# TOKEN2049 - Why Privacy Matters

- Channel: [TOKEN2049](https://streameth.org/token2049)
- Date: 2019-10-09
- Watch: https://streameth.org/watch/yt-if1NAs0dPcc
- YouTube: https://www.youtube.com/watch?v=if1NAs0dPcc

## Transcript

we're here with three panelists a very international word from Tel Aviv or one from Malaysia one from Australia and we're just gonna simply start by you know introducing yourselves you know quick one or two minute introduction about who you are what you do yeah so I'll start hi everyone I'm Alexandra Zion CEO at beam we're building a scalable confidential cryptocurrency based on the memo Wimble protocol it's a funny name but it's a very new and very amazing protocol that allows full privacy in the blockchain and great scalability in terms of the blockchain size our vision is to build a currency that is both fully confidential but can be optionally compliant so that both businesses and individuals can use it and everyone can choose the amount of information they want to disclose from zero to everything the idea is to give people full sovereignty over both their assets and over information about their assets thank you I'm Ruben yup I'm the CEO of Z coin and ZK has been around since 2016 we were the first implementation of the Xero coin protocol which is different than the zero cash protocol and we also you know similar working as a private cryptocurrency and we also recently you know were the first blockchain political election in Thailand where 127 thousand voters voted on sequence blockchain nationwide so yeah hi my name is Simon I'm the founder of the lucky project where another privacy project forked Manero actually we're essentially using a master node network to bootstrap a new Onion Routing network using a new onion routing protocol and we're also using that service no network we call them to act as a decentralized message service so what we're creating is an inter and encrypted private messaging system that uses Onion Routing to lock down your IP address there's no phone numbers and the ultimate goal is to get it to the point where when I send anyone a message literally no one but me and that recipient knows that that message has even been sent let alone what's in it so that's what we're working on cool so we're gonna start with some high-level questions about what's why privacy matters and we'll start with you know some of Tim Cook's comments on privacy at Davos and of course most recently Mark Zuckerberg call me some comments on privacy how important it is for their platforms how they say the big Giants intend to build privacy into their devices into their networks just kind of a question for the panel like how do you see privacy play a role they are how important is it what's this balance between privacy security and just your general thoughts on a high level about privacy okay so we think privacy is basic really a basic human right and lately it's been slowly but steadily taken away from us on all in a lot of aspects of our lives financial life you know the government's and the banks can know everything about we're doing and the social networks know kind of frightening Lemoore about ourselves and even we do right so today the privacy is going away from us every day and and as as the result of this actually the good thing that's happening is that more and more people realize that and start and try to fight back in all kinds of different fronts and now we're seeing that you know Mark Zuckerberg starts talking about privacy loudly and you know whatever comes out of it it's a good sign that these they realize that they need to do something and to to address the issue and and at least show people that they return the privacy back or these try to so so in super important going away from us and we need to really fight back and get our privacy back and you know we're doing that on financial cryptocurrency front other people are doing that and on other fronts but it needs to be more and more known and understood by everyone here and elsewhere that privacy is important because we don't have privacy we don't have our freedom and I think we all like to be free so you know often our privacy is you know I think it think this is kind of like ongoing narrative that privacy's for hiding illicit activity for drugs or you know dotnet type of activities and I think we have the view privacy rather than hiding things it's more about the ability to choose what we want to reveal to the world because right now we don't really have a choice we you know we signing up to all this you know privacy policy policies you could click a set do you want to use our service you have to give up your privacy because there's no real demand for it and not only that is about trusting organizations with our data I mean previously you know our data was like segmented you know one organization and one part of data one organization has you know different sets of data but now all these datasets are coming together that form a very complete view of who we are and that's really scary and we shouldn't be trusting these organizations without data because you know they've been so many data leaks you know can we actually trust these organizations with our data like even China you know they recently had like a breach of the surveillance systems with all that data being released out I think we have to understand that we shouldn't be giving so much power to centralized authorities yes we can you know do stuff that regulates this activity like anti-money laundering kyc but there has to be a line there rather than you know everything about our lives open to the government or organizations to exploit I think Mark Zuckerberg comments recently quite interesting because it seems to be to me to be a little bit to life that and the other thing is that he's also saying it's going to take years to rebuild Facebook such that it you know has encryption enabled by default and brings about all these principles which is super important I think to answer the question why privacy matters you can look to George L Orwell's 1984 1984 is not actually about the Arrakis tree it's about what happens when you have a society where people think that they can be watched and