0:06:15.440 even rumors of any use of it for anything illegal. 0:06:16.320 --> 0:06:18.640 And I remember this when the same UH sort of 0:06:18.720 --> 0:06:21.080 question was asked about bitcoin, like you alluded to, When 0:06:21.080 --> 0:06:24.400 bitcoin was new, a lot of people either they couldn't 0:06:24.440 --> 0:06:28.880 get their head around why it could be valid and valuable, 0:06:29.279 --> 0:06:31.200 or they were just more excited and interested in the 0:06:31.279 --> 0:06:34.279 in the crime story. But as the years have gone by, 0:06:34.400 --> 0:06:38.760 the non criminal uses of bitcoin are increasingly important. Right 0:06:39.200 --> 0:06:42.080 I expect the same will probably happen with z cash. 0:06:42.160 --> 0:06:47.480 That the use of a currency like this for crossing 0:06:47.520 --> 0:06:52.280 borders UM, circling the whole globe UM, and being an 0:06:52.320 --> 0:06:55.320 open and permission list thing that anyone can plug into 0:06:55.400 --> 0:06:58.520 and anyone can add their own service or their own 0:06:58.520 --> 0:07:03.440 business into it without thus making themselves dependent on some 0:07:03.600 --> 0:07:06.919 you know, third party like PayPal or UH some foreign 0:07:07.000 --> 0:07:11.080 government or anything like that. With bitcoin, you know, one 0:07:11.120 --> 0:07:14.840 of the challenges that I've had with sort of wrapping 0:07:14.880 --> 0:07:19.160 my head around is why is there any value to 0:07:19.240 --> 0:07:21.880 it in the first place? UM. And it's sort of 0:07:21.920 --> 0:07:25.360 like this difficult philosophical question that I think actually applies 0:07:25.400 --> 0:07:30.080 to all money, and it applies to gold arguably and 0:07:30.160 --> 0:07:32.000 lots of things. So it's not just a bitcoin, but 0:07:32.200 --> 0:07:35.600 in other words, like we all you know, people somehow 0:07:36.360 --> 0:07:40.680 except that there's value to these currencies sort of x nilo. 0:07:40.760 --> 0:07:42.480 I mean with the dollar, with the U. S Dollar, 0:07:42.560 --> 0:07:44.520 you could say, well, you have to use the dollar 0:07:44.640 --> 0:07:48.240 to pay your taxes. Uh, And so that sort of 0:07:48.320 --> 0:07:53.800 creates a reason that dollars inherently have value. Um, what 0:07:54.240 --> 0:07:58.320 how do you answer this question a with cryptocurrencies in general, 0:07:58.640 --> 0:08:01.680 and then be with a brand new one like why 0:08:01.800 --> 0:08:04.600 do two separate people on different parts of the globe 0:08:04.920 --> 0:08:08.800 agree that a z z cash has value to it? 0:08:09.160 --> 0:08:11.760 And and see, like you say, with with any other 0:08:11.880 --> 0:08:14.360 kind of currency or or or a gold coin or 0:08:14.360 --> 0:08:17.280 anything else, it's a there's a mystery to it. And 0:08:17.520 --> 0:08:20.280 sometimes people mistakenly think that a gold coin or a 0:08:20.760 --> 0:08:24.080 or a hundred dollar bill is valuable because it's backed 0:08:24.120 --> 0:08:27.360 by something else. But that's got to be a mistake 0:08:27.520 --> 0:08:29.960 because if that were the only value it had, you 0:08:30.000 --> 0:08:34.360 could just use the something else. Well. Well, I mean, 0:08:34.440 --> 0:08:38.440 like you know, the the US dollar is arguably backed 0:08:38.480 --> 0:08:41.800 by a gigantic army, and there's a law that says 0:08:41.960 --> 0:08:44.440 you will go to prison if you don't pay the 0:08:44.480 --> 0:08:47.240 government a certain amount of dollars relative to your income 0:08:47.280 --> 0:08:50.160 at the end of every year. So, I