Latest / Hardwired by AlphaWire / Can AI Destroy Crypto Privacy? | ft. Corey Petty - Logos

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Can AI Destroy Crypto Privacy? | ft. Corey Petty - Logos · Hardwired by AlphaWire

0:00
SPEAKER_00: So, hello everybody.
0:01
SPEAKER_00: Welcome to another episode of Hardwired.
0:04
SPEAKER_00: I'm here with Corey Petty.
0:05
SPEAKER_00: Thank you very much for coming on, Corey.
0:07
SPEAKER_00: Happy.
0:08
SPEAKER_00: I always like to start off a podcast with just a little bit about you, where you come from, how you kind of got into crypto a little bit.
0:15
SPEAKER_00: It's a nice one to ask, and then what you're up to at the moment.
0:18
SPEAKER_00: So if you want to fire away.
0:20
SPEAKER_01: Yeah.
0:21
SPEAKER_01: Um, thanks for having me.
0:22
SPEAKER_01: Uh, I've been around for a while, so I'll try and keep this short.
0:26
SPEAKER_01: Um, I came back.
0:28
SPEAKER_01: I come from a um high-performance computing and physics background where I did a lot of quantum mechanics on supercomputers.
0:35
SPEAKER_01: Always loved computers, always loved the software hardware interface on really hard problems.
0:41
SPEAKER_01: Always love physics and decomposing things into their smallest pieces and putting them back together.
0:47
SPEAKER_01: Um, and that slowly led me into Bitcoin when I learned about kind of the Byzantine Generals problem and how they solved it, the proof of work uh and mining.
0:57
SPEAKER_01: Fell in love with that, then learned about money and how made up it is in a lot of ways, and how much we trust in the various individuals.
1:04
SPEAKER_01: And I was always fascinated by like the idea.
1:06
SPEAKER_01: I still fascinate the idea of like how much can you remove from a process, especially humans, and still make it work.
1:15
SPEAKER_01: And so Bitcoin did this really interestingly in that they removed the human from the like uh adjudication process of like, or like the trust process of me giving you money on the internet.
1:26
SPEAKER_01: I was like, cool, we solved the problem.
1:27
SPEAKER_01: We remove something and it works really well.
1:29
SPEAKER_01: It's more resilient now.
1:30
SPEAKER_01: I don't have to trust another human, which is, you know, more often than not, tends to be bad when power gets in the hands of others, right?
1:38
SPEAKER_01: And then I kind of fell into that rabbit hole, started a podcast called the Bitcoin Podcast in 2015.
1:44
SPEAKER_01: Still do that for funsies.
1:46
SPEAKER_01: Um, and then I joined, I made the leap of leaving academia to go into crypto.
1:52
SPEAKER_01: Uh, but back then that wasn't, there weren't jobs in crypto.
1:54
SPEAKER_01: So I did data science for government consulting services, teaching um people in cleared spaces how Bitcoin worked.
2:02
SPEAKER_01: That was fun.
2:02
SPEAKER_01: Also taught data science, which was also fun, but that didn't last very long because that's very slow.
2:08
SPEAKER_01: Uh, and like everything was blowing up, right?
2:11
SPEAKER_01: And I wanted to be at the bleeding edge.
2:13
SPEAKER_01: And so I joined status in 2018 as the CFO.
2:17
SPEAKER_01: I did a lot of security work, which means I had my fingers and everything.
2:21
SPEAKER_01: Uh, and I got to learn everything.
2:23
SPEAKER_01: And I was always kind of an avid community member on trying to like understand what's going on, how people help people understand what's going on.
2:30
SPEAKER_01: And then I wanted to get on the other side of it instead of telling people know that they can't build that thing because it's not secure.
2:37
SPEAKER_01: I wanted to be in the help build in the thing.
2:39
SPEAKER_01: And so I got a kind of in the launch pad of like logos, which was kind of like an extension of status into infrastructure.
2:47
SPEAKER_01: Status always wanted to be an application that consumed infrastructure.
2:50
SPEAKER_01: But like everything that was built wasn't kind of at the standard that we wanted it to be.
2:54
SPEAKER_01: So we expanded the organization into building logos, which is all of the infrastructure require.
3:00
SPEAKER_01: Um, and so I got to kind of be a part of that organization and like development and how things worked and who's doing what and what the project was about.
3:08
SPEAKER_01: And now I just talk.
3:09
SPEAKER_01: Uh now I get to go and help people understand what we're doing, why we're building the technology we're building, uh, and why it's important as a holistic thing as opposed to just an isolated project, and like how it works and uh who cares and all kinds of stuff.
3:28
SPEAKER_01: And that's always fun.
3:30
SPEAKER_00: It was it's been interesting to have a a bit of a deep dive into it before you came on the podcast, what you're actually doing.
3:35
SPEAKER_00: Because it's probably not the most common thing in crypto or in blockchain technology in the slightest.
3:41
SPEAKER_00: And one thing that that I was sort of came across when I was looking you up was just who do you actually offer this for?
3:48
SPEAKER_00: Like if we were to take this kind of down to like a simplistic level and maybe give some examples of how the technology could be used, or maybe even current clients or projected clients of where you're trying to take it, could you explain that to me?
4:01
SPEAKER_01: I mean, unfortunately, the answer is everyone, because it's we're trying to rebuild a complete, like decentralized, private by default technology stack that allows you to build what we would call actually decentralized applications, right?
4:15
SPEAKER_01: That are private.
4:15
SPEAKER_01: Like privacy is a core primitive.
4:18
SPEAKER_01: Not because privacy is the thing that matters, it's because privacy yields the things that matter, right?
4:24
SPEAKER_01: It gives people optionality on how they do self-disclosure and how information gets leaked across the transaction pipeline.
4:30
SPEAKER_01: So we're we think we have very strong principles on how we think this infrastructure needs to be built.
4:36
SPEAKER_01: And it's very difficult to bolt these things on afterwards.
4:40
SPEAKER_01: So other infrastructure isn't necessarily appropriate.
4:43
SPEAKER_01: So we decided to build to start with, like the Holy Trinity, which Ethereum started with, with uh kind of messaging, storage, and agreements, and then executions on top, which we call blockchain.
4:55
SPEAKER_01: And then all that glue in between that does all the things key management, you know, applications, uh, networking, you name it, right?
5:04
SPEAKER_01: We build the entire thing.