scrutinized at anytime which is becoming increasingly the case unless we start to see these major tech companies actually take a stand and you know respect people's privacy by implementing things correctly using existing technologies out there I mean they did so with what's up which is great and they really try to cater that experience to make it intimate but there's still a lot of metadata that flows through that thing and so I think it's I think it's critical that there are people out there always working towards providing the general public with the best possible privacy because I think privacy really is just a extension of security like he wouldn't think your bank was very secure if it was trivial for someone to be able to reveal your transaction history which is exactly the case with what have happens with Bitcoin so Bitcoin is secure but I wouldn't I would say that privacy is actually just an extension of that security as well so that's important for a number of reasons oh yeah then I guess the counter-argument to sort of this general feeling about privacy is um why is it important in the sense that you have all my data you know everything about me but these companies are able because of that to provide you the best services the best goods the best most relevant ads um and so I give up you know privacy but I get you know better service better Goods better services um how do you think about that and where does privacy play a role in that when you can get you know free services and good services what are you really giving up so I think we have become kind of used to all this convenience stuff you know when Google it reads me all my emails and show my flights is it's like very convenient right really and when Facebook shows me the events that might be and really are interesting to me it's kind of convenient but then if you think where it can get us in the future and where this data and this knowledge you know a lot of people start getting scared and and and rightfully so because you know we're giving up so much we're getting some convenience and some goodies not monitor even but just convenience in return but the the end of this road looks very scary and it might get us to to 1984 we and we and we don't want to be there so again we all need to think and understand that we're giving away probably way too much for those little conveniences in our lives and it may end up in a very scary place I think it has to be a informed choice like for example I think this is something that really bugged me like I use an Android phone I thought that if I turn off my location and you know the location tracking it would stop tracking my location but it turns out that it is continuously tracking my location unless I go to this op skill setting that says disable Google and web activity which is you know it's total rubbish right how would I know that and it's okay if someone willingly says yeah okay I want this convenience like yes I put I do all my bookings on my flight booking to Gina because I like the convenience but I'm making a conscious choice to reveal that and I think as long as users are aware rather than like you know reams and reams of privacy you know agreements you know just saying that we can track your location every way if you do this and if people actually understand that I think people will be a lot more careful yeah maybe I don't need you know like Siri and maybe I don't need certain features because I value my privacy and as long as the population has to be aware of it but if they aren't they just click a set and he goes and I think more about it and when is issued so what you're saying is people need to have a choice yeah right now people just don't have a choice everything is just well like on paper people do have a choice right you can always not accept the and but it's like it's like opt-out right so so if you don't do anything you are not private and we all know that if you like lo big numbers works like op opt-out is like they're a very tiny portion of people would even care to go and understand what to click and what what to remove right if it's possible at all so maybe the right ways to make it really an opt-in thing like this sharing not something that is on by default but something that you consciously turn on but then mostly people won't do that and then the business models will be kind of ruin some of them I don't think um like the advertising is is one thing and that does bring us some convenience and you know with the rise of Amazon and everything else with superfast delivery of online shopping and all that sort of thing but that's all great but I think that we're seeing a resurgence of actually more curated content becoming more popular like the whole 2016 US election really brought to the front of people's minds that if we really do just plug into this very large data set and become a part of it and let it feed us what we want to see that can be quite dangerous and actually reduced the scope of things high quality things that we see in a life so I think over time people are going to be willing to sacrifice small pieces of convenience for higher quality goods higher quality content and higher quality conversations and communities as well I think the future is not in one big Facebook conglomerate I think we've all now realized that that's not a very good idea and we very happy two separate aspects of our financial our work lives our social lives in two different apps and different places online and I that's gonna continue to be the case um but then again this tracking thing is is quite a pertinent issue for us because we have this anonymous messenger how the hell do we track what our users are doing in order to improve the experience if it's all private by default and as you said opting in it's a very rare thing like you might get one or two percent and there'd be a certain type of user as well so you wouldn't get a complete picture of how to design things for the average user so these are interesting questions but if privacy really is the the thing that you're targeting you should be uncompromising in it I believe cool let's switch topics let's talk about cash and cash is probably the most untraceable private