Cryptographer David Chaum | Layer Zero

David Chaum is a computer scientist and an OG member of the cryptography community. His innovation has driven much of the mathematical foundation of cryptocurrency, and he continues to work on projects like xx Network. In 1985, David issued this warning to the public: “Computerization is robbing individuals of the ability to monitor and control the ways information about them is used. Already, public and private sector organizations acquire extensive personal information and exchange it amongst themselves… The automation of payment and other consumer transactions is expanding these dangers to an unprecedented extent.” In today’s surveillance capitalism, it’s clear that we need cryptography now more than ever. ------ 📣 Forta | Help Make Web3 a Safer Place https://bankless.cc/Forta ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: 🚀 ROCKET POOL | ETH STAKING https://bankless.cc/RocketPool ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across 🦁 BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave 🌴 MAKER DAO | DECENTRALIZED LENDING https://bankless.cc/MakerDAO 🔐 LEDGER | SECURE STAKING https://bankless.cc/Ledger ------ Topics Covered: 0:00 Intro 6:00 David Chaum 11:30 60s Technology 20:00 60s Culture 23:55 A New Direction in Cryptography 33:30 The Fork in the Road 41:50 Minimum Disclosure 48:25 Traffic Analysis 56:05 Surveillance Capitalism 1:02:00 The State of Data Today 1:12:00 New Ideas and Society 1:15:40 Advice to Crypto ------ Resources: David on Twitter: https://twitter.com/chaumdotcom?s=20&t=u3ULosGOPIOTPZobdnMKkw https://twitter.com/chaumdotcom?s=20&t=u3ULosGOPIOTPZobdnMKkw David’s Website: https://chaum.com/ ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:03David Hoffman?

  Welcome to Layer Zero. Layer Zero is a podcast of unscripted conversations with the people that make up the cryptography community. Cryptography is of course built by code, but it's composed by people. And each individual member of the cryptography community has their own story to tell. Cyberpunk's understood that the code they write impacts the people that use it. And Layer Zero focuses on the people behind the code because cryptography is people all the way down and it always has been. Now, you might have noticed a little difference in that intro, and that's because I have not a member of the crypto community, not a member of the Ethereum community, but a member of the OG cryptography community. And I'll do admit, it doesn't make complete sense to say that cryptography is people all the way down because actually cryptography is one of the few things that is drickly math through and through and through.

• 0:47David Hoffman?

  Today on the show, I have on David Chom. If you don't know who that is, you need to do a little homework because we live in an industry that is built upon David Chom's work. He's the founder of DigiCash, one of the early experiments into online cash, but mainly one of the big proponents of privacy at all costs, where not just the data about a message is private, but all of the metadata is private too. And I'd like to read a quote out to help emphasize the importance of who David Chaum is and what he's done for this industry. This is Chaum's warning to the world in 1985, where he talks about the dangers of user data that is building up around computing systems. He says, "Computerization is robbing individuals of the ability to monitor and control the

• 1:32David Hoffman?

  ways information about them is used. Already, public and private sector organizations acquire extensive personal information and exchange it amongst themselves. Individuals have no way of knowing if this information is accurate, outdated, or otherwise inappropriate. New and more serious dangers derive from computerized pattern recognition techniques. Even a small group of them tapping into data gathered every day in consumer transactions could secretly conduct mass surveillance, inferring individuals' lifestyles, activities, and associations. The automation of payment and other consumer transactions is expanding these dangers to an unprecedented extent." Projecting the vision of these two futures, one built with current technology and one built with decentralized services,

• 2:15David Hoffman?

  David Chaum saw that the two approaches appear to hold quite different answers. Large-scale automated transaction systems are imminent, and as the initial choice for their architecture gathers economic and social momentum, it becomes increasingly difficult to reverse. Whichever approach prevails, it will likely have a profound and enduring impact on our economic freedom, democracy, and our informational rights. David Chaum said this in 1985, before we had surveillance capitalism, before we had Web 2, and before we have the state of Facebook, Instagram, all this collection of metadata and the reselling to targeted ads, and all these other practices that we now deem evil in this world, but we now also have to live with. And so David Chaum saw this in 1985,

• 3:00David Hoffman?