5:05
SPEAKER_01: And then we wrap it all up in this thing called Basecamp, which allows people to use it in a relatively easy way.
5:11
SPEAKER_01: That's the idea.
5:12
SPEAKER_01: And so you can build whatever you want.
5:14
SPEAKER_01: And one example is something that I'm doing myself as a demonstrative tool called Muster, which is basically a lot like you mentioned before this chat, like WeChat, right?
5:24
SPEAKER_01: You get into a room with somebody and you do things.
5:27
SPEAKER_01: But like with WeChat, China watches and makes decisions on what you can do and what you can't do and what you should do, and consequences if you don't do those things.
5:34
SPEAKER_01: We're doing everything privately so that you can't do that and you can trust it.
5:39
SPEAKER_01: Now, that's really hard to do.
5:41
SPEAKER_01: Uh fortunately, we build it in a modular way so we can upgrade it as we learn how to do it better and better and better.
5:46
SPEAKER_01: And as technology gets better, we can kind of change the pieces that don't work so that the process of doing this gets um better for the user and hopefully easier for the user to do it too.
5:58
SPEAKER_01: So, like one of the ways, one of the things we're doing is um a project called Cirples.
6:05
SPEAKER_01: It's like the other wing of logos, and that people get together, we go out and try and encourage people across the globe to gather around a very local first grassroots community organization and discuss problems they're having in their community, where they're being underserved.
6:22
SPEAKER_01: What's a problem in your local area that you'd like to do something about, right?
6:26
SPEAKER_01: How do you take action?
6:27
SPEAKER_01: Okay, once you understand what those problems are as a community, and only the community can really decide these types of things, then we help them specify what the requirements are for solving such a problem.
6:37
SPEAKER_01: What technology would you need to do this, right?
6:40
SPEAKER_01: And then in the event that we can help, we help build that technology for them.
6:45
SPEAKER_01: Or we help them identify the things that already exist that they can use to do these types of things.
6:49
SPEAKER_01: And we've done things like clean up massive trash piles in Africa.
6:54
SPEAKER_01: We've done things like find um uh private, effective ways for victims of sexual abuse to leave safely in Portugal.
7:05
SPEAKER_01: Like if we're finding, we're solving real problems doing this type of stuff and building technology that's helping people in a way that they weren't able to be helped beforehand.
7:14
SPEAKER_01: And that's really great.
7:15
SPEAKER_01: And so, like we're trying to do a whole bunch, but going after local communities to help help them help themselves and build a technology that's generalizable enough that we can that people can build the thing they need without being forced into something that they don't need.
7:29
SPEAKER_01: That makes sense.
7:31
SPEAKER_00: No, it it does.
7:32
SPEAKER_00: And I think it's I think it's something that a lot of people in crypto maybe miss.
7:36
SPEAKER_00: Like you mentioned things in in Africa.
7:38
SPEAKER_00: There, I think there's almost like a because they don't experience it, they don't perceive it, of there is a vast swathe of the world that doesn't have access to the rails of tra of commerce, of transaction, of communication that everybody else kind of takes for back for granted.
7:55
SPEAKER_00: Like with the example of WeChat, China's maybe a difficult one to discuss, but that but the same rationale applies is that like you go to some countries in Africa and the ability to just have a contract with somebody and it be executed when things are done does not exist.
8:11
SPEAKER_01: And it's I worked about this, it's wild.
8:13
SPEAKER_01: It's so wild how much that doesn't exist.
8:16
SPEAKER_01: I took that for granted, I didn't know it.
8:18
SPEAKER_01: It's it's that just really doesn't exist.
8:20
SPEAKER_00: Yeah.
8:21
SPEAKER_00: And it's and it's hundreds and hundreds of millions of people and hundreds and hundreds of millions of dollars or whatever base currency you want to quote it in, of volume and transaction and value that's that's moved, things are delivered, they turn up on time, it does work, but it isn't efficient and it doesn't allow them to own and access their own data or to be able to like leverage that data to get lending or any of the other things that we all take for granted when we have a business in a kind of first world country, if you want to use that vernacular.
8:53
SPEAKER_00: And I think it's people misunderstand that like there's a real need for this right now, and like this critical mass that you might perceive a transaction system to need to be viable in the UK or the US is not the same around the world.
9:07
SPEAKER_00: And you can build out these kind of test cases to be a little bit mean about them.
9:11
SPEAKER_00: They aren't, they are proof of work.
9:13
SPEAKER_00: It does it physically works in those scenarios, but in in kind of everybody else's maybe terminology and investors, it would be an example, is that will then allow that network to build that operating system together users and have a real kind of proof of use case there, which then allows it to scale even bigger and wider and into the countries where they would be competing with another transaction system like WeChat or like just paying an invoice on Revolute with their little pro as a freelancer to use a very common example.
9:44
SPEAKER_00: Um, but it's interesting, it's it it I I hearken back to a conversation I had with the CEO or the co-founder of World Mobile and what they were doing with networking across some of uh places like Africa and putting in these opportunities for farmers or people with little businesses to get connected and be able to utilize contracts and send stuff to each other.
10:05
SPEAKER_00: And it the same analogy is true is that people need this, and that it's a very, very large amount of people, and it and it's kind of a almost like a misunderstood area of business that companies like yours are building towards.
10:18
SPEAKER_00: I suppose one thing I would say is like, let's say you've been building this what, five years-ish, kind of something like that, or this area of of kind of development.
10:28
SPEAKER_01: To be fair, I think it's always been in Jared's CEO of logos, like mine, since the start of status.
10:33
SPEAKER_01: Um, when he did the ICO of that.
10:35
SPEAKER_01: He wanted this to exist.
10:37
SPEAKER_01: But we assumed that the infrastructure would be built for us when Ethereum started.
10:40
SPEAKER_01: Um, it just didn't go as planned.
10:42
SPEAKER_01: What they optimized for was scale.
10:44
SPEAKER_01: And a lot of the things that they promised, like messaging and storage, were kind of left by the wayside because the value, the obvious value, because the first application of stuff is money, happened to be the blockchain.
10:54
SPEAKER_01: That then got focused and scaled.
10:56
SPEAKER_01: But as you as the focus is being optimized for scale, privacy kind of took a back burner.
11:01
SPEAKER_01: And you're seeing it turn today, which is good, but it's very difficult to bolt that stuff on.
11:06
SPEAKER_01: And so, like, this has always kind of been there.
11:09
SPEAKER_01: Um, we just took the steps to start building these things in earnest.
11:15
SPEAKER_01: Um, it started with Waku, which was an adoption of Ethereum's Whisper.
11:20
SPEAKER_01: So Whisper wasn't very good for mobile phones, but we needed it for status.
11:23
SPEAKER_01: And so we had to alter, all to alter it.
11:25
SPEAKER_01: Turns out Whisper wasn't good for a lot of things.
11:27
SPEAKER_01: So we just completely took it over and then made it kind of a full messaging stack, called it Waku.
11:33
SPEAKER_01: And now that's called logos messaging.
11:35
SPEAKER_01: And that now is a suite of different protocols that's useful for all the context of ephemeral messaging, not just a node talking to a node on a blockchain network, which is what Whisper started as.
11:47
SPEAKER_01: And then um that became that became useful within status and also useful with other other projects externally, like Railgun, which is currently using it quite often, and other projects that continue to use it, um, because it's just generally useful in decentralized um things.
12:04
SPEAKER_01: But then we'd like, well, we need the whole thing.
12:06
SPEAKER_01: So we finally took the step to expand it into um blockchains and execution zones, execution environments.
12:14
SPEAKER_01: Um that was called Gnomos at first, that's the logos blockchain, and then now uh, and then also decentralized storage, which was called codex, but now it's called logos storage.
12:22
SPEAKER_01: Well, so we kind of tried it to do independently, and then we unified it into just one logos project so that these things are mechanically uh um sympathetic to each other, meaning that as they grow into their own ecosystem, they're gonna be still useful and easy to use with the other things, as opposed to them growing in a bunch of different directions and then trying to glue them back together later.
12:41
SPEAKER_01: So that's what we see today is logos as a unified project.
12:45
SPEAKER_00: It makes a lot of sense, and I think it's one of those things that people will maybe not understand from the first pass, but as things start to grow on it and build on it, like it will become supposed like crypto did, it's one of those things like you kind of ignore it, ignore it, ignore it, and then suddenly one day you go, Oh, we're gonna have to get involved with it.
13:02
SPEAKER_00: So speaking, not from my point of view.
13:03
SPEAKER_00: I I'm like you, I believe in it as the thing that will happen, but it's taken a lot of time to convince institutions and and kind of traditional money management people that blockchain rails are better.
13:16
SPEAKER_00: This is probably the next step of not only is it better for just transacting, but maybe it's better for moving, storing, allowing access to data, storing said data, distributing parts of said data and all the things that smart contract rules and the ability to codify different rights, rules, and obligations around whatever it may be, whether it's a transaction or whether it's just data on a blockchain will will come to be.
13:42
SPEAKER_00: But you mentioned one thing about privacy, and that fundamentally is that there's the topic that we're gonna talk about today, which is can AI destroy crypto privacy?
13:52
SPEAKER_00: And and the reason I wanted to just dive into what you guys did is because I think it frames why you would be a person to talk about this, because at the heart of what you're offering is a way to be private, as much or as little as you would need to be, depending on the use case.
14:07
SPEAKER_00: Um but I have a few questions to go through.
14:10
SPEAKER_00: And the first one is can a actually can AI actually destroy crypto privacy, or does it just make existing privacy failures more visible?
14:21
SPEAKER_01: Okay.
14:22
SPEAKER_01: This is a good one.
14:23
SPEAKER_01: Um it's already destroyed because you don't have a technology that covers the entire transaction pipeline.
14:31
SPEAKER_01: When you do something on a blockchain, which is like for for to be clear, what you're doing on a blockchain is the end of an entire life cycle and coordination and engagement with somebody.
14:45
SPEAKER_01: It is the settlement part of a lot of coordination and back and forth and negotiation and understanding.
14:51
SPEAKER_01: And so you've already, by the time you've already submitted a transaction and put it on a blockchain, you've already disclosed everything about it and running through Rails that can manipulate it in a lot of ways.
15:01
SPEAKER_01: And so let's put that into context.
15:03
SPEAKER_01: Say you would like to use a multi-sig um that's going to trade one asset for another because you're, I don't know, managing some treasury that has some you know portfolio analysis to keep it going, right?
15:18
SPEAKER_01: Uh you're gonna negotiate this where?
15:21
SPEAKER_01: Probably on Telegram, Discord, signal if you're doing pretty good.
15:25
SPEAKER_01: Uh and and you're already compromised by doing that because those things are not secure for the most part.
15:34
SPEAKER_01: A lot of that stuff is tracked, even if it's just metadata of who's talking to who and when they're doing it.
15:39
SPEAKER_01: Uh Telegram is not private by default.
15:42
SPEAKER_01: You have to go through a little bit of effort to actually get to some level of private chat.
15:46
SPEAKER_01: Discord, most definitely not.
15:48
SPEAKER_01: Or whatever the soup de jour is for talking to people.
15:50
SPEAKER_01: So you're already negotiating what you're going to do with who you're going to do it, when you're going to do it, on things that are capturing this information you're trusting.
16:01
SPEAKER_01: And you're going to finally know what you're going to do.
16:05
SPEAKER_01: You're going to log into some web domain and say it's a Gnosis Safe.
16:11
SPEAKER_01: You're going to use Safe's DNS and you're going to pull up the UI and load your treasury that gives you information on how to do this type of stuff.
16:21
SPEAKER_01: Once again, you've already exposed a tremendous amount of information just using a browser and trusting the DNF system and Safe's infrastructure on what you're going to be doing exactly.
16:31
SPEAKER_01: Then you go through the process, the rigor mole of signing these things.
16:34
SPEAKER_01: Hopefully, the DNS isn't hacked and you don't lose all your money because it gives you the wrong transaction by bit.
16:40
SPEAKER_01: Uh and you get your transaction through the way it's supposed to be.
16:43
SPEAKER_01: Uh, you're going to put that through a transparent mempool, which is built by very few people, to then figure out how they would like to order this type of thing.
16:54
SPEAKER_01: And then maybe they get submitted to people who are going to try and expose because the MEV and extract as much value as they can because they can manipulate ordering, because they can see these things, right?
17:03
SPEAKER_01: That transparency in the blockchain itself causes additional manipulation you don't really want in extracting value from the system.
17:10
SPEAKER_01: And then it finally gets on chain.
17:12
SPEAKER_01: If it doesn't, get hit by OFAC sanctioning, because that can also happen too.
17:17
SPEAKER_01: So we haven't even gotten to the point where it's on the chain.
17:20
SPEAKER_01: And I'm I've I've given you a bunch of different ways in which your information has been exposed.
17:24
SPEAKER_01: And the difficult problem here is that it's exposed once, but then archived forever and didn't mind.
17:32
SPEAKER_01: So when you ask me about what AI can do, it can go through those archives way better than anyone ever could previously.
17:39
SPEAKER_01: Anyone could have done all of this and then gone after you in a way that potentially manipulated you in some way.
17:46
SPEAKER_01: If they had access to all of this and the energy and understanding to do all this, AI does it routinely automatically for everyone.
17:54
SPEAKER_01: And so like it makes it it like lowers the barrier of entry of removing all of the privacy things we have because we're lost in a sea of data.
18:04
SPEAKER_01: That's no longer the case anymore.
18:06
SPEAKER_01: So like it's it's it's it's it's a difficult thing because we've built these archives and user rails that continue to build the archives that expose information.
18:16
SPEAKER_00: So positing that kind of scenario as fact, and it is something I I agree with fundamentally, that the way in which we transact and even Web 2 and Web3 versions as they currently stand, you have so many exposure points.
18:33
SPEAKER_00: And even if you are perfect in the way in which you do things and very, very careful, even then, like it is very, very easy to be exposed to one bad link in the supply chain.
18:44
SPEAKER_00: Is what you're saying then with your operating stack is that you remove a lot of these opportunities to sort of be stuck in the middle of something, and therefore the only bit that you kind of enact is at that final level where it goes on-chain.
18:59
SPEAKER_00: So you remove all of the communication that goes to a third party, it goes to your stack, to your addresses or the ones that you built on your system, and that therefore kind of just stops all of this branching out tree of possible entrances to that data and kind of locks it down.
19:18
SPEAKER_00: Is that is that how it kind of functions?
19:19
SPEAKER_01: That's correct.
19:20
SPEAKER_01: If you hit if you stop one leak, you the the the information goes somewhere else.
19:25
SPEAKER_01: You need to secure the entire transaction pipeline.
19:28
SPEAKER_01: And when you see people talk about privacy more often than not in industry, they're focused on a single link.
19:33
SPEAKER_01: And unfortunately, that's not enough.
19:35
SPEAKER_01: You can't fill a buck, a leaky bucket up by by plugging one hole, right?
19:40
SPEAKER_01: You have to plug all the holes.
19:42
SPEAKER_01: Otherwise, it cannot hold water, right?
19:44
SPEAKER_01: And we're losing a lot of water.
19:45
SPEAKER_01: And that when I mean that, I mean money.
19:47
SPEAKER_01: Like these are markets, entire markets are propped up around capturing this information and using it to their benefit.
19:54
SPEAKER_01: Genalysis is a very good example of this, right?
19:57
SPEAKER_01: And so like the idea and the effort with logos is to plug all of the holes as we possibly can continuously and improve it, improve, improve that process.
20:08
SPEAKER_01: And the places that we can't, we make it explicit so that the user understands where this information is coming and going, and they can make decisions for themselves based on that.
20:16
SPEAKER_01: Because right now, people don't get what information is being left or brought in or exposed to them and what that means.
20:23
SPEAKER_01: Hopefully, we can and we can service that information when it does and allow them to make the best decisions for themselves.
20:30
SPEAKER_01: It's not we don't want to make them for them, we just want to expose it to them in such a way where they can make their own decision appropriately.
20:37
SPEAKER_00: So expanding on that point, you you picked on a thing I want to go into a little bit deeper, which is you're going to build your environment where you can plug all of the holes and build your bucket very much more securely, but you're still gonna have to interact with certain things, or maybe you won't, but it depends on the use case, or it can get a bit stuck in.
20:59
SPEAKER_01: Something's gonna get exposed.
21:02
SPEAKER_00: But on that point, at the minute, for maybe from my kind of slightly ignorant point of position of the knowledge of this area, I know a little bit.
21:09
SPEAKER_00: I work a little bit with a cybersecurity company, I have an inclination and I understand how many opportunities there are for things to be taken advantage of.
21:18
SPEAKER_00: But what, in your opinion, are like the most kind of visible and important breaking points?
21:24
SPEAKER_00: Is it the chain analytics, is it KYC, is it data, metadata, biometrics, device fingerprints or behavioural patterns?
21:32
SPEAKER_00: And I'm sure the answer will be all of them, but what I'm kind of interested to hear a little bit is where you think there could be improvements in the short term and where are like the long term improvements that are just going to come by some of these things getting improved upon, which is always gonna be an endless race because it's security.
21:48
SPEAKER_00: Like as we plug one hole, the the attack vectors always increase.
21:51
SPEAKER_00: But what's kind of your view of the next iteration, let's say?
21:57
SPEAKER_01: I think I should probably find a way to quantify.
22:00
SPEAKER_01: So I can prioritize them better.
22:02
SPEAKER_01: Um, I mean, metadata is gold.
22:07
SPEAKER_01: It is so valuable, right?
22:09
SPEAKER_01: And so who you're talking to win about not even about what.
22:15
SPEAKER_01: And forming like being able to capture that information and archive it allows you to do analysis and form patterns.
22:21
SPEAKER_01: And we are very good at pattern recognition.
22:23
SPEAKER_01: And AI is way better at pattern recognition and then doing something about it.
22:28
SPEAKER_01: So like it's just finding ways to close the gaps so that we don't just keep capturing so much metadata about what people are doing, when, and with whom.
22:37
SPEAKER_01: Um that's I think the largest one for me because that's the one I think AI will take advantage of the most.
22:45
SPEAKER_01: It's not what's already being taken advantage of quite a bit.
22:48
SPEAKER_01: Next one is like KYC, which is a honeypot.
22:52
SPEAKER_01: There's not there's almost no instance that I'm aware of, like there's just of an industry that has been completely devoid of information leakage.
23:04
SPEAKER_01: And like like these databases being hacked or exposed, or just pure incompetence leading these types of things.
23:11
SPEAKER_01: I'm still getting calls for ledger.
23:13
SPEAKER_01: Like me too.
23:15
SPEAKER_01: Everyone in this organ in this industry who's had a ledger gets calls like it's so like we've all felt it.
23:21
SPEAKER_01: And we all feel it more because that's a cheap way of getting exposure to people.
23:26
SPEAKER_01: Like I think that's like those are the two that I think would be quick, very quick, powerful wins in a lot of this.
23:34
SPEAKER_01: But like you said, it's it's the whole thing.
23:36
SPEAKER_01: Like there's so much to go about in terms of um where we can shore things up that makes a significant impact.
23:47
SPEAKER_00: Like it I think it's coming, like, but it it just seems to be relentless at the minute that one after another vulnerability is exploited.
23:55
SPEAKER_00: Like, just even like you bring up Ledger, the fact that their supply chain was um compromised with a physical device inserted into a device that you were expecting to come seal just baffles me.
24:09
SPEAKER_00: Like it's a large company as well, and like it just doesn't make any sense how something that seems so simple as to be conscious of the way your devices go from manufacturer to the end customer and what distributors you use.
24:25
SPEAKER_00: Like, it's not even uh at that point a question of the the code being secure, it's it is just pure incompetence, and it seems that that has pervaded our industry endlessly.
24:35
SPEAKER_00: Do you think that's gonna change, or do you think it's gonna be one of those that people just keep learning the hard lesson and it becomes the ones that do it well and the ones that don't?
24:44
SPEAKER_01: I don't know.
24:45
SPEAKER_01: Um, I would like to believe the the ones who are doing it well win.
24:49
SPEAKER_01: But like that's not necessarily the case historically.
24:52
SPEAKER_01: Usually it's it's like who gets the most attention and place the theater really well, right?
24:56
SPEAKER_01: Like Ledger got a lot of service because they had a reasonably good device early on and they sold it really well.
25:03
SPEAKER_01: It was never the most superior device, and I think they grew up on that.
25:09
SPEAKER_01: And then they just manage a business that was useful for shareholders to maintain that that narrative.
25:16
SPEAKER_01: But like there's a bunch of other devices.
25:18
SPEAKER_01: We make one called Keycard and Keycard Shell, that, in my opinion, is light years better than Ledger ever could be in terms of like price point, ease of access, uh usability, security.
25:32
SPEAKER_01: You can do all the things.
25:33
SPEAKER_01: In fact, if you go look at the at some of the like the um third-party reviewers of hardware wallets, keycards at the very top and keycard shell, because it offers everything.
25:43
SPEAKER_01: Uh I don't know.
25:45
SPEAKER_01: Like, I think it's gonna continue because everyone likes to play theater and sell something because that's how you run a business more often than not, especially if you have shareholders.
25:54
SPEAKER_01: And the ideals are really hard to do.
25:56
SPEAKER_01: Like building this stack is incredibly hard.
25:59
SPEAKER_01: And we're lucky to be in a position where we're able to do it.
26:02
SPEAKER_01: I think that's a unique opportunity for this organization to be able to build something like this that can last because we're able to do it with with these strong ideals because it's so hard.
26:14
SPEAKER_00: Without patting you on the back too hard, it is commendable from somebody who's been in the industry, like coming up on 10 years now, to see at least a few companies taking it very seriously and kind of leading the charge of what ultimately needs to happen.
26:27
SPEAKER_00: And in in the past, like you would it's happened with every industry that pops up, is that it's kind of a wild west to begin with.
26:34
SPEAKER_00: Everybody moves fast and breaks things.
26:36
SPEAKER_00: Like, look at the industrial revolution, and it's a big one to compare it to, but how many people got caught in weaving?
26:42
SPEAKER_00: I'm from the north of England, and the amount of kids that lost hands and were in weaving machines.
26:47
SPEAKER_00: I know it's a bit of a weird analogy, but it's kind of the same thing of like you have a new industry, there aren't rules, there aren't obligations, there aren't there isn't a kind of a third-party regulator which can get messy and it's never perfect, but it ultimately ends up being either the market forces decide it or a third party decides it after somebody decides enough harm has has gone on.
27:09
SPEAKER_00: Um here, man.
27:11
SPEAKER_01: It's like it's like I've I've been there since the beginning, and it's been a crazy course because it turned into money and money blows up with this type of thing.
27:19
SPEAKER_01: Um, so when there's value, people will go seek it, right?
27:22
SPEAKER_01: It's like it's like the kind of gold mining industry.
27:24
SPEAKER_01: They just they just go do.
27:26
SPEAKER_01: Uh and now we're starting to see a little bit of that calm down finally, luckily.
27:32
SPEAKER_00: Well, on that point, another question I had was institutions want compliance, audibility, and identity assurance.
27:40
SPEAKER_00: Can institutional privacy and regulatory transparency coexist, or is private finance fundamentally incompatible with the current compliance model?
27:52
SPEAKER_01: It's it's not compatible incompatible at all.
27:55
SPEAKER_01: Um, like I I think the tagline I have here is like they coexist when disclosure is chosen and not forced.
28:02
SPEAKER_01: More often than not, when you do these types of things, like institutions already demand privacy, right?
28:07
SPEAKER_01: Confidentiality for themselves.
28:09
SPEAKER_01: A firm is confidential.
28:11
SPEAKER_01: And the reason when we have a firm is because it's hard to do all these things and put them together and offer something that's simple.
28:16
SPEAKER_01: But they demand confidentiality.
28:18
SPEAKER_01: They want privacy.
28:20
SPEAKER_01: In fact, they can't operate without it.
28:23
SPEAKER_01: And so, like privacy, the privacy rails enable them in a lot of ways and allows them to be much more fine-grained in the resolution in which disclosure happens.
28:32
SPEAKER_01: Meaning that you're not forced into how you disclose something, or in the process of disclosing something, you don't have to automatically disclose a bunch of other stuff too.
28:43
SPEAKER_01: Right?
28:44
SPEAKER_01: Like right now, if I want to prove to you that I'm 18, I give you my driver's license.
28:47
SPEAKER_01: This is the kind of standard example.
28:48
SPEAKER_01: By doing that, you know so much about me other than I'm above 18.
28:52
SPEAKER_01: That's a yes or no question.
28:54
SPEAKER_01: If I can answer that, something like zero knowledge technology, I don't need to hand over my entire driver's license and give you all of it, which will then get make a honeypot, and I'll get a bunch of calls from Ledger again.
29:05
SPEAKER_01: Right?
29:06
SPEAKER_01: And so like institutional privacy wants these types of things.