technology that exists my thinking around this is I I do think that we are all it's inevitable that we all move towards a digital or cashless society I think for me the question is not whether we're moving digital I mean the question is are we moving centralized digital 1984 or are we moving more digital having more decentralized peer-to-peer so my question is like your comments on that you agree with disagree with that and how do you see privacy coins play the role of cash in today's so yeah definitely there is a movement towards cashless society digital and digital cash although some countries are doing it more than others like I I know that people in Germany are not giving up on their cash and you know just getting their paychecks and some people just take out all the cash because they like privacy and they also like zero fees people in Japan are using a lot of cash as well I think in the United States you know the Green dollar is still the favorite so all people use cash there too but of course it's somewhat more convenient to just take out your phone or a small piece of plastic and make your payment but cash will not go away so fast I think because it's still convenient people like it and it has a lot of advantages of on traceability now in our view a private coin or any digital coin should be very close in its properties to actual cash and as we're trying to build it at beam because with cash for every transaction you can choose the level of information you disclose right when I buy a coffee at Starbucks or any other place I usually get a cash register slip receipt right so there is a paper trail on this transaction from their site but not for mine if I come and buy maybe a car with cash then I might sign a contract right and and then there is some kyc from my side and of course there is this corner - signed by the dealership whatever so in in in and then those those papers go somewhere and are reported and then this cash ends up in the bank so what we wouldn't achieve is a situation where for each kind of a transaction both participants choose the level of disclosure and who the disclosure goes so if it's a private transaction no disclosure to anybody if it's buying a house with a coin or or making a b2b transaction that needs to be later reported to an auditor then both sides choose to put some papers on the blockchain and later show them to the auditors I'm actually you know I mean like Kristen the god that was like speaking in on the IMF talking about centralized government digital currencies of custom many people misread as crypto currencies but you know as to whether we'll be moving towards a centralized model or PPP model I think government's ultimately want monetary control I think it would be hard to build a system where it's like truly decentralized and you've seen that you know often it's always talking about the same things anti money laundering terrorist funding the same things are being used to argue against privacy and you know one of the things especially with with cash you know cuz yeah sure he knows maybe person he like he knows Ruben bought a coffee that's not too bad but like for example if I use something like a digital currency or even like the cdc's Bitcoin when the person received the money he'd not only knows that you paid them for this service but he also potentially knows what you've done in the past I go he went to a competitor he has this much of money and that's also a privacy risk but I feel therefore cashless societies I mean take a look China is the best example of everything moving WeChat pay and all these things and people embrace it because it's so convenient and even like you know you get bonuses we've continued use of some some cash systems of course I feel that you know ideally cash exists alongside cashless type of systems but there has to be a properly then it has to be a want by Ennis Molina we were talking about my Facebook if if the campus analytic us that scandal didn't happen all these things people will be still accepting and giving up their privacy and I don't think that many people are actually fully comprehending what they are doing if they just move to pure cashless and I think that has to be moved to a more for for fun yeah there's a number of issues that brought up when we discuss the comparison between privacy coins and cash not to double up on anything else I think I'd like to talk about the the recent bands that have been proposed by the Texas State Legislature and the French government and historically the Japanese government as well for private crypto currencies such as the cash and arrow and others so the curious thing about it is is that obviously these countries also have cash they use it extensively it which is entirely untraceable so it seems somewhat hypocritic and hypocritical and often very misguided as well I think mo probably the main concern comes with cross-border payments because of course the thing with cash is its physical so you have to move it to somehow which is quite difficult and that's another thing that's appealing about cash because you've always been able to have it and put it under your bed and you bring in the store value argument and everything else and the volatility with crypto currencies and centralized crypto currencies that people can use to grep get that property as well this is a number of issues here I don't think we've yet seen a privacy coin really do a fantastic job of becoming a digital replacement for cash this is something that we're and many of well practically all of us are trying to work on in some regards and you know there's lots of technical discussions discussions that have to be had about the trade-offs that you can make in order to achieve cash light qualities that I think there's probably another few years before we work out really the best way to do that and then the next question is is are people really going to use it like if we are going truly digital with our money is where does privacy fit into it and I truly believe that there is but I think it could run into face to run face to face with any government created coins or anything like that I honestly think there will be government created crypto currencies and