mean, you 0:08:50.160 --> 0:08:52.760 could you could see how there are these structures that 0:08:52.880 --> 0:08:57.080 buttress the value of fiat money. Yeah, there's there's a 0:08:57.240 --> 0:08:59.720 there's a buttress, But that can't be the full explanation, 0:08:59.760 --> 0:09:02.520 because people value it and desire it and use it 0:09:03.120 --> 0:09:07.559 for purposes beyond paying taxes and getting along with the army. Um. 0:09:07.600 --> 0:09:10.800 And in fact, you can see with fiat currencies like that, 0:09:10.960 --> 0:09:14.240 if the people collectively start to value them less and less, 0:09:14.480 --> 0:09:17.880 then eventually the army and the revenue service also start 0:09:17.960 --> 0:09:21.000 valuing them less and less. Right, But how do you 0:09:21.040 --> 0:09:23.320 get But you know, it seems to me, how do 0:09:23.360 --> 0:09:26.320 you germinate that in the first place. Yeah, it's a 0:09:26.360 --> 0:09:32.480 really good question. I remember years of consternation and and 0:09:32.480 --> 0:09:36.200 and confusion among people when bitcoin was new, where a 0:09:36.240 --> 0:09:40.199 lot of people said, very decisively, this is impossible, this 0:09:40.280 --> 0:09:43.200 is a scam, This makes no sense. It you know, 0:09:43.360 --> 0:09:46.960 it cannot last. It is only somebody's ripping someone else off. 0:09:47.000 --> 0:09:49.720 And once they're done this is over. And you know, 0:09:49.840 --> 0:09:52.600 I thought at the time, I disagree. I think this 0:09:52.720 --> 0:09:55.480 can last. I think it makes sense. But I'm never 0:09:55.520 --> 0:09:57.320 going to convince these people. But what is going to 0:09:57.400 --> 0:09:59.200 convince them is if a few years go by and 0:09:59.240 --> 0:10:02.600 it's still here. And that's what happened with bitcoin after 0:10:02.720 --> 0:10:05.319 like you know, about four four years or so of that, 0:10:05.440 --> 0:10:08.040 then the voices saying that it was impossible and meaningless 0:10:08.080 --> 0:10:11.319 sort of faded out. Um so, and then how do 0:10:11.440 --> 0:10:17.120 we germinate it? Well, you know, ze cash has been, 0:10:17.400 --> 0:10:20.720 like you mentioned at the beginning of this podcast, remarkably 0:10:20.760 --> 0:10:24.920 sort of popular, widely, widely anticipated, and widely accepted. And 0:10:25.600 --> 0:10:27.760 ever since it's launched only a couple of weeks ago, 0:10:28.400 --> 0:10:32.960 there have been dozens of companies have announced that they've 0:10:33.000 --> 0:10:36.520 added z cash integration. So there's a company called Purse 0:10:36.679 --> 0:10:39.440 and you can buy anything you want off of Amazon 0:10:39.480 --> 0:10:41.800 dot com and pay with the cash, and they give 0:10:41.840 --> 0:10:47.480 you a discount because they have access to discounted Amazon points. Um. 0:10:47.520 --> 0:10:50.480 And there's you know, there are merchants that will sell 0:10:50.520 --> 0:10:52.960 you T shirts and Neon signs and things like that 0:10:53.000 --> 0:10:55.520 over the internet and charge you in ze cash. It's 0:10:55.520 --> 0:10:58.520 a social it's a social activity. It's the fact that 0:10:59.160 --> 0:11:01.000 it has to be something thing that you care about 0:11:01.000 --> 0:11:03.800 and you value. But in addition to that, you have 0:11:03.920 --> 0:11:06.400 to have a group or a community of other people 0:11:06.440 --> 0:11:08.560 who also care about it, you know. And I first 0:11:08.640 --> 0:11:11.080 started trying to wrap my head around bitcoin, I thought 0:11:11.160 --> 0:11:14.319 that the you know, it's kind of like Facebook in 0:11:14.360 --> 0:11:16.920 the sense that Facebook would have no value if nobody 0:11:17.040 --> 0:11:20.720 was there. That's right, And you could create another social 0:11:20.760 --> 0:11:23.600 network that had all the functions of Facebook and perhaps 0:11:23.679 --> 0:11:26.839 arguably better. And some have existed, but they've never had 0:11:26.840 --> 0:11:30.199 any value because nobody was there. It's still not totally satisfying, 0:11:30.600 --> 0:11:33.479 but it's it's sort of gets there. That's what economists 0:11:33.520 --> 0:11:37.160 call the network effect, right, a network effect, it's definitely 0:11:37.200 --> 0:11:40.559 true of It's definitely true of Facebook and social networks UM, 0:11:40.559 --> 0:11:43.080 and it's also definitely true of currencies. Currencies are very 0:11:43.120 --> 0:11:46.160 strongly affected by the network effect. UM. So it's kind 0:11:46.160 --> 0:11:48.680 of both. It's both that there's a lot of people 0:11:48.720 --> 0:11:51.960 out there who value z cash for itself, and there's 0:11:52.000 --> 0:11:57.280 also a widespread um belief that other people are valuing 0:11:57.360 --> 0:11:59.600 z cash, so that it's going to you're gonna you know, 0:11:59.600 --> 0:12:02.600 it's gonna have currency, so to speak. But what really 0:12:02.760 --> 0:12:05.640 inspires me the most is the people who are who 0:12:05.720 --> 0:12:09.240 just love it because they love privacy and they think 0:12:09.240 --> 0:12:14.040 it's it's helpful to underprivileged people. Uh that it empowers 0:12:14.080 --> 0:12:16.800 people because it crosses borders and allows people to cooperate 0:12:16.800 --> 0:12:19.640 who previously weren't able to reach each other to cooperate. 0:12:20.120 --> 0:12:22.880 And I've had this wonderful experience of people coming up 0:12:22.920 --> 0:12:26.320 to me just to say, we care about this. My 0:12:26.400 --> 0:12:30.040 community is on board, and we're glad that this has happening. 0:12:30.160 --> 0:12:32.120 We think it's important. It kind of makes the head 0:12:32.160 --> 0:12:34.720 hurt thinking about where these things come from. But in 0:12:34.760 --> 0:12:36.920 a way, I think all the good things in life 0:12:37.480 --> 0:12:40.600 make the head hurt if you try to think them through. Yeah, 0:12:40.640 --> 0:12:43.640 you know it's it rises from human behavior, and human 0:12:43.640 --> 0:12:46.800 behavior is one of the biggest mysteries. I want to 0:12:46.800 --> 0:12:49.599 take a quick break for a sponsor and we'll be 0:12:49.720 --> 0:12:54.800 right back. But knowledge to work and grow your business 0:12:54.880 --> 0:12:59.000 with c i T from transportation to healthcare to manufacturing. 0:12:59.200 --> 0:13:02.600 C i T offer commercial lending, leasing, and treasury management 0:13:02.640 --> 0:13:05.960 services for small and middle market businesses. Learn more at 0:13:06.000 --> 0:13:14.199 c i T dot com. Put knowledge to work and 0:13:14.240 --> 0:13:17.920 we're back with Zuko Wilcox. He's the CEO of the 0:13:18.000 --> 0:13:21.839 z cash company um, which is a company that has 0:13:22.000 --> 0:13:26.679 launched a new cryptocurrency. You know, when we talk about bitcoin, 0:13:26.920 --> 0:13:30.319 we uh everybody. Most people know that there's this mysterious 0:13:30.480 --> 0:13:35.719 creator who went by the pseudonym Satoshi Nakamoto. No one 0:13:35.760 --> 0:13:40.720 really knows for sure who it is. That mysterious origin 0:13:40.920 --> 0:13:44.120 kind of helps, uh uh sort of adds to the 0:13:44.280 --> 