  which is one of the reasons why he's such a fantastic character. And he's been dedicating his life to building private cryptographic systems that protect users' data, and not just the contents of messages, but all of the data that those messages leak, as in who is the sender, who's the receiver, how big is that message, what time was that message sent? All of these bits of data that create a Sudoku puzzle that's solvable to track who we live in the world of what we now call the metaverse, but was previously called just our online footprint. David Chaum, his name is on this shirt. If you aren't watching the podcast, it's the shirt with all the cryptographers that this industry is built on. And so I will stop with my gushing

• 3:43David Hoffman?

  and allow this conversation to progress into one of the core cryptographers that this entire crypto industry is built on, right after we get to some of these fantastic sponsors that make this show possible. Rocketpool is your decentralized Ethereum staking protocol. You can stake your ETH in Rocketpool and get our ETH in return, allowing you to stake your ETH and use it in DeFi at the same time. You can get 4% on your ETH by staking it with Rocketpool, but you can get even more by running a node. Rocketpool is the only staking provider that allows anyone to permissionlessly join their network of validating Ethereum nodes. Setting up your Rocketpool node is easier than running a node solo, and you only need 16 ETH. To get started, you get an extra 15% staking commission on the pooled ETH that uses your node to stake. You also get RPL token rewards on top.

• 4:25David Hoffman?

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• 5:07David Hoffman?

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• 5:50David Hoffman?

  Instead, you can spin up a Maker Vault and use your collateral to mint DAI directly. With Maker, the power to mint new money is in your hands. And there's something new in the Maker DAO ecosystem. Every time a new Maker Vault is opened, the owner can claim a PoW, which contributes funds to One Tree Planted, an organization with ongoing global reforestation efforts, creating a world where digital participation and the health of our environment can live side by side. Soon, Maker will be present on all chains in Layer 2s, bringing the biggest and best DeFi credit facility to everywhere there is DeFi. Today, you can mint DAI on oasis.app, DeFi Saver, or other DeFi protocols that you use. So follow Maker on Twitter, @makerdao, and learn from the oldest and most resilient DAO in existence. David Chaum, I am so honored to have you on this Layer 0 podcast. Welcome to Bankless.

• 6:35Speaker 01

  It's so great to be here with you, David.

• 6:38David Hoffman?

  So, David, yeah, there was this episode that we did on Bankless a while ago called "Before Bitcoin", and it was just a reading of one of my friend's explorations into the early days of cryptography. And I think that's something that this crypto industry really forgets to pay attention to as to the significance of the shoulders of giants that this industry stands on. And so I really want to go and explore that part of crypto's history, like the pre-currency side of this industry, going back to our roots and going back to the cryptography side of this industry. You ready to go down that journey with me?

• 7:16Speaker 01

  Sure, sure. Yeah, I think you're right. It's something that most people don't pay enough attention to these days, although it is a layer sort of below what we're using today in a sense. But yeah, we can talk about it, sure.

• 7:30David Hoffman?

  Yeah, and I actually want to start at the very beginning. Cryptography has many different parallels that are less about math, right? Like, it's a puzzle, it's a lock that you try and break. I'm wondering, when you were growing up as a child, what were like the early indications or characteristics that were things that you liked to pay attention to that later would be obvious about cryptography?

• 7:53Speaker 01

  Of you, yes. I was, you know, really, the truth is that I appreciated the super strength of secrets as a child. Much, yeah. Of course, I was interested in all kinds of security mechanisms and this sort of thing, but I really had a reverence for how powerful it is if you know something and no one else does. And I thought that maybe there was a way to leverage that to help make the world a better place.

• 8:29David Hoffman?

  And what were some of those first things that captured your attention when you were young?

• 8:37Speaker 01

  Well, you know, it was a different growing up than a lot of, I think, your listeners have so have had, because, you know, there was the anti-war movement and I was, you know, very much caught up in all that kind of thing and, you know, I learned how to program computers by punching the little squares out of the Hollerith cards with a toothpick. Then we'd give the deck and then the weekend, the next week, we'd go to, you know, back to the Science Museum and they'd give us the output from the, you know, Fortran program and it would say, you know, "invalid punch in column six failed", you know, and it stopped, repeat this process.

• 9:18Speaker 01

  You know, so it was, I was interested in all kinds of things, but I think the really powerful force in my youth was the idea that the world really needed, it was going to go off in the wrong direction and it really needed some help and the power of secrecy maybe could be leveraged for that. So that's kind of, you know, they say people know their life story when they're six or something. Have you ever read that? You know, yeah, something like that.

• