The Zcash Network State

Transcript

Welcome to the state podcast. And uh so Arjun, you are 22. >> I'm 19. >> You're 19. Okay. So 19 means you were born in 2006. So you were born 5 years after 9/11. The financial crisis, you were only like 2 years old, right? So, you know, uh, with video games, people spawn into the battlefield in the middle of, you know, like a moa, you know, everybody's shooting at each other and there's like this giant thing and someone spawns into the middle. And so, I think of you kind of people, the Gen Z types, as spawning into the middle of this totally chaotic situation. And I just want to tell you, it wasn't like that in the 90s and the 2000s. I don't know what your perception is that or

maybe you perceive this chaos as normal. Uh I mean I was born with a lot of things that I take for granted right uh which >> where is the US where you were? India. No >> in India. Okay. Yeah. >> So uh you know I've like for as long as I remember I know like having a computer smartphone kind of >> uh after a while. Um so >> what's your spiel? Give your life story. You're Zcash guy now but what's your what give you your spiel? >> Sure. So um you know I was a pretty normal kid I would say when I was up to like 13. >> You're still a kid but go ahead. Yes. Fine. Fine. Go ahead. until around COVID uh when I was like you know doing whatever teenagers would do play Fortnite you know um and then co hit and

then I just like >> where were you then >> in India >> in India okay how come you have an American accent you have a global accent >> international no idea just talking to a lot of people okay >> um so I >> um anyway co hit and then I just started reading a lot of books like the beginning of infinity nal's book nal the nalmanac um and then I just start questioning a lot of things I take it for granted. um and just like start questioning the meaning of it all right uh like why am I in school like um I don't want to be just growing up studying engineering like everybody else and you know uh you know how the Indian is there's nothing wrong with studying engineering but I understand but but you know that kind of life >> it's like if it's only a canalized path

you want to have some options that's yeah so anyway I got completely radicalized I guess I would say and then um >> you got woke no exactly Yeah. Yeah. >> You you got well you got enlightened. >> Enlightened, >> right? Go ahead. Yep. >> Um and then I you know when it was time to go back to school because when I was online school I would just like mute the site and then you know write from my blog write on Twitter. Um but then when I had to go back to school I was like this sucks. I'm out of here. Right. So dropped out of high school worked on air chat for a while uh in the wall. uh and uh we sunseted that um you know I guess a couple years ago now and then sort of got involved with Zcash.

>> Great. >> Okay. So let's talk Zcash, right? So the Zcash network. >> Mhm. >> Okay. So my view is um there's many problems that Zcash solves. Some of them are obviously privacy, simplicity, um quantum, you know, like uh quantum resistance, quantum resiliency, let's say, >> up to some certain point >> up to some certain point, right? >> And and it has at least a road map for resiliency right? >> And like Sean Bo has a good post on this >> and then scalability, right?

>> And then um it's also got some degree of lindiness or what have you given that it's been around for 10 years. Got a good security track record. Um, it's got a good exchange integration, community, all that kind of stuff. And, um, Zcash is interesting because Salana guys like it, Metallic likes it, I like it, Novel likes it. Um, and, uh, you know, it's uh, it's something where I think we can build a coalition around privacy. And you've certainly experienced this yourself. It's funny to say like, how does the youth think about privacy and so forth, right? I'd love to hear your thoughts and I'll give a thought. I I would say I'm like I I don't hang out with a lot of people my age, right? So I don't know the like um what like regular

people my age think. But uh for me I think privacy is super important. Like I don't dox my location anymore. You know I used to when I was a kid, right? >> Uh didn't really realize >> the downside of it. >> Yeah. Yeah. But then now you know you um especially with AI being able to recognize where you are exactly um and uh you need that on chain I think uh because you can't have freedom without privacy uh and if if like every transaction you make is just broadcasting your entire wall to the public um or you know where you are what you're doing uh I don't think that's a world that I want to live in. So >> yeah and I think a lot of people don't fully understand that point um if you're under surveillance you're not sovereign.

Yeah. >> And uh one way of putting it is um if every move is being tracked, for example, you don't have the advantage of surprise, you can never launch something, uh you can never have private deliberations, you don't have the room to make mistakes, uh anything you do can and will be used against you and so on and so forth, right? And uh you know there's um another way of putting it is what does privacy mean? say arguably means local files and local data. So that's also the same as what sovereignty means. It means privacy is private keys is private property is not online like almost decentralized and local and individual

as opposed to communal and shared and public and whatnot right um so that's a sense in which sovereignty is privacy is locality is security >> it's creativity right like I'm not going to be creative I'm not going to be myself my authentic self if I'm always being watched and like I would think like knowledge creation and wealth creation just comes to a stall if uh all everything is certain all the time. >> Yeah, it's funny. You know, like one thing I used to say sometime sometimes people would tell me, oh biology, you know, China is going to just be the same as Japan and it's going to like run into a ditch like Japan did. But the way I'd point them to something is actually in the early in 2017 actually uh Sberger's paper MIT published something that said

um that China killed a bunch of American spies in 2010. Japan could never do that. So that's why China, that's another way of looking at it. So, you know, obviously very different national security sense, but China's sovereign in a way that Japan isn't because it could kill the spies because it stopped the spies. >> Obviously, I'm sure America's killed Chinese spies as well, but Japan would never be able to kill American spies, you know. So, Japan is under surveillance and wasn't sovereign, but China wasn't under surveillance and was sovereign, right? So the ability to actually be free of surveillance is actually in a sense to be sovereign and the alternative way of doing it is to encrypt not through violence like the Chinese way but through decentralization encryption which is the internet way.

>> Yeah. You recently tweeted um Zcash must scale. Why is scaling Zcash a moral imperative? >> Well, it's because look, I love Bitcoin. Bitcoin's amazing. I don't never have a negative word to say about Bitcoin or what Satoshi did and so on. But he developed it in 2009, right? 2009 was many generations ago technologically. Um you'd make different trade-offs potentially today. Um especially quantum has improved a lot. We know a lot more about blockchain scalability obviously we know about smart contracts. You know obviously AI is out there blah blah blah. So um Zcash must scale just means right now how does Bitcoin scale offchain and other chains that say offchain which say you load Bitcoin into Coinbase or Binance and then within the

internal Binance or Coinbase economy you have a debit and a credit and you can just send a receive at zero fees and only when it's recorded out as a transfer out is there an onchain transaction. Right? So offchain is basically database entries and then other chains means you swap Bitcoin into something else um and then you send it on that chain Salana or Ethereum or something like that or USDC on Ethereum or Salana and that's fine you know that does work but many of my you know friends who are still you know like Bitcoin Maximalist or what have you sympathetic to them but they've basically been saying oh lightning lightning is going to be there any day now for 10 years literally 10 years of Lightning. And the thing about it is

when you press them, they're like, "Oh, well, Lightning, you know, there's no public database of it because it's supposed to be payment channels between two nodes." And you go and you look into the details of it. Basically, the thing about Bitcoin is any address can send any other address at any time, any amount without any setup at basically let's say standard fees, minimal fees, right? that anybody can pay anybody any time, anywhere, any amount without any setup is a set of things that is all broken with lightning. Any node cannot pay any other node with lightning unless there's a channel or a route between them. They can't pay any amount because it's constrained in a complex way by how

much of the deposits are there. They can't do it necessarily at any time because you have to have like a channel open and channel close. Uh and then the amount of money is like it's like bound in a complicated way by like the deposits on the channels. And then what do you get out of all of this? What you get is something where uh like you know maybe if one party or other party breaks a payment channel then you can you could get like the last transaction out or something like that but the transactions are being recorded offchain which is why it's quote scalable to make lightning work and apps like moon and so on and so forth that try to make like mu n and wallet of satoshi and so they're fine like like these guys but basically they

end up essentially setting a hub and spoke topology where it looks a lot like here's Coinbase, here's Binance and they've got a ring of customers around them and they have a channel between them where they can do quick Coinbase to Binance settlement. So that if you send within Coinbase to another Coinbase customer or within Coinbase to a Binance customer, maybe Coinbase to Binance is uh it could be offchain or it could be a very quick Coinbase Binance like you know daily or nightly or whatever hourly settlement, however they decide to do it. But if they have an agreement, they have a peering relationship. They can move it fast. This is very similar to how banks work, right? Banks essentially mean within a bank it's fast. It's just a debit or credit in their system. And between banks, they use Fed wire or something. They do settlement and they

have a true up where it's like the net credit, the net debit, and they just true it up like this, right? And so the uh hub and spoke implementation of lightning is really not in my view doesn't get you much over just loading in the bitcoin and doing off-chain transactions and having a peering relationship between moon and wallet of satoshi and noster and whatever right Damus and and that's all fine and and there's a bunch of people who will basically give me some kind of argument like no it works or whatever and then whenever I poke on it it's always some hub and spoke thing under under the under the hood and it's not it's not like truly decentralized in the sense of you it's not like Bitcoin where you can

see it onchain anybody can pay anybody any time any amount without any setup blah blah right okay so what you really want is onchain scaling right just blast of transactions on chain what's funny is Ethereum actually learned the same lesson as sense as Bitcoin why like you know and to be clear again I'm I'm pro Bitcoin pro Ethereum like Vitalic posted that L2s kind of didn't work. And um to be clear, a lot of the L2s are smart people. I think they will adapt and pivot. I've actually had a post coming out on this from L2 to app 2. You can turn those L2s into app chains. And you have Ethereum for global state. You have your computer for local state. And

then if you have like a decentralized notion like an obsidian is L2s for app state that you're syncing across um computers like you know like your username of argin.eth or balius.eth is global but the state that you're moving if you're doing a file share request or something that doesn't need to be global state it could be L2 state and then you have local app state fine so leaving that though the thing is L2s were fine as a hack they were more successful on Ethereum than they were in in Bitcoin like base and polygon were actually quite important are important but really the salana model of just blasting you know events on chain worked right because just easier conceptually easier you don't have to think about I mean blockchains are complicated without having to worry about like, oh, where is

my coin? What chain is it on? It's easy to make mistakes on that. It's easy for users to make mistakes. You're forcing them to be aware of a detail that they really shouldn't be aware of or have to be aware of. And um so Salana's model of just blast it on chain and have beefier hardware worked. And that was it was maybe not obvious a few years ago, but that model worked. And it became also very clear that the value acrruel is going to Salana and then an app on Salana is doing something Salana isn't doing. And uh and so that worked right so now we have basically three level. So it's Bitcoin, Ethereum, Salon in terms of scalability on chain, right? And so now the question is can we go further?

Still ZK obviously there's ZK roll-ups, there's optimistic roll-ups, there's all you know ZK is not simply a um a privacy technology, it's also a compression technology. It's a performance technology. And in fact, arguably even though Zcash came up with the concept of ZK, the utility of ZK saw use more in scalability than it did privacy at first. This is good because scalability was immediately commercially important. You know that saying um vitamin versus painkiller. >> No. >> No. Like uh you know a painkiller is it's maybe immediately obvious.

>> Yeah. Okay. Yeah. >> You got you got a problem and you want to take care of it, right? And then vitamin is like possible upside, right? >> And you can argue but basically another way of putting it is like a painkiller is a must and a vitamin is a nice to have, right? like a like a like a you know a want as opposed to a need, right? So making more money required scalability. So that was a must, right? And it seemed for a long time like people could do without privacy or or rather it wasn't like it wasn't as important as scalable so people thought.

But now we have all of these attacks on people for like you know doxing locations so and so forth where if you're now if you're in Dubai or you're in a low crime jurisdiction Singapore if you're in El Salvador perhaps and so on and so forth you're fine right those are going to be three very important places on the earth in my view Singapore Dubai El Salvador are the new um like Tokyo London New York like even Miami is maybe I think El Salvador has more upside than Miami because it's a startup seat. Like I I actually like Francis Suarez a lot.

Miami and El Salvador will probably have an important relationship. But El Salvador is like a full sovereign, right? It can do a lot. It did deal with Elon recently. It has tether there. These are big moves, right? So Belli is like Belliwanu. Those get you the Americas, um, uh, EMA and APAC, right? It gets you all three time zones, El Salvador, Dubai, Singapore. And those if you're doing if you're setting up anything in crypto I think you or anything in tech crypto those are going to be the three nodes. One thing we need to do I should post this afterwards. Um like president Kelly should set up direct flights between Dubai El Salvador and Singapore El Salvador and build an international airport.

>> You all have them already. >> I don't think we have them. Yeah. Partly it's because uh South America Latin America has been sort of locked off from the rest of the world especially Asia and lots of flights have to route through America. And to route through America, if you're not a US citizen, you have to get a so-called like I think a C visa, transit visa. So many people who want to go to crushimento and Argentina and they're Asian. They don't have a US visa or something. You have to like go to the embassy, the US embassy to get a C visa for just a like it's a huge tax. You want to just fly from, let's say, India to Argentina, you have to stop through the US. But to even stop through the US, you need like a C transit visa, which means you need to go to the US

embassy and apply for a visa months in advance to jump on a flight to go. So mean it takes away all spur of the moment. It's like this enormous tax of time and energy. You can get rejected for that visa. It's often not awarded. >> So having something like El Salvador, which can just route around that will be very important. Like an enormous amount of traffic will go there because Dubai and Singapore are these huge huge points. Anyway, coming back. So uh so onchain just being able to blast private transactions onchain salana like scalability but Zcash is what um I think Shawn Bo may have with Tachion that seems simple scalable easy to understand um it's what a lot of people wanted