0:13:49.720 fascination and allure with bitcoin. Obviously, Zuko z cash is 0:13:49.720 --> 0:13:55.000 different because there's a company with investors that have launched 0:13:55.000 --> 0:13:59.360 this currency. Uh explained to us sort of the advantages 0:13:59.520 --> 0:14:04.040 and this advantages of having specific founders and backers and 0:14:04.120 --> 0:14:08.080 investors associated with your launch. Well, there are advantages and 0:14:08.120 --> 0:14:12.600 disadvantages in terms of people's trust. The fact that we 0:14:12.679 --> 0:14:15.520 have these investors causes some people to trust us more 0:14:15.520 --> 0:14:18.480 and other people to trust us less. And the fact 0:14:18.480 --> 0:14:22.160 that we have a company with employees and a CEO 0:14:23.000 --> 0:14:26.720 causes some people to have more confidence in the future 0:14:26.840 --> 0:14:29.400 of our project and other people to have less. Um 0:14:29.560 --> 0:14:33.479 But the reason we did it was not that consideration. 0:14:33.600 --> 0:14:37.240 It was in order to be able to fund the work. 0:14:37.840 --> 0:14:40.440 There's been a lot of engineering effort that we've already 0:14:40.440 --> 0:14:42.920 put into get this far, and we have a roadmap 0:14:43.320 --> 0:14:46.760 for pouring in years more of engineering effort to improve 0:14:46.840 --> 0:14:50.800 the protocol over the coming years. Tell us about your 0:14:50.840 --> 0:14:55.720 ceremony when you officially launched the currency. You put put 0:14:55.800 --> 0:14:59.800 up a blog post about this sort of extraordinary, extraordinarily 0:15:00.280 --> 0:15:04.080 complex launching event that you did to sort of ensure 0:15:04.160 --> 0:15:07.960 people that UM you know, is safe and secret and 0:15:08.040 --> 0:15:11.320 wasn't going to be hacked. Walk us through this sort 0:15:11.360 --> 0:15:14.840 of elaborate launch that you did. Well, there's a cryptographic 0:15:15.040 --> 0:15:18.720 value that we needed to produce, uh to use it. 0:15:18.720 --> 0:15:22.200 It's kind of a public key, crypto public key that 0:15:22.440 --> 0:15:24.400 needs to be used in the protocol. He has to 0:15:24.440 --> 0:15:29.920 be used by all the users, and the associated private key, 0:15:30.040 --> 0:15:35.280 if it existed, could be used to counterfeit money, so 0:15:35.440 --> 0:15:40.120 counterfeitsy cash. So we came up with a protocol and 0:15:40.120 --> 0:15:43.280 a ceremony which allows us to generate that public key 0:15:43.360 --> 0:15:46.960 without the corresponding private key ever coming into existence. And 0:15:47.000 --> 0:15:50.360 we call that thing the toxic waste private key UM. 0:15:50.400 --> 0:15:52.400 And our analogy is if you have a factory that 0:15:52.480 --> 0:15:55.520 produces something and as a side effect, it produces these chemicals, 0:15:55.520 --> 0:15:59.320 These precursors, and individually, each precursor is harmless. But if 0:15:59.320 --> 0:16:01.840 they all get together and it turns into toxic waste, 0:16:01.880 --> 0:16:03.920 that's really dangerous and difficult to deal with. So we 0:16:03.960 --> 0:16:08.880 designed this system to produce the necessary public key and 0:16:08.960 --> 0:16:11.800 keep all the precursors separate until they could be safely destroyed. 0:16:12.320 --> 0:16:16.120 And we executed this protocol with six different people that 0:16:16.200 --> 0:16:18.920 we recruited from I was one of them, and then 0:16:19.160 --> 0:16:23.360 five different people that we recruited who we trusted to 0:16:24.240 --> 0:16:26.680 be competent and not to get hacked while they were 0:16:26.720 --> 0:16:29.560 doing this, And as far as we can tell, none 0:16:29.600 --> 0:16:32.400 of us got hacked, so all six of the precursors 0:16:32.400 --> 0:16:36.040 got destroyed. The details of this ceremony, as you call it, 0:16:36.080 --> 0:16:39.600 are pretty interesting. Explain some of what you did, uh, 0:16:39.720 --> 0:16:42.760 to sort of coordinate these five different people, Well, there 0:16:42.760 --> 0:16:47.000 were six different people, and uh, the the main goal 0:16:47.120 --> 0:16:51.040 was to prevent some attacker from hacking all six of 0:16:51.120 --> 0:16:54.560 us at once and stealing the precursor from each of us. Right. 0:16:55.360 --> 0:16:58.480 So one thing we did was that we recruited people 0:16:58.480 --> 0:17:04.200 who were themselves exceptional computer security experts, and we let 0:17:04.240 --> 0:17:07.399 them have a degree of autonomy about what sort of 0:17:07.400 --> 0:17:10.560 defensive measures they would take um so that there would 0:17:10.560 --> 0:17:13.000 be a variety of defensive measures in play, so that 0:17:13.040 --> 0:17:14.840 even if an attack or figured out how to hack 0:17:14.880 --> 0:17:16.520 one of us, you wouldn't figure out how to attack 0:17:16.600 --> 0:17:18.760 how to hack the others. And then each of us 0:17:18.800 --> 0:17:22.119 had an air gapped machine. We went. We did this 0:17:22.160 --> 0:17:25.399 thing called random purchase, which is you drive to a 0:17:25.480 --> 0:17:29.000 random computer store without like calling ahead in case the 0:17:29.040 --> 0:17:32.080 attacker is spying on your phone. Uh So we turned 0:17:32.080 --> 0:17:34.800 off our phones and we drove. We got an old 0:17:34.800 --> 0:17:38.600 paper map, remember those got out of paper map, found 0:17:38.640 --> 0:17:41.639 the computer store on the map and drove there and 0:17:41.680 --> 0:17:44.119 we walked down the computer store and said, we want 0:17:44.320 --> 0:17:48.280 one of these here computers. And then the salesman said, okay, 0:17:48.320 --> 0:17:50.679 there's there's two sitting here in a box, you know 0:17:50.720 --> 0:17:52.919 in boxes on the showroom floor, and you can have 0:17:52.960 --> 0:17:54.720 this one. And we said no, no, we want the 0:17:54.760 --> 0:17:58.119 other one. He said, okay, fine, you can have the 0:17:58.119 --> 0:18:02.080 other one, which we did. The whole random purchase process 0:18:02.240 --> 0:18:07.320 is to prevent the possibility that an attacker could plant 0:18:07.400 --> 0:18:10.320 a backdoor into the machines. So if you just order 0:18:10.480 --> 0:18:14.000 machines from Amazon, it's possible. And in fact, the Snowden 0:18:14.080 --> 0:18:20.400 disclosures revealed that it's actually practiced that sometimes people intercept 0:18:20.480 --> 0:18:23.159 your shipment of your computer and open it up and 0:18:23.240 --> 0:18:24.720 plant a bug in it and then seal it back 0:18:24.760 --> 0:18:27.120 up and deliver it to your house. Um, so that's 0:18:27.119 --> 0:18:29.520 why we did random purchase. So people went around in 0:18:29.520 --> 0:18:32.360 all six in the six different locations across the globe 0:18:32.880 --> 0:18:35.480 and purchased a random computer from the store. And then 0:18:35.560 --> 0:18:38.280 we air gapped them, which means we you know, unscrewed 0:18:38.320 --> 0:18:42.119 the lid of the computer and pulled out all the radios, 0:18:42.160 --> 0:18:46.359 all the WiFi and Bluetooth and any kind of networking 0:18:46.400 --> 0:18:49.639 so that these computers couldn't connect to any