Decentralization is the New Encryption

Transcript

thanks is working okay cool um hi so uh it's a real pleasure to be back here the last time i was here was february 2019 um and i left paris and ended up back in san francisco with covert and then it's exciting to be back 18 months later or so in person and uh the whole place is opening up again thankfully i'm here to talk about um kind of a concept that we've been working through in terms of a narrative the idea that we're not saying decentralization equals encryption but the fight for encryption and especially end-to-end

encryption we believe is now going to get replaced by a fight for decentralization and uh blockchain cryptocurrency all the systems we've been working on and continue to work on are i believe getting co-opted in many cases by organizations governments uh um companies um and turn from the systems that we believe are beneficial in the decentralization aspects into something which is quite different so let's uh start with what do you mean by encryption um and in this aspect many of you probably very familiar with what encryption is but i want to kind of develop a couple of nuances here

um in the simplest form if you've never heard of this it's a way of taking data and making it so that someone in the middle of a transaction let's imagine i'm sending a message from myself to someone in the audience someone gets in the middle of that transaction and they try to read that message the idea is they would not be able to do that and this idea dates back very long time really into you know very early history there's examples of used in roman times and before um and uh there's a cipher called the caesar psycho cipher i believe from julius caesar um and the basic idea is is how do you keep information private when you're moving it it's been really the key to privacy on

the internet and you may not know that the very earliest uh web protocols http not https uh didn't include encryption at all and it still does not there's there's still http available for many uh aspects of protocol communication um the introduction of the s uh ssl or tls it enabled uh e-commerce to happen enable you to be able to securely enter information on a web page your credit card information other private information and be sure that when you communicated that to a web server that transit was secure now once it's on the

web server they may store it badly and get hacked and all sorts of other things might happen but at least that communication component was secure and without this we wouldn't have online banking wouldn't have amazon we wouldn't have anything that we that would take for granted in web one web two world we now see not just not just encrypted services but in some cases end-to-end encrypted services now just taking a series of things we've got some payment systems on one side venmo and paypal but if you're just trying to take the aspects on the on the left so probably many of you communicate with telegram but you might not realize that it's it has encryption that the functions in a

different way to what you'd expect whereas whatsapp does actually have end-to-end encryption so the signal so when you're looking at some of these systems you're saying which one am i using why should i use it and just be really conscious and be careful that you take a look at how these systems encrypt information um how they store the information is it stored unencrypted on the server for example so a difference between setting up a telegram group or a whatsapp group you notice when you add a somebody new to your whatsapp app group they can't see the information that was there before in a telegram group however that data of what was said before is stored on a server so when you set up that group somebody gets added you just bring that information in so lots of us like to use telegram and crypto but

it's my least favorite choice well maybe i guess message facebook messenger or something like even lower but uh it's it's not my favorite choice of a really secure mechanism of communication there are ways to make and use it in a more secure way but that's still there's nuances there um some companies now are really just trying to push the idea there's huge billboards now in berlin saying apple is privacy um trying to push the idea that instead of selling your data and building businesses around it they're going to instead make privacy a feature so end-to-end encryption is just essentially under attack um and just like uh as you see in the crypto markets

today whatever reason an organization the government the narrative can find for uh why bitcoin is bad or ethereum is bad or stable coins as bad is like whatever is the latest reason the latest reason is ransomware so it's like therefore let's ban crypto the same thing with end-to-end encryption we have a constant series of negative narratives around uh such as such a bad person did a bad thing because they used an encrypted messaging system therefore we need back doors to everything and this idea that you know if you can just surveil all the people all the time you'll solve all the crimes forever is deeply flawed and it really ignores um the truth which is that most crimes are solved by um just essentially people

working under cover you know kind of it's more like james bond than it is um uh the the born identity yeah that's the one where everything's scanned and you just press a button and bombs get dropped it's much more james bond it's much more like undercover people pretending to be part of a cell and then actually catching a bad guy so um there's certainly cases where you could argue that these things would be good but i think on the whole this is a negative thing to just put back doors and everything and the other problem with back doors is that if the government has the back door how can you be sure that the government is secure you've got a central organization they also get hacked gets leaked um so you actually make yourself less secure um we've had a lot of uh negative stuff

around platforms like whatsapp and we've had a lot of like awareness now this has led recently to a large shift to signal telegram other platforms and um some sort of recent news around this stuff you just really seen in this headline today also but just really seeing like this very large push against encryption end-to-end encryption especially um on a global basis there are um you know legal fights try and defend it there are groups like the eff it's you know it's like it's like a long war here that we're trying to get there but really the idea of privacy um we believe and i hope many of you share this is really fundamental

to how we build um the future and it hasn't helped this last 18 months as i said i was last time i was here on this very stage was right before the pandemic started um and it was so early that when i went back to san francisco they wouldn't test me because they said that i hadn't been in china so therefore i couldn't have covered um so the this this global crisis that we just went through um yes it's not comparable to something like 911 but the kind of controls that have been put in place like in 911 we had the patriot act right afterwards and the patriot act is still in place that hasn't suddenly been rolled back there isn't some initiative where people say hey you know what i don't know if we need that law anymore

let's just get rid of it you know let's get rid of all the surveillance stuff we don't need it now instead it actually gets doubled down and patriotic ii was even tougher than patriarch and so now we have controls in place where you know probably most of us have got some kind of passport now eu passport thing says oh you've been tested you're good if you haven't got that or even you do have that you're basically kyc if you know what that means like it's like know your customer you know you have to identify yourself every time you go into a store in some countries now you go in you scan a code you write information on a website oh i was at this store oh um you know i had to do this thing you're you're when you enter countries now the amount of information amount of tracking that

we have voluntarily voluntarily give people it's like we're trying to fight using gdpr we're trying to fight using all this privacy but we're just opting in to giving our information away so it's like it's a constant fight especially when you have things like covert kicking around um so what's decentralization got to do with this we all think about decentralization we tend to think about it as um i don't know it's like it's cool thing you know get rid of the big guys like let's uh let's make it like decentralized well why why make things decentralized well to me potentialization is actually about doing things in a permissionless way so uh let's go back to you know there's i was actually working on

distributed systems a couple decades ago and before we had crypto but back then it was for different reasons it was for resilience so you build distributed systems so that your data centers don't fall apart when one hard drive falls over in this case what we're looking at is saying in the case of bitcoin the decentralization was to break a specific system of centralized control that centralized control structure allows you to censor things it allows you to control things as you really harness what you can do you can decide no that transaction is not going to go that bank account gets frozen or this is how we you know kind of on a more macro level this is how we control economies through money printing et cetera so we can kind of get into the macro side of

that after the talk but bitcoin was an answer to this very centralized control structure of storing wealth now ethereum comes along i think that's something excellent so ethereum comes along and says that's great but now we want to run code okay what can you do with code well first idea was well let's let's create new currencies let's see this this was actually on the very first example on the on the theorem page let's create a new currency um so this led to this thing the ico space so the ico was really a way to route around the centralized control structures of fundraising vcs angel investors it's like a little closed club of people where you have to go in and you know have the right idea look the right way have the right deck

and then maybe they'll bless you and give you the right money um the theorem comes along and says hey you know what how about we just make that permissionless and yeah you know more bad ideas were created and good ideas but there was some really good ideas that came along and many years later we now see some of these companies creating the space that we're in now so this idea of breaking a centralized system and control how does that apply to privacy well this is what we started working on a few years ago so orchid is a decentralized network and the network contains node providers that run vpn services that's our first example the basic idea is this so normally when you have a vpn you

think well i'm private right well if you start searching for vpn companies there's a few out there that are big and so on but there are hundreds out there and when you get to different countries there's even more you're like which one do i pick well i think just yesterday there was a one vpn company got hacked all the customer data was was lost so in that case you've lost credit card information user data and so on well it's like okay well that happens all the time so what's the big deal well in a vpn what you're doing is you are sending your data through that vpn in order to get yourself an encrypted and private connection to the website or other resource that you're trying to get hold of now people use vpns for lots of reasons one of the most common reasons is what we call geoporting which just

means like i want to watch hbo max but i'm in germany okay i get a vpn that makes me look like in the united states i happen to have a subscription so i can still do it right and hopefully hbo doesn't detect that i'm using a vpn even though they often do um other examples if you're connected to the public wi-fi here the open wi-fi i'm sure these guys are very trustworthy but you might want to use a vpn because all your data is going through them so that's another example where you might want to use it airbnbs other kinds of things but in a more general sense people are using these things to make sure that you can't figure out who they are and where they're going now the problem with vpn is is that the vpn actually knows that information

there's one person in the middle who knows that information and occasionally they're not such a good actor and occasionally they get a knock on the door from somebody big and say hey you might need to hand that over and usually they do um so our idea was what if we could add more than just one vpn we'll get more than another one and this concept of being able to string different providers together in a secure network it's called onion routing you may have heard of tor which is an open source project that predates us we adapted that idea incentivized the provider network and enabled it to give you this concept of no one in the network knows who you are and where you're going so given all that the question is what

does orc do well we just provide the software for the node providers and for the people to use how does it work well we're not in the middle making any decisions but the software has some interesting properties this simple system i described has some problems when you try and add it into not just ethereum not even just really fast layer twos or other things that are gonna get faster and faster in the future but it has some problems when you start getting into a very simple problem of what we you know we just we kind of called decentralized services so if i'm the client and i want to get some service from one

of you in the audience i'm like okay i want to pick this guy over here so he's going to provide me um vpn service and i'm going to pay for it so who goes first so do i pay him first and then he gives me the service or does he get his service first and then i pay him and if you've got a fully anonymous system you just don't know whether or not the person is going to pay or whether or not the person who provides a service now if you can and that's there's no real solution to that but if you can get that interval smaller and smaller and smaller then your financial exposure to the loss of service or the loss to payment gets really small to kind of miniscule level in order to do that you need to put the payments into the

data you need to put the payments into the packets so that every packet you send has a piece of has a payment associated with it how do you do that on blockchains where we're struggling to get to you know payment network speeds never mind data network speed which is significantly faster so what we do is i think it's actually this slide maybe i can go back as well um this play no it doesn't play there's a cool version of this where it kind of plays and all expands but what we do is we take the payments and we instead of sending actual payments such that that payment is something you could go and sell or do something else with it we send you a chance of a payment you

send your ticket like we call them probabilistic payments probabilistic nano payments so you're sitting there receiving as a provider you're sitting there receiving these nano payments not just from one person but from many people and this is quite different to other payment channels and it's many to many and and also like permissionless in the way it works um such that then over time and it doesn't have to be very long period of time because we're talking data speeds you get the expected value to be the same as if you'd actually got all payments so this is what we call probabilistic nano payments we've been looking at adapting this to other kinds of ideas it turns out that certain other kinds of services like streaming and potentially storage work really well with us come back a bit uh there's a staking

component to the system um the staking is essentially a form of advertising so the node provider says i've got this much orchid oxt is the staking component um i'm going to put it up and essentially there's a financial risk there because i could have done something else with it i could have put it in a cool d5 project instead but i'm going to put it up against the node in order to receive traffic the more traffic the more the more exceeders there the more traffic that goes to that node on a random weighted selection process i think that's all the aspects of that yeah so the hops you can put a single hop in there and it's just like a vpn and then you're gonna like well so what

have i done differently well you've done a couple of things differently you add more than one hop you've got the you know no one knows who you are and where you're going aspect there's a couple of different aspects in this in that you don't need to put a credit card information in there you don't need to put in your name or anything you can just go get some crypto put into the app and you're off you go now putting crypto into the app is tricky for most people and whilst all of you i'd love for you to use orcid we're actually trying to go larger than this and get people who've never even heard of this crypto thing or maybe they've heard of it but they definitely don't know what metamask is um so we did another innovation here which is that in addition to all the stuff i've talked

about we said well could we figure out a way to have this connected to the regular world the the world of in-app payments where you just take your phone double-click when it says do you want to add some credit to your orcid account and it just works so you haven't had to go and use ramp or something like that and add metamask and all these things you've just actually just done one click and it works so the way we did this is instead of using that payment to go buy the oxt and then bring the xt back and turn it into nano payments we created um this kind of structure where you have a series of credits out there that are automatically created and it creates smart contracts full of nano payments just from doing a fiat transaction the other big innovation we made in the last year or

so while we were all locked down we got busy um is we we didn't want to switch off ethereum we really like ethereum we're very happy with our choice but we wanted to add an extra scaling solution so we made it so that we can use any evm compatible chain and the first one we use is x die we're adding some others right now and so now this is very important to us because even though the nano payments are cheap and fast and very efficient on gas constructing the nano payments contract for each user was pretty expensive to the point where it got to i don't know like 20 or 30 dollars for the for the minimum buy-in we've got that down to less than one dollar or so now it's not a subscription model for vpn so you could download it now

actually if you scan this code it will take you to the download page although check the url you know it could be could be weird um you get to that url you get to you can get started and it's pay as you go which has some disadvantages if you're a heavy heavy user but if you just want an app with vpn service you want to download right now you don't want to give a bunch of information out you can do that i'll leave that up for a second um i think i'm running towards the end of it i'm not sure i guess about 20 minutes in i'm going to stop now for some questions but kind of where we're going with this the the company the organization the project is really focused on privacy really focus on specifically decentralized aspects of systems to improve privacy

we're continuing to promote the app going to get uh some some good um good growth there but also now we're starting to look at these other applications so if any of you out there are interested in looking at nana payments or other ideas i've been talking about come find me afterwards i've everyone got the qr code okay one more one more in the audience there it's going once okay um it's available ios macos and android windows might be coming soon um that's just a really strange picture but it's cool um this is how you find me i'll be here for the next couple days um and be very excited to chat any questions let me know

this is just a mic drop all right find me afterwards if you have questions thanks you