29:10
SPEAKER_01: It's just we're making it so that everyone gets it and not just institutions.
29:14
SPEAKER_01: You know, then like and we also kind of minimize the cost uh of a firm and makes things a lot more efficient and effective, and therefore, like creates markets, like new markets for people, because the money absorbed in these firms doesn't stay in the firms, it goes somewhere else.
29:30
SPEAKER_00: I think that's one thing that people fundamentally misunderstand as well in this whole conversation is how impactful zillar knowledge proofs are going to be when they get to scale, or even just become a little bit more commonplace in the way that you interact with applications, whether they be web two or web three, whether they're decentralized or semi-centralized or whatever terminology you want to use, depending on the use case.
29:53
SPEAKER_00: Because I think we throw around a lot of terminology because it is useful when you are speaking to people that are building and understanding it and really like in the nitty-gritty of blockchain Rails.
30:04
SPEAKER_00: But fundamentally, like for most people, it is does it work and how do I use it?
30:08
SPEAKER_00: And I think that's you what, sorry?
30:11
SPEAKER_01: Why do I care?
30:12
SPEAKER_00: Yeah.
30:12
SPEAKER_00: Yeah.
30:13
SPEAKER_00: What's in it for me?
30:14
SPEAKER_00: And I think I think zero knowledge proofs is a really good example for people of where a blockchain application or way of doing things could be really helpful.
30:24
SPEAKER_00: They've all experienced a data leak.
30:26
SPEAKER_00: Everybody at some point has had more than they would like to be known about the leaks of the internet if they've used as many applications as most people have, been involved as many databases as most people need to be just in the course of their daily life.
30:39
SPEAKER_00: And having this ability to share a much more shortened amount and a way that's provable to both sides that it was the right information used in the right way should be very, very interesting.
30:52
SPEAKER_00: I want to switch gears a little bit and go from talking about privacy technology to privacy coins.
31:01
SPEAKER_00: And I've got a question, but I want to ask you for just an explanation to somebody that's maybe not come across them before.
31:08
SPEAKER_00: What is a privacy coin?
31:10
SPEAKER_00: Can you give me some examples of it?
31:11
SPEAKER_00: I know this is a little bit the basics, but I think it'll help frame the next question.
31:16
SPEAKER_01: Yeah, privacy coins.
31:18
SPEAKER_01: So right now, if I send it with Bitcoin and Ethereum, if I send you Bitcoin or Ethereum, uh I sign a transaction.
31:26
SPEAKER_01: And that transaction is effectively saying I own this amount of tokens in this account, and I am now giving a portion of those tokens to you in your account.
31:36
SPEAKER_01: Now it's pseudonymous, so I'm using some address to do this type of thing, but I'm publicly stating this.
31:42
SPEAKER_01: I'm writing this document that says I'm giving these tokens to you, and then I sign that and put it on a blockchain.
31:47
SPEAKER_01: That's for everyone to read, right?
31:49
SPEAKER_01: The ledger is transparent, meaning you can see who does what with whom and for how much.
31:55
SPEAKER_01: Forever.
31:56
SPEAKER_01: A privacy coin shields some of that information depending on the privacy, depending on the chain of the coin.
32:02
SPEAKER_01: And it says, and in the best case scenario, you see none of that.
32:07
SPEAKER_01: You just know that somebody did something and it was valid.
32:11
SPEAKER_01: It was within the rules of the chain.
32:15
SPEAKER_01: So, like, there aren't new coins minted out of nowhere, the person who sent the tokens had the tokens in the first place, addresses were valid, these types of things.
32:23
SPEAKER_01: Like all the rules were followed, but you don't know anything about it.
32:26
SPEAKER_01: That's effectively the best case scenario for a privacy coin.
32:30
SPEAKER_01: Um, Zcash is an example of this.
32:33
SPEAKER_01: Uh, they're an opt-in privacy coin, meaning that if you would like to make a transaction where you don't see the receiver or the or the or the sender or the amount, you need to opt into that in a shielded way, right?
32:46
SPEAKER_01: If you need to get tokens shielded somehow, then you need to send it shield.
32:50
SPEAKER_01: So opt-in privacy is a weaker form of privacy, in our opinion, because it creates a specific anonymous set.
32:56
SPEAKER_01: It is it is narrowing out who cares about privacy within the broader set of people who are just doing things, right?
33:04
SPEAKER_01: And that is a that is a meaning thing, but it's way easier to look at those people and assume bad things are happening if you have a negative computation with privacy.
33:14
SPEAKER_01: So privacy, not by default, is a weaker form.
33:17
SPEAKER_01: That's Zcash.
33:18
SPEAKER_01: Monero is another example.
33:19
SPEAKER_01: They do things through what's called ring signatures, or like it's on by default.
33:23
SPEAKER_01: You can't, you don't get to choose on whether or not this information gets revealed as you submit these things to the blockchain.
33:30
SPEAKER_01: Um, then there's other new various ways of offering some level of privacy, mostly in the payload itself, right?
33:38
SPEAKER_01: Just this information of to, from, and how much.
33:42
SPEAKER_01: But there's a bunch of other stuff that is concerning with privacy outside of just the payload.
33:48
SPEAKER_00: I think that I always find interesting is at the minute, like if you send a payment through traditional banking, like you have privacy from the outside world, but not from the bank and not from the government in some cases, depending on what level of power they have and whether they would need to apply to get that information or whether it's just there.
34:07
SPEAKER_00: But fundamentally, or in my opinion, I think there's going to be a world where there's both.
34:12
SPEAKER_00: There is some entities that would like to transact privately, and there is a business case or a reason to do so.
34:19
SPEAKER_00: And there are some personal or uh retail, if you would use that trading terminology, use cases where some people may just want to be private.
34:27
SPEAKER_00: They should have the choice.
34:28
SPEAKER_00: It shouldn't be you're automatically doing something illicit.
34:32
SPEAKER_00: It should just be I would like to have the choice of whether this is shared with anybody or some people or some mixture of the two.
34:40
SPEAKER_00: I don't I don't know what you think.
34:41
SPEAKER_00: Do you think there's a case for allowing some entities to be able to check up on some of these transactions optionally, or is it we're all private or we're not?
34:51
SPEAKER_00: Is there an in-between?
34:52
SPEAKER_01: Oh, there's definitely an in-between.
34:54
SPEAKER_01: There's always an in-between.
34:55
SPEAKER_01: Uh it's just like the rails that govern all of this need to be private because you can't bolt on privacy, right?
35:04
SPEAKER_01: Once information has been leaked, it can't be unleaked.
35:07
SPEAKER_01: And so if you have access to the base layer, there is nothing that's private that can be built.
35:12
SPEAKER_01: But you can go the other way around.
35:13
SPEAKER_01: And so it's more of an optionality thing, in our opinion.
35:15
SPEAKER_01: It's like when we build the fundamental rails in which all jurisdictions are going to be using, because jurisdictions have different views on this type of thing and what access they need for whatever justification they have.
35:28
SPEAKER_01: And so, like, you need to make sure that you accommodate to all of them, meaning you need to be most optional, which means the most private at the base layers you can build things on top that are appropriate for all of the jurisdictions so that disclosure happens where it's supposed to and not forced into it in a layer that people didn't opt into.
35:45
SPEAKER_00: And I think that's the most important point is there will be scenarios where disclosure to certain entities or bodies is not just preferable, but probably like wanted just to make the the the actions of commerce work just as well.
36:01
SPEAKER_01: Right?
36:02
SPEAKER_01: You need to be able to do disclosure to prove you did something.
36:04
SPEAKER_01: If you have a land registry, you need to prove to somebody you have the land, right?
36:10
SPEAKER_01: So like I built it into what I for musters.
36:13
SPEAKER_01: So like every bike, it's a it's a completely private app as much as I can possibly make it with the technology we have available today.
36:18
SPEAKER_01: But within every room when something happens, every individual in that room can prove everything that happened because they watched it all personally, right?
36:27
SPEAKER_01: They have that option to do that.
36:28
SPEAKER_01: They can self-disclose in whatever level they want to, right?
36:32
SPEAKER_01: And that's what you want when engaging with like individuals.
36:36
SPEAKER_01: You want the individuals to be able to disclose however they need to, or invite a third party in that has specific access that can then see specific parts of that process, right?
36:45
SPEAKER_01: That can all be done.
36:48
SPEAKER_00: And I suppose it gets even more interesting with zero-knowledge proofs of maybe them wanting to know certain kind of if statements, like, is it bigger than X?
36:58
SPEAKER_00: Is this transaction under Y?
37:00
SPEAKER_00: Because then you can kind of say, well, you've got you can transact privately in this rail, but if it breaches this level, we want a zero-knowledge way of knowing that it's breached this level, and then we might request that you provide us with some information.
37:12
SPEAKER_00: I'm talking of a very like hypothetical scenario, but you would only be able to do that if the underlying base rail is private.
37:19
SPEAKER_01: Yeah, I agree.
37:21
SPEAKER_01: You need the optionality there, so you can build whatever you want on top that then filters out appropriately and then pushes to whoever needs that information.
37:29
SPEAKER_00: So leading on from that then, is financial privacy separable from broader digital identity and online surveillance?
37:37
SPEAKER_00: I'm sure this is going to be a kind of a not a mixed answer, but a kind of an if-then what's the word?
37:44
SPEAKER_00: Conditional answer, but go on.
37:46
SPEAKER_01: I mean, no.
37:47
SPEAKER_01: Privacy is a privacy is a property of the whole system.
37:49
SPEAKER_01: And identity is built baked into everything, right?
37:51
SPEAKER_01: So like these are all it's all the same thing.
37:54
SPEAKER_01: And privacy is it privacy is a holistic thing.
37:57
SPEAKER_01: So it's clear.
37:59
SPEAKER_01: Clear no for me.
38:00
SPEAKER_01: It's like your payments, your message, your identity all get linked in the same metadata.
38:05
SPEAKER_01: So you need it all together.
38:10
SPEAKER_00: So if AI-driven surveillance becomes the norm, what does a realistic privacy stack look like in five years?
38:21
SPEAKER_01: Five years.
38:22
SPEAKER_01: Uh hopefully it doesn't take us that long.
38:25
SPEAKER_01: Uh so local first by default, meaning that individuals have their data local to them and then disclose what's needed when it's needed too.
38:35
SPEAKER_01: Um all synced peer-to-peer as needed.
38:40
SPEAKER_01: Uh we have syncing protocols.
38:41
SPEAKER_01: That's the whole point of blockchain and distributed consensus, right?
38:45
SPEAKER_01: We can sync data really well in a really, really reliable way.
38:49
SPEAKER_01: Uh zero knowledge for disclosure, so you're only showing things that need to be shown and nothing else.
38:57
SPEAKER_01: Um, anonymous networking, so you can't track the networking to understand identify who's doing what.
39:03
SPEAKER_01: Like statistically, you can do like statistical analysis on network tracking and then see like who's doing what, uh, or at least who's talking to whom about specific things.
39:13
SPEAKER_01: Um, self-custody of keys and identity.
39:16
SPEAKER_01: Well, keys are identity in a lot of these situations, right?
39:19
SPEAKER_01: So self-custody of those things.
39:21
SPEAKER_01: And then obviously, like some level of resistance to post-quantum cryptography hacking, right?
39:26
SPEAKER_01: So like the like the key exchange protocols, the cryptography that we use need to be resilient to quantum computers in with when they exist.
39:34
SPEAKER_01: I don't think it's in it, I don't think really it's an issue on whether or not they will, it's just a matter of time.
39:39
SPEAKER_01: Larger argument, but like we need to be prepared for that type of thing anyway.
39:43
SPEAKER_01: So like that's the general framework I'd say, is like really robust resistance uh agreement processes or like um consensus uh protocols, local first, quality zero knowledge proofs for disclosure, anonymous networking, and then like self-custody of keys.
40:02
SPEAKER_00: Those are some big, big, big problems to solve.
40:05
SPEAKER_00: I suppose what's your what's your gut feel on when we get to kind of like a level playing field with these things?
40:11
SPEAKER_00: Because there's quite a few different areas that need almost ground up overhauls to be able to work at scale for when not the the technology, but for the adoption of the technology into enterprise systems and into the way in which people interact.
40:25
SPEAKER_00: Is it gonna be like a gentle, like very measured upwards climb, or is it gonna be one where we build and build and build and then it kind of goes vertical?
40:34
SPEAKER_00: A bit like social media.
40:35
SPEAKER_00: Like, is it gonna be one of those things like when the cat's out the bag, it's out the bag, or is it we build very methodically and what's the word?
