“Regulators are going to come around – some of them already have,” says crypto privacy advocate…
One of the great things about events like last week’s World Blockchain Forum is that players from the crypto space get to indulge in impromptu meet-ups, and chat with each other in person – whether that’s to formulate alliances, form opinions, trend-spot, or simply gossip. In between main stage events, the Thames-side patio of Old Billingsgate was consistently abuzz with conversation, and buzzing thanks to the copious amounts of coffee being consumed, as people chatted and made plans.
It was there that we were lucky enough to run across OB1 CEO Brian Hoffmann and ZCash COO Jack Gavigan. Before we interrupted, they were deep in conversation regarding the walk-through and demo the former had just given for his multi-crypto, decentralised p2p market concept, OpenBazaar, in the main hall. A presentation that had opened with a searing critique of centralised websites, and their propensity for scooping up our data.
from the hacked-together, decentralised platform DarkMarket back in 2014. Since then, he’s developed it as a much friendlier-sounding, and user-friendly, incarnation of the same user-regulated, unmediated, crypto-friendly, marketplace. Jack has a history working in fintech, cyber security and trading systems at some of the biggest names in finance, and now operates as part of the management of one of the top so-called Privacy Coins in crypto today.
Thus, it seemed an opportune moment to grab a conversation with both about the role cryptocurrency has in ensuring private transactions and open markets, and what decentralisation offers for the future of online trading and personal finance.
So that’s exactly what we did…
CNR: Both of you are dealing in the same sort of area – bringing what’s generally been considered to be the dark-side of cryptocurrency a bit more into the light. What have been the main problems in convincing people of the importance of – in ZCash’s case – promoting privacy, and decentralising markets in the case of OpenBazaar?
Brian Hoffman, OpenBazaar:
From the marketplace side, it’s not so much about tackling the dark part of the web…
However, I think those types of users have a clear advantage by using an anonymous software, anonymous currencies, right? Because they have a high risk, they’re doing something that’s not legal. So they will adopt those kinds of hiding technologies quicker than mainstream users.
The more important thing is that those values should be more respected by mainstream users. I think we’ve learned to just be so open and cavalier about sharing our data. And then we turn around when we get our credit cards hacked or identity stolen, and we’re like: ‘Whoa! How did that happen?’ Because [people] don’t understand the risk that they’re putting themselves at by using software that doesn’t protect privacy and doesn’t use proper encryption.
CNR: I would guess that users of ZCash, or people that use OpenBazaar’s markets, have pretty similar ideologies to your products. What do you think the percentage of the entire potential market for crypto holds that kind of ideology, though?
Jack Gavigan, ZCash:
If you go around now, and survey 100 people asking them ‘will you publish your credit card bills and your bank statements on the internet?’, or ‘will you tweet out every single transaction?’ They’ll go: ‘No’…
Look at legislation here in the EU. We’ve got GDPR, in the US you’ve got similar legislation protecting financial privacy. You can see people recognise the value of privacy. I think they use these technologies, like Facebook, and Bitcoin, and they don’t necessarily realise that they’re giving up all this privacy.
Then, they’re confronted with the fact that ‘Oh, shit! Wow… Experian just got hacked and my entire life is now for sale to the highest bidder’, or ‘Shit, did I just have my voting intention changed by being influenced on Facebook?’, or ‘do I really want to subscribe to, or pay towards, a political project using Bitcoin if there’s a risk at some point the future somebody might analyse it all and trace it back to me?’
I think that people are beginning to, right now, realise the importance of privacy. If cryptocurrencies are going to go mainstream, privacy has to be a part of that. They have to be private, they have to be confidential.
CNR: When you’re putting control in the hands of users, and you’re taking away that mediation, are you scared that you are relying on a
Sony type ruling
saying that the medium is not going to be responsible for the crime? Do you not feel that you’re putting too much of your business model into the hands of people who are going to misuse it?
I think that’s certainly like a morality issue on the behalf of the people that participate, right? When we started the project, it wasn’t really intended to be a business or anything, it was it was a passion project around the ideals that we want to create more freedom for users.
I mean, it is an independent choice, but you should respect jurisdictional laws. If you don’t appreciate those, you change them or you move somewhere else, or whatever. You don’t just break them.
If the platform became 99% drug sales, there is a morality issue, right? You’re building software that serves a purpose you don’t believe in…
As a personal thing, I would stop working on something like that.