Bitcoin to be you know so yeah so that's that's how I think about that right >> what what else will it take to be the official currency of the network state >> there's no official currency of the network state I think um because there's there's going to be a thousand network states right it's like um there's going to be like a thousand cities startup societies thousand startup cities thousand network states um but I think there will be just like there'll be a salon network state ethereum network state don't die network state coinbase network state binance network state all these people have talked about telegram network state etc etc there will be a um a zcash network state um the only thing about Zcash historically has been that the Zcash people were so into privacy

they never talked about it and also Zcash itself for a variety of reasons just you know most crypto things have a failure mode of being way too commercial and like too much get money now too much you know like when airdrop memecoin blah blah type of stuff once in a while you have a project which has the opposite failure mode or if not failure mode because I don't think Zcash has failed at all but rather The reason that they haven't like they've been sort of shadowed by other project is they were so academic, >> right? They were so academic like you can overreact and be too non-commercial also, right? And there was it was good in a lot of ways. They nailed the

cryptography. They were very smart. They were playing the long game. All that kind of stuff. But you need the right equilibrium, right? You don't want to be too PhD.com. You don't be two PhD or two.com. You want to have the right synthesis. We're going to change that. >> Yeah, I think we're changing that. Right. You guys have Gen Zcash. Yes, that's right. Tell me about that. >> Yeah. So, I just thought it was a cool little fun >> word. Play on words. So, um it's Yeah, I think the idea is like, you know, um a lot of things start from young people and then the older generations just like catch up, right?

>> What are the five best Gen Zcash videos or what are the best ones? Which ones did? Well, do you remember? >> We did one with you. >> That's true. >> You know, >> we had the Zcash network event here, I guess. Y >> yeah. Um we did one with Hashe. Did a couple with Hashe. The first one when Zcash was a $30. The second one when it was a $700. >> Nice. That's good. That's a good one. >> You didn't buy. So >> yeah. Uh well, I mean I love obviously but see >> um keep going. I'm listening. >> Yeah. Yeah. Uh there's a few more interesting ones. Um but yeah, I think we want to ramp up um start doing more. >> Okay. So what is what are the themes of Zen Jenzie? The feed >> fun for sure. We want to make it fun.

Make privacy fun, make it sexy, make it cool. Um, and I think, yeah, educating u like, you know, you don't want to be like you just want the user to know as much as they need to know. Like, uh, that's why I love Zashi, right? Because Zashi, there's all these different shielded pools with Zcash that, you know, if you really wanted to dig deep, you could like learn all about them. And the other apps kind of force you to learn them. Uh, but with Zashi, it's all just default into the shielded orchard pool, right? Um so as little information you need but to use it properly obviously like you know you're not leaking information anywhere. Um so I think you know educating about that that would be great. Um but yeah one more question I had about uh you know you're talking about lightning and bitcoin. Uh

do you see a world where you know zcash is sort of a complement to bitcoin where it's actually >> interesting question. Yeah. So the thing is I mean one thing to not underestimate is like Bitcoin has like an insane brand right it has been I mean one way of putting it is there's a lot of people who are just now thinking about Bitcoin or whatever and what they'll say is something like Arjun what kind of Bitcoin should I buy right I'm probably you heard something like that right so that is another way of putting it is for example how many drone manufacturers can you name >> I know mock industries which is a small But what are the big ones?

>> Um, >> most people could name DJI. Maybe they could name Andrew, right? >> DJ. >> So, you have to be really into it to be able to name like small ones. That's just probably a friend of yours. Exactly. That's right. So, but >> like to be able to go down the list of all the various drone manufacturers, it's like DJI is like Bitcoin. Maybe Andrew is like Ethereum. It's a military drone. Very different, but it's a drone manufacturer. And then like to know more than that, you really have to be in the space, right? So if you think about it that way, right? Like again like most people they name an AI they'll name Chad GBT, right? And to be in the space to know Gemini and Claude and you have to be really in the space to know like I don't know the sea dance that just came

out this open model or the Chinese and whatever you know Quen blah blah Deepseek and so you we have to that's a useful way of modeling. Another example is like how many Chinese politicians do you know? >> Xiinping. >> Exactly. Right? Can you name Lee Chang and all the other people in the pro most people can't, right? So that's a good way of thinking about how people from the outside think about crypto. They just know Bitcoin. They just know like the one name in crypto is Bitcoin, right? That's like insane like the there's a power law on brand, right? So don't underestimate that. That's like a huge huge huge huge huge thing. So because of that number one and Bitcoin's just insane ubiquity and you know like all that kind of stuff, I think Bitcoin

will be around and do well for a long time. Also there's an aspect to being public on chain like transparency and privacy are actually both useful things right and for Kelly to be able to prove that he has this amount of bitcoin reserves is actually useful for him at times right um if he can secure the private keys um there's a sense in which bitcoin literally does become digital gold right it's something where if you you you use to actually show your proven reserves you know and then you need proof of reserves and liabilities in general because you know you know it's not just that you have 100,000 bitcoin or 10,000 bitcoin but rather all the claims on them add up to this right that's like another level of it but at least proofer reserve shows

you have something and so there's sense in which it's possible because transparency and privacy are both useful features kind of like immutability and programmability are both useful features so bitcoin is immutable and ethereum and salon are programmable mutability like in the sense of if you google mutable state. That's like a core concept in programming. That's like the thing that Bitcoin doesn't want to do that Ethereum Salana must do. But it's like these are both valuable things. Immutability and programmability, but you can't have them in the same package. It's like, you know, I want to drink water. I want a warm fire. I don't want fire plus water because they annihilate each other, right? So, you need to have them separate as things, right? So, it's possible that Bitcoin, just like Bitcoin

and Ethereum coexist because Bitcoin is immutable and Ethereum is programmable, Bitcoin and Zcash coexist because Bitcoin is transparent and Zcash is private. And you may want to have proof of reserves, right? >> Does Zcash have T addresses? >> It does have T addresses. That's true. That's true. You can do that. Um, but there's something also where uh the total sum of Zcash can't be proven as easily as the total sum of Bitcoin. Yeah. Right. Maybe there'll be some cryptographic technique that does that. It's pro probably possible, but it's not quite as simple as with Bitcoin where you just download the blockchain, run a verifier, sum all the chain tips, and you get this how many Bitcoin there are, right? That was a troll that people used to run on Ethereum. They'd say, "How

many ETH are there?" Right? And they could show a script that just simple just showed how many BTC there were. You can't say how many ETH there are, right? You can say how many transparenc there are. Um, and certainly that's an upper bound. Like >> you can also say how many shields there are. >> You can see how many shield there are. That's true. That's true. >> But it's a little bit less Anyway, people can make these arguments and so it's it's like a little bit less uh >> um trackable. >> Yeah. >> Than than Bitcoin is. And sometimes it's a feature. So anyway, uh that's those are the um the benefits of an older technology are ubiquity, brand, and perhaps transparency. Mhm.

>> Um, and we wouldn't we shouldn't underestimate that. I mean, one thing that's interesting is, you know, when Facebook was in its early days, Twitter was and Twitter was in its early days, people said, "Oh, Twitter is just Facebook status updates, right?" Because Facebook there was there's a time when it said like Argin is Yeah. And then you could type in a box. I don't know if you remember that. It actually is before your time. You It was like 5 years before you're born or something like three years. But 2004 to 2007 you had that like biology is and you type something in >> and then eventually the biology is went away. You just type something in those tests. It be similar to a tweet but it' be like biology is it was it was an update of AOL instant messenger. AOL instant messenger you would say John is

asleep and that was like your away message or John is at the office. So it would tell people where you are almost like an answering machine message. So answering machine message became an ICQ or AL in messenger away message became a Facebook SAS update became a Twitter tweet and so that's it that's the evolution of it right so the answering machine became the tweet >> um that's not the only lineage but part of it point is people thought Facebook can do all these things Twitter can do only one thing therefore Facebook will just crush Twitter it turned out that the simplicity of Twitter meant to just build a community around it right that's the other thing that Bitcoin has gigantic community right hundreds of millions of people right are part of Bitcoin and like you could say for example that

um I don't know what's a good version of this like I don't know maybe El Salvador is a better Mexico but how many people are going to move from Mexico to El Salvador community has a stickiness all it you know >> um that's not exactly right you know what I'm saying right >> so um yeah I I I don't know what the future holds but I'm pro Bitcoin pro Ethereum pro salon and pro Zcash because it's we're still in this very nonzero sum mode for a long time. All this all the intracoin fights I think there's a healthy competition and so on >> but >> but I think this could be Zcash's moment. Let's see.

>> Awesome. >> Cool. Well, thanks. >> Thank you, >> sir. Okay. He sir.