be very interesting to see what kind of transparency mechanisms they implement there as well because I don't think we're going to see any government put a cash the system forward that reveals every transaction to everyone I think there has to be some semblance of privacy for that to be widely adopted and widely used so how they're going to do that technically is of great interest to me and how that conflicts with some of the legislation that we're now seeing coming up as well the legislation part is quite interesting especially by the Japanese Japanese ban on privacy coins because it was a response to a hack on coin check it on nem which isn't a privacy coin and you know a lot of the time regulators do gut reactions and he just every time in bringing up AML kyc terrorist funding when banning privacy coins because of a hack that had nothing to do with privacy because none of the coins seem to be at longer to privacy because it was just to be seen as doing something yeah and that seems to be the case with most regulators like even like the France report you know they were I wouldn't leave them but some currencies that don't even provide real privacy obviously they don't understand the technology nothing just IO privacy coins bear and what what they actually may actually happen is that if you embrace privacy codes allow them to be traded on regulated exchanges which to the ml kyc you can you know combat a lot of the so-called abuses of movements of large money like what is he does email kyc make sure they are regulated if you ban them you are encouraging the rise of sexist and p2p exchanges which then make it so much difficult to control so rather than like you know taking a very gut reaction response and just ban it because like it's similar to like you know the music industry like they tried to prevent privacy and then ever realized oh yeah you know just make it easy and then you can still kind of regulate it I guess the similar parallels there and I just hope that governments really understand what they are trying to do that do you want to have some control or do you want to just like let it all go doc yeah I don't actually think banning private cryptocurrencies is going to have the effect that they wanted or anything it it's not really possible I mean it's like I mean good luck with that how can you bend a privacy coin right it's something I have on my is the 12 words I have in my head so I mean perhaps you can ban it and regulate exchanges that's right but you you can't really been owning it transacting it you cannot trace it so it's and I agree that a sane and forward-looking government needs to understand that this technology is here the private digital money is here you can ban it yeah it won't have any effect but you can you can say you bend it and and then what search people's phones for wallets I mean it won't work preventing a settlement accepting as a payment from would accept but but but the right way is to say well the technology is here let's see how it can fit what we're doing instead of living it all into the darknet and you know when people say that cryptocurrencies used for bad stuff you know the the currency that's used for best stuff is United States dollars right and and and Fiat you know so nobody's blaming you know Alan Greenspan who signed on a lot of those for drug dealers ships and and all that kind of stuff so it's not the the money it's you know that there are criminals and the government's have our tax money to go after those criminals regardless of what kind of means the bad guys are using right and the worst yeah the worst thing is that you know money laundering is happening in our existing financial system you know and then they're just slapped with a fine no one goes to jail and then that is where all the crap is happening and yet government's are just letting it happen because the too big to fail and you know I find it really hypocritical to target privacy coins then when the elephant is just right there standing there you know raking the train yeah okay now let's get to the technical part of the talk sure like just kind of discuss some high level privacy techniques you guys like your Loki is a fork of madero you know you're using nimble window like what are the trade-offs or vulnerabilities you think about when you design your privacy codes that help us understand all the different privacy techniques usually quite a well-thought-out panel because we've got three members here from the three sort of main modern-day privacy techniques so there's probably would you like to start out alex with yeah z cash maduro yeah yeah so yeah we really have three different approaches with you know I'll speak about member Wimble member a little being the latest invention in that space this protocol was published just a little more than two years ago by an anonymous person and the the protocol kind of turned all the Bitcoin architecture upside down so instead of having addresses and moving money between addresses me and belen will actually designs a system where you have like the blockchain is actually like a huge wall of safe-deposit boxes that look exactly the same and users just have keys to their safe-deposit boxes so what if I want to send Reuben some money I take my box and just let Reuben change the key and we both sign that transaction or I split it into two boxes and then one change box for me and and the other I give the other box Reuben here so and the blockchain can verify that whatever I had in the box and the initial box was divided into two boxes and no new money was printed and they can do that without knowing the actual amount so so it's a really cool technology because we don't have to hide any information on the blockchain because it's just not there from the first place right and and the advantage is you know very good privacy and also good scalability because we don't even have to store the transaction history on the blockchain so you know we can talk about some deficiencies one of the prices or one of the disadvantages we or the price we have to pay for that is that for every transaction both sides need to talk right because for me to send Reuben some money I need to give him the box give him