'Like a Peanut Butter Allergy': Why Institutions Need Onchain Privacy

Transcript

Yeah, yeah, that makes so much sense. I mean, especially if I think about, you know, whales and industry. Um Not going to lie, like for me as a journalist, um I don't love the idea of uh that activity being more private because it makes things harder if I want to look into something, but obviously if I'm the person transacting, then of course that's what I would want to do, and especially in this kind of situation where I am engaging in an activity that could potentially multiply my money or or, you know, maybe I take some kind of gamble and I lose money. Um and, you know, you just wouldn't want people to see that, you know, like we have all those accounts that will tweet about,

"Oh, so-and-so, you know, you know, they bought this coin at this price, and then they lost, you know, whatever, $50 million like 3 months later when they sold or, you know, whatever." So Um all right, so let's just talk a little bit Oh, uh-huh. >> No, I just I just want to double-click on that. I think obviously the speculation has been the biggest use case of blockchain so far. I think what's also happening, at least like from what I'm seeing over the past, you know, year, year and a half, that we're actually getting people starting to use this for real businesses, right? And this is both, you know, kind of globally, banks and fintechs adopting blockchain, as well as for agents, that is the interface, right? That the

easiest easiest, right? Cloud players adding magic payments that going to be on blockchain. All right, we see this kind of across all all of the different stack of services, right? One way or another, they're adding different options. And the thing is like, while you were speculating, yes, the visibility of the trades were, you know, was a problem, but it is like kind of, you know, people were okay with that for the most part. When you're starting to actually use it for real business, like or, you know, if you're paying, like if I'm paying for coffee, like if it's if the coffee you know, uh is there coffee shop sees my, you know, balance, my net worth during that transaction. If anyone else in the

world, right, can observe that I spend money in this coffee shop, like that's a massive like security issue. And for businesses, it's massive business operations issue, right? Because everybody sees who they paid, you know, what is their like cost of goods, how much is sold, like like that that becomes a massive business operations. And so, I think privacy is really, you know, people ask like, "Oh, nobody cared about privacy. Like Zcash existed like for a long time. Nobody cared about it. Nobody cared about privacy. What happened, right?"

Uh and I think there is a diff- there the change that came is like people actually starting to use it for day-to-day stuff, starting to use it for running businesses. The kind of global financial system is starting to get integrated. And so, privacy becomes really an enabler for this to be like not an op- massive opsec issue, not a massive kind of business operations issue. So, I do I do feel there's like a transition that's happened as well. Uh and and kind of Zcash and NEAR both are really delivering on that on that value prop.

>> One anecdote I'll give also is I use it pretty aggressively, pretty frequently when I'm traveling. So, a lot of people take, obviously, currencies, usually Tron, honestly, which is sort of fascinating, but a lot of Tron usage, but when you're booking flight tickets or hotels or whatever concierge stuff, it's actually very helpful to be able to use NEAR intense via Zcash and sort of tighten up your opsec, especially if you're going to like a France or something where I believe it's 80% of all crypto kidnappings or some Um and so, being able to actually use it for that, um that's I I religiously use it for that. Um, it's

been very helpful. >> And actually explain that a little bit because um, so first of all, it's a it's a two-part question. So, did you literally mean that people are taking TRX or did you mean a stablecoin on Tron? >> USDT on Tron. Here's the USDT on Tron. >> Oh, okay. Okay. >> yeah. >> And then but then how so how many merchants out there are accepting So so I don't know. So you so you use your Zcash with Near Intents. So then what what does the merchant see? >> So, I mean, ideally they accept Zcash directly, but obviously that's a pretty big ask because most of the folks who deal in crypto for whatever reason they already take USDT on Tron.

Maybe it's more of an Eastern thing. Um, but you know, as soon as you find one or two of them, then that's pretty much all your needs anyway. Uh, assuming like depending on what you're doing, right? Like if you're doing travel, the travel people will take care of pretty much anything related to travel judging ranging from flights to taxis to booking things, whatever it might be, hotels. Um, and so you can >> using a travel agent. You're not paying for the hotel directly. Like you're not paying the hotel directly.

>> Well, I mean, I guess you could, but yeah, in this case you're not. Uh, you're you're doing a sort of a private concierge, so to speak. Um, and you can just do that via uh, like just because obviously for something to be like a store of value, you need to hold value in it. But then you need to also be able to do things with it to an extent, like things backed by it. And so I think like the most underrated thing that I'm upset that like not everybody uses it, but I think a good enough amount of people use it such that it does make a difference is sort of like if you use the Zcash wallet, they all have the pay feature which integrates near and tens, which then lets you pay on any chain, right?

So, you can also I also do Solana USDC with this, for example, or you can do Ethereum, or you can push your Robinhood whatever. Um and it's just super convenient. And and like it's not like a regular bridge where you can just go back and be like, "Oh, it came from this other address. Okay, now my private concierge knows how much money I make, and therefore now they're going to upsell me on all these sort of different shit." >> Yeah. Yeah, this is something that I think about because um let's just say I've had some weird experiences when buying things with my name, and it has made me realize like, "Oh, man, I probably need to figure out a way to like buy things more privately." And I know that there are credit cards, and

I have done that occasionally, but it's a hassle, you know? Like um so I I love what you are saying here. Um so, let's actually talk a little bit more about this privacy thing because like obviously um you know, we we've said for a long time like just crypto people generally have said that privacy is essential for adoption. Um and what's kind of interesting is like so I I definitely agree with that. Um you know, I've I've long said that I I've never been that person who, you know, broadcasts all of my Venmo transactions, but at the same time like so many people, you know, in surveys they'll say they care about privacy, and then when it comes down to the actual actions, they they don't care. They

would rather have convenience. So, um you know, I'm just curious to hear you talk about like whether or not you really think that the like privacy and confidentiality will be big drivers in this next adoption cycle, and um and and you know, why and how you square that with this behavior where like by and large a lot of people will give up privacy for convenience. >> Yeah, I mean right. Well, I would say Yeah, I I would say that generally people prefer convenience and then for any kind of privacy product, the idea is we need to build a better

product. That's always I mean, it's always been true even for let's say in general, right? I think we're being like, "Oh, why are people not adopting that three the past 10 years?" And the answer was always like, "Well, you need to actually have a better product." Across the board, right? Not not just, you know, in theoretical way that if you, you know, if you know what you're doing, you can sign an ROP, you know, transaction, you can read, you know, X X encoded address, make sure that, you know, uh you understand the last four four digits at at the beginning and end of the of the address. Like that's not a good product, right? That's not, you know, how Venmo works. It's not how uh you know, some of your normal banks

work. So, we kind of need to build a better product and then deliver privacy as the kind of powerful add-on for people to to leverage. And then and then it becomes it's not an onboarding tool, it's a retention tool in the way, right? Now that you are private, it's actually really hard to go back because privacy actually brings I call it like a psychological safety. There's like a level of kind of uh I don't know, like anxiety that just goes away when you know that the product you use is private.

Like you know that nobody can go and like track down or see what you're doing, etc. And I think that this is true about, you know, financial, it's about true about AI, it's true about everything. Like as soon as you know that like you're at your home and nobody's looking at you, you, you know, you lose your money and nobody can stop it, nobody can take it away. Nobody looks at it, right? You have like reduced level of anxiety. So, that's why I call it the retention in a way. People will stay with this if they're bored. >> So, there's as as far as I can tell, I think there's two things here.

One is there are certainly cases where privacy actually makes the product more convenient. And it improves the product itself, right? The dichotomy of well, if you have privacy, then it's a worse experience is not necessarily a true one. It's more of an implementation shortcoming from past attempts. Uh but in the case of for example, Zcash, why would you not want your store of value or the thing where you're storing value to be private? Right? Like what what is Why would you not want that? Right? And and assuming you can get it in a technologically feasible way. And obviously when ZK first sort of went to market, the tech was pretty

Obviously, it was I mean, Zcash was the first implementation of a snark in in in the planets on on especially for money. And so, it took many years to actually get to a point where the latencies sort of bearable to to be able to use in a mobile setting for example, right? Where your phone can actually do the ZK proof. Um and so, all things equal, then why would you not because privacy is just optionality. It's choice, right? If I have a thought in my mind, it's private by default, but I can wish to publish it on the internet. If I take a picture, I can share it on socials or I can keep it on my phone, right? And so, with money it's sort of or store value is sort of the same thing.

I want it the optionality because I want choice, but then I also can do whatever I want with it. I don't have to make it private. It's just up to me. So, because if you don't have optionality, then you have coercion in some sense. Uh in In case, it's implicit coercion because it's not like somebody's like forcing you to do it, but that's how this game forces you to play, so to speak. Now, the other aspect of this is I'll actually take the other side. Um, like Ilya's right that it's a retention tool, but it's also an onboarding tool. And so, you may look at something like the minority rule here. Right? Which is to say, there are it's a it's a necessary but insufficient condition for onboarding.

Right? Which is to say, there's always going to be people who have the limitation that they cannot come on chain unless they have some sort of uh private option. So, institutions come to mind, which is the ironic part, because a lot of the institutions actually have this as a hard requirement uh due to how they're regulated. They cannot uh disclose certain information, certainly not customer information, and so it's a literal requirement. Right? It's it's a bit like um when I say the minority rule, I mean something like a peanut butter allergy. Right? Which is to say, if a certain amount of people literally cannot do something because of a blocker, well, then the system has to basically mold such that it can allow for those

people to onboard. But then, once those people do onboard, then you don't lose anything by having that optionality. Right? Because let's say like the the set of users who uh the set of eaters who must have peanut butter is much smaller than the set of users who don't care and just want to eat food. And it's sort of the same thing with privacy. >> You just caught a piece of Unchained. I'm host Laura Shin, and the full conversation is in the description below. We go live every Monday and Thursday. Subscribe so you never miss it. $540 million.

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