network. And 0:18:49.680 --> 0:18:51.399 then we did all that before we first turned them on. 0:18:51.560 --> 0:18:54.080 So now that they're random purchased and air gapped, we 0:18:54.119 --> 0:18:57.440 feel pretty sure that there's no attacker out there who 0:18:57.800 --> 0:19:00.000 has a backdoor in any of these computers, at least 0:19:00.040 --> 0:19:02.320 not a back towards that they can they can use. 0:19:03.640 --> 0:19:06.680 And then, uh, now that we have these air gapped computers, 0:19:06.720 --> 0:19:12.040 we still need to deliver the the protocol messages to 0:19:12.200 --> 0:19:15.640 each computer so that each one can perform it's part 0:19:15.680 --> 0:19:18.439 of the computation and send its answer back to produce 0:19:18.520 --> 0:19:21.959 the shared public key. So we decided to use DVDs 0:19:22.560 --> 0:19:27.600 to deliver those messages. Yeah, paper maps and DVD this 0:19:27.680 --> 0:19:32.680 is throwback all the way. So uh so, the messages 0:19:33.280 --> 0:19:37.399 that got exchanged between the air gapped computers were only 0:19:38.119 --> 0:19:42.359 exchanged by means of right ones append only DVDs, and 0:19:42.400 --> 0:19:47.160 that means it produced and an evidence trail of all 0:19:47.200 --> 0:19:50.040 of the communications that we did during the ceremony. And 0:19:50.080 --> 0:19:55.120 afterwards we collected those um the recordings of those messages 0:19:55.119 --> 0:19:58.840 and uploaded them to the Internet archive for historians to analyze. 0:19:59.359 --> 0:20:02.879 What else, some of the people did some some fun things. 0:20:02.920 --> 0:20:06.080 One of them. Three of the participants in the ceremony 0:20:06.119 --> 0:20:10.240 were anonymous. At the time, only I knew their identities, 0:20:11.080 --> 0:20:14.359 and three of them were some known computer scientists and 0:20:15.080 --> 0:20:21.440 Washington d C policy UH experts and me. And then 0:20:21.520 --> 0:20:24.520 at the end of the ceremony, as soon as we 0:20:24.560 --> 0:20:29.400 had finished producing the correct public key and everyone had 0:20:29.480 --> 0:20:33.200 deleted their own precursor, then we revealed one of the 0:20:33.240 --> 0:20:39.320 three anonymous people was a well known large information security 0:20:39.359 --> 0:20:42.000 consulting firm and that they were running their part of 0:20:42.040 --> 0:20:45.320 the ceremony in their lab under surveillance, and that they 0:20:45.320 --> 0:20:49.400 were in parallel trying to hack into a copy of 0:20:49.480 --> 0:20:52.119 their computer to see how hackable it was. And it 0:20:52.200 --> 0:20:56.199 all sounds extraordinary, like it sounds like something out of 0:20:56.200 --> 0:20:59.840 a movie where you that you like a hacker movie, 0:21:00.280 --> 0:21:02.359 and I get that, like I haven't even told you that. 0:21:02.480 --> 0:21:04.720 The last let me tell you the last few parts. 0:21:04.760 --> 0:21:06.760 There were three anonymous people. One turned out to be 0:21:06.800 --> 0:21:11.440 an infosyc lab one it turned out nobody. Nobody knew 0:21:11.480 --> 0:21:13.879 this at the time, but it turned out that he 0:21:14.000 --> 0:21:18.400 was a well known bitcoin developer, and that he performed 0:21:18.440 --> 0:21:21.160 his part of the ceremony in a moving car on 0:21:21.160 --> 0:21:25.639 an empty Canadian highway in the far North because he 0:21:25.720 --> 0:21:27.800 figured that would make it harder for anyone to hack 0:21:27.840 --> 0:21:31.320 into his computer during the process. And the last one 0:21:31.400 --> 0:21:35.040 remains anonymous. So there's your there's your mystery. If you 0:21:35.080 --> 0:21:38.080 want to have something like Satoshi Nakamoto, it's the sixth 0:21:38.080 --> 0:21:41.399 participant in the ceremony. That's exactly what I was about 0:21:41.440 --> 0:21:44.199 to get at. So part of the ceremony, and we 0:21:44.200 --> 0:21:45.800 just have a few minutes left. But part of the 0:21:45.800 --> 0:21:49.960 ceremony obviously is to prove forever in history and theory 0:21:50.000 --> 0:21:54.560 that there's no way anyone could make counterfeit z cash. 0:21:54.840 --> 0:21:58.320 But also part of it is just too it appears 0:21:58.520 --> 0:22:02.560 create a sort of aura and mythology around it that 0:22:02.720 --> 0:22:07.400 sort of befits the uh sort of mystery of all currency. Well, 0:22:08.280 --> 0:22:11.000 I guess that's a convenient side effect. But you know, 0:22:11.080 --> 0:22:13.880 like since like all currency and language and all these 0:22:13.880 --> 0:22:17.959 sort of shared social conventions have mysterious origins, it seems 0:22:18.000 --> 0:22:20.959 like it very much helps to have a sort of 0:22:21.000 --> 0:22:24.960 fascinating creation myth that would come out of a movie 0:22:25.000 --> 0:22:28.159 about hackers. Yeah, and and some of the some of 0:22:28.160 --> 0:22:31.119 the participants destroyed the hardware with fire after, so in 0:22:31.160 --> 0:22:33.840 future generations children have an excuse to use fireworks on 0:22:33.880 --> 0:22:37.400 that day. I'm very eager to see how this works out. 0:22:37.440 --> 0:22:39.880 I actually, uh, a friend of mine and I had 0:22:39.920 --> 0:22:43.760 sort of have seriously have jokingly launched our own currency 0:22:43.800 --> 0:22:47.199 a couple of years ago, called us stalwart bucks uh, 0:22:47.320 --> 0:22:50.120 named after my Twitter handle. At one point on an 0:22:50.160 --> 0:22:54.240 Indian exchange. The total outstanding value is about forty dollars. 0:22:54.280 --> 0:22:57.040 Of all of them, it's now probably zero because I 0:22:57.040 --> 0:22:58.600 don't think a single one is traded in a year 0:22:58.600 --> 0:23:03.040 and a half. We gotta leave there, Zucho Wilcox, Uh, 0:23:03.200 --> 0:23:07.280 the backer of z cash. We're going to be watching 0:23:07.320 --> 0:23:09.879 it to see if you can make a dent in 0:23:09.920 --> 0:23:13.200 the cryptocurrency world. And hopefully maybe we'll have you back 0:23:13.200 --> 0:23:15.520 on here in a year and we can see what 0:23:15.640 --> 0:23:17.919 we've see what you've learned. But I really appreciate you 0:23:17.960 --> 0:23:21.280 coming on today, Thank you very much. But by and uh, 0:23:21.440 --> 0:23:24.560 that'll do it for today's Odd Lots podcast. Here's normally 0:23:24.600 --> 0:23:27.800 where I would talk to Tracy and talk about what 0:23:27.840 --> 0:23:31.000 we learned on the episode, but um, she's not here, 0:23:31.080 --> 0:23:33.679 and so I don't think I have anything to add. 0:23:34.520 --> 0:23:37.119 Thanks for listening everyone. You can find me on Twitter 0:23:37.240 --> 0:23:40.159 at the Stalwart and you can follow Zoko on Twitter 0:23:40.359 --> 0:23:52.600 at zooko z z o o Ko. Put knowledge to 0:23:52.680 --> 0:23:55.280 work and grow your business with ce i T from 0:23:55.320 --> 0:24:00.439 transportation to healthcare to manufacturing. C i T offers commercial lending, leasing, 0:24:00.480 --> 0:24:04.159 and treasury management services for small and middle market businesses. 0:24:04.320 --> 0:24:07.000 Learn more at c I T dot com. Put Knowledge 0:24:07.040 --> 0:24:07.400 to Work.