the key or let him change the key and then we both sign it so so remember Wimble if you want to send money to somebody unlike bitcoin where you just need to know the address and send it to them and they can pick it up ten years from now remember when but both sides need to talk and they need to be online not in necessarily the same time but in in the close vicinity in time so so quickly we have one minute left so each he's alive you're sure say the crypto no protocol back home was the first to come out Manero was subtly after that and there's been a plethora of other forks uses three main techniques to observe the escape transaction history the first is ring signatures which is one that's talked about the most but is actually only one of these three techniques it's where if you know how UT EXO is on the Bitcoin blockchain work you have various outputs which can be spent and sent to other people the way ring sea fishes work is that when you create an output you send it you mix it in with a bunch of older or possibly older outputs so that you can hide the app you can hide when outputs are actually being spent so it's not clear at all what's going on you mix it in with nine they mix it in with ten other transactions the the next one is stealth addresses so instead of me sending it directly to your address and that being able to be linked on the blockchain I use a different key exchange to essentially send it to a one-time address which prevents the sender being known and then the final one is ring CT we now use bulletproof for that which allows you to prove that you have sent a positive amount of money a you're not printing money but means you don't actually have to show how much money is being spent in each transactions so through that we can hide the recipient the sender and the amount using those three techniques the downsides are the transactions used to be a lot larger they now a lot smaller thanks to bullet proofs and you have to scan back through the blockchain to see your transactions which you can make the mobile experience a little bit less nice but they're the main trade-offs how quickly you just explain like basically what we're trying to do is on the blockchain the main thing that reviews identity or it's the relationship between addresses and the transaction flows both member Wimble and crypto notes their strategy is basically to hide your transaction in the crowd with other transactions or decoy transactions so you're just trying to you know you're mixing your transactions with a large crowd of people well for us were more about like ability to destroy the coin and at any time in the future to redeem a brand new one with no transaction history so in that case we feel that you know the links between the old coin and a new coin are completely broken so that's just like a different approach then let's say like a decoy transaction based type of system well thank you that's the time we have we saw some time for a few questions are any questions for our panelists assignment Alex move it do you guys think that the future of messaging should be completely private I think that's a question for you I certainly think that there should to be a way to do completely private messaging I don't think that there will ever be a case that there will be complete and utter private messaging on all platforms for everything I don't think that's entirely necessary particularly when it comes to group messaging because if we're all in a room and we are all in this massive group chat with I don't know how many people here maybe 200 all it takes is one of you to screenshot that conversation and then it's basically a public conversation so privacy can really only be achieved in small groups of people when it comes to messaging so I don't think there's ever going to be a future where we'll see every because the people are ultimately at the end of the day the source of most information leaks and data hacks as well so I think that's the critical issue here but technically is it possible yes but practically probably not I think actually one of the things with like messaging to me I see as one of the pillars of a decentralized society like decentralized communications decentralized production decentralized law enforcement if we have a system where people can communicate freely like just loud ideas to you know communicate without fear of censorship I think that's something we should go to it's too rather than you know if we have someone that's like overlooking what we are saying or who we are talking to and that potentially is a source of censorship of course there's some arguments you know whether we should let child pedophile rings talk in private and stuff like that but I think it's a general hole we should be free to express our opinions without fear of surveillance of what we're saying because then we can truly freely express who we are as a human being yeah I would just add that I agree with Simon that there is a technology piece which can be solved but the human piece like you know if I say something bad about the government to to a friend you know nothing can prevents him to just screenshot this conversation and go to the police if if I live in a state where saying a thing is is like illegal and so it's both the society in general and the technology so of course the technology can help us communicate in private and not let prying eyes look into what we're saying but if you know people in the group want to reveal it to to the law enforcement which can actually kind of prosecute me for saying things technology cannot solve that really is the only provider of the system reviews the identity though yeah well that's the thing the law enforcement agencies over the last twenty years have been handed this amazing thing on a plateau it's like hey you can see what most people are saying most of the time without having to do much work at all great and now it's starting to be taken away from them with end-to-end encryption so guess what police it means you have to go back and do good old police work like you used to so I don't think anything's changed in that regard I think that's our time let's take the panel Ruben Simon and Alex thank you thanks everyone