40:42
SPEAKER_00: Like keeping going upwards.
40:45
SPEAKER_00: There's a word for that.
40:46
SPEAKER_01: Increasing, like slowly.
40:48
SPEAKER_01: Yeah.
40:48
SPEAKER_01: Like, I don't know.
40:50
SPEAKER_01: Uh so there's this, there's this thing, right?
40:53
SPEAKER_01: So like I think a lot of people don't want this technology to exist because it kills their market, right?
41:00
SPEAKER_01: There's a lot of money being made on gathering this information, archiving it, and leveraging it.
41:06
SPEAKER_01: Like data is gold in today's digital society.
41:09
SPEAKER_01: It's how you control things, it's how you make money off of things, it's how you do all this type of stuff currently, and the way we built the internet.
41:17
SPEAKER_01: And so, like, there's a lot of money to be lost in this being the standard.
41:22
SPEAKER_01: So, more often than not, when that's the case, historically speaking, the thing that ends up winning or surviving and growing into a new standard is a thing that doesn't look like it's the thing replacing.
41:35
SPEAKER_01: Right?
41:36
SPEAKER_01: Bitcoin is a great example of this, right?
41:38
SPEAKER_01: Uh like no one gave a shit, sorry if I if I can't cuss, about Bitcoin for the longest time because it was like that's never going to work.
41:46
SPEAKER_01: It's never gonna be good.
41:47
SPEAKER_01: Yeah, yeah, yeah, yeah.
41:48
SPEAKER_01: And so like that's the point of being valuable because the level of proof of work was so great that it actually became resistant.
41:56
SPEAKER_01: Right now, if we were to start Bitcoin, it gets smashed at a heartbeat if people knew it was going to be valuable because you could break the proof of work security.
42:03
SPEAKER_01: Now you can't, right?
42:04
SPEAKER_01: Yeah.
42:05
SPEAKER_01: And so like you have to grow to a point where you're you don't look like a threat until when you are a threat.
42:11
SPEAKER_01: Right?
42:12
SPEAKER_01: And so I think what that translates to is like a Cambrian explosion of experimentation, where you're helping people do things that matter, but on a scale that doesn't isn't threatening.
42:26
SPEAKER_01: Right.
42:26
SPEAKER_01: They're able to make severe impact in their lives by helping themselves, really, in their local economies.
42:33
SPEAKER_01: And then we learn lessons and build technology that allows them to keep doing that without it being taken out from under them.
42:40
SPEAKER_01: Uh, and then when you are able to do that and give stronger guarantees on not getting rubbed or assumed power from you based on helping yourself, then we'll have something that really matters.
42:52
SPEAKER_00: I'm excited to see what happens.
42:54
SPEAKER_00: I think there's an a bit, it's a bad analogy, but a bit like how options exchanges and uh derivative exchanges really took off with hyperliquid and like derive and stuff, is they've proven that there is a business need and there is a want from the consumer.
43:10
SPEAKER_00: And I think it's a little bit of a different analogy, but the same with privacy features and privacy technology in the stack and the operating system and the applications is there is a genuine need, and a bit like we were talking about the examples in Africa, as more and more and more of those get utilized and the value and the efficiency gains get demonstrated, and the just privacy kind of gains that people are exposed to become more commonplace, it will keep growing and growing and growing.
43:36
SPEAKER_00: Whether there is that kind of Cambrian explosion, who knows?
43:39
SPEAKER_00: I'd like there to be, but whether there is or not, that's too who yeah, who knows?
43:44
SPEAKER_00: Um, so that was all my my kind of points I wanted to touch on today.
43:48
SPEAKER_00: You've been a really great guest.
43:49
SPEAKER_00: I've learned a hell of a lot, but I always give people the opportunity before we sign off.
43:53
SPEAKER_00: Is there anything you want to plug, anything you want to talk about, anything you want to direct people to have a look at, or anything else that I've not asked that you thought I was going to ask that you want to talk about?
44:02
SPEAKER_01: Yeah, appreciate that.
44:04
SPEAKER_01: I mean, obviously, I represent logos, and so and like I'm here because I really care about this project.
44:10
SPEAKER_01: Um, it's in a lot of ways the reason why I got into crypto in the first place and what I've wanted to see in this industry.
44:17
SPEAKER_01: So go check us out logos.co, that's l-o-g-l s dot co.
44:22
SPEAKER_01: Go get our flagship application, which is how you use any of this stuff called Basecamp.
44:28
SPEAKER_01: It's on the website.
44:29
SPEAKER_01: It is incredibly easy to use.
44:32
SPEAKER_01: Uh, and we're actively building very fast.
44:36
SPEAKER_01: Uh, hopefully we have mainnet targeted for um end of Q1 next year.
44:43
SPEAKER_01: But that's mainnet for blockchain, but we have the entire ecosystem and table states applications involved with this, all available through Basecap, where it's a plug-and-play thing.
44:54
SPEAKER_01: You push a button and you can run a blockchain node on your on whatever device that you have.
44:59
SPEAKER_01: Really simple.
45:00
SPEAKER_01: Use your user interface.
45:02
SPEAKER_01: All the modules are just searchable through our package registry.
45:05
SPEAKER_01: Like all the stuff is incredibly easy to use and works on commodity hardware.
45:09
SPEAKER_01: Go play with it.
45:10
SPEAKER_01: Tell us what you'd like, tell us what you'd like to see.
45:13
SPEAKER_01: Join the Discord or the various places we have on the website for to go.
45:17
SPEAKER_01: We're paying people to help build this stuff.
45:20
SPEAKER_01: So we have these things called RFPs, requests for proposals, that help us help people get in on helping us build the ecosystem so that when we do launch, we have everything we need in the community of people who are contributing to it, not just us.
45:33
SPEAKER_01: Go look at those.
45:34
SPEAKER_01: Apply for them.
45:37
SPEAKER_00: I'll definitely be taking a bit more of a look and having a play around, and maybe in a few months when I've had a bit of time to like get you get steps so that we could have a another update call, that might be quite fun.
45:47
SPEAKER_00: Happy to, yeah.
45:48
unknown: Yeah.
45:49
SPEAKER_00: Well, thank you very much, Cory.
45:50
SPEAKER_00: This has been great.
45:51
SPEAKER_00: This has been another episode of Hardwired.
45:52
SPEAKER_00: Thank you, everybody, for listening in.