In terms of the question around legalities, I believe code is free speech. I think it’s a creation like a song or a book, and you’re producing it for others to consume and use and however they choose to do that. I think they’re responsible parties.
It’s like creating a knife, and you say ‘it’s for this’, but it obviously can be used in other ways…
Should we just ban it outright and not use it? No. But, if
used it to stab other people – and for no other purpose – you’d be like ‘okay, that’s probably a bad creation.’
CNR: In Brian’s talk, he held up Silk Road as a private, crypto-positive, platform ruined by the bad things that it was used for. In regards to OpenBazaar, how do you insulate yourself, as a creator, from having a similar kind of fate befall you personally as befell Ross Ulbricht?
You know… everybody has their own approach.
Bad people do bad things. There’s a difference between a bad guy and a good guy: a bad guy will embrace [the misuse] and see it as an opportunity, while a good guy is going to go: ‘Actually, I’m going to discourage this, or stop making this, or step away from this, or I’m going to shut this thing down…’
I mean, Ross Ulbricht? I think, some people say that he was unfairly convicted, and so on… But the preponderance of evidence suggests that he was a bad guy.
Most people don’t realise that the very first e-commerce transaction on the internet was marijuana. An illegal marijuana sale… Imagine if the guys who started all that, the developers, said: ‘oh, this is going in the wrong direction, let’s just kill it.”
Early on, you don’t really know what the final make-up of your user base is going to be. At first the higher-risk [taking] users are willing to try it out.
Foreign companies often try new business models to get ahead of legislation, and things like that, or try new things – and they have to be more risky. So it’s just that way that technology cycles work.
BitTorrent never realised its full potential because it was clear that there was not as much of a [legitimate] benefit to it as there was for elicit piracy. And that’s the way it is! Eventually, it got killed by better business models because users didn’t want to be doing illegal things. They just wanted content, and they found it a different way.
So if people want digital money, and the banks come up with some clever way to do it that users accept while crypto just stays as this drug dealing currency, it could end up like BitTorrent.
CNR: That’s why, I take it, is why there’s been a lot of talking about user experience and user interface during the WBF? Is that what you guys are focusing on now, in terms of creating a better way of making it usable, more transparent?
We need technologies. But they’re built by technologists… Technologists are rarely good at user experience, and user interface. I think the whole the whole cryptocurrency space has suffered from that.
For it to go mainstream, crypto needs to have that ‘Apple moment’.
Apple came along, they figured out how to how to build a great user interface that even two year olds could use. You see these videos of children who can’t even speak turning on an iPad, putting in a code, going to YouTube and putting on Peppa Pig… It’s so simple and easy to use.
We definitely need to be figuring out the user experience so that we can go through that S curve from the early adopters through to the to the mass market. My dad is never going to use cryptocurrency, but he can use Facetime. He’s not that great at computers and stuff but, y’know, he can use an iPhone and FaceTime!
If we can figure out how to make cryptocurrency itself, on decentralised markets, as easy to use..?
published recently put a lot of value in privacy coins and anonymity. Do you see that as the start of a shift in perception on an institutional basis, from opinion-makers? Do you believe the thinking will come around to the likes of ZCash?
I think it’s inevitable.
If you said to to a company: ‘right we’re going to set up this new trading platform, it’s going to use OpenBazaar’s technology, and every single trade that you do is going to be visible to all your competitors’. They’d be like [raises two fingers] ‘uck you!’, y’know?
Commercial confidentiality, personal privacy, people recognise the value of these things.
Regulators are going to come around – some of them already have. New York’s Department of Financial Services recognised the importance of personal financial privacy when they gave Gemini the go-ahead to list ZCash. I think other regulators are going to realise that their role is not just to combat AML and terrorist money-laundering, and terrorist financing. They also have [a role in] consumer protection… And part of consumer protection is ensuring that people’s personal information is protected.
I’d be surprised if any regulator in the world does not mandate that a bank uses encryption to protect communications between itself and its customers. I think that in time, maybe a few years down the road, we will start to see regulators saying we can’t use an open, visible-to-the-world blockchain. I don’t think they’re going to mandate using some specific form of currency or technology, but they’ll set these standards.
Then, before you know it, the privacy or the confidentiality that you get with ZCash will be ubiquitous in the same way that every time we log into Amazon, or log onto our online banking, it’s all protected by Transport Layer Security.
CNR: Jack Gavigan and Brian Hoffman, thanks a lot for taking time to chat with us… We’ll let you get back to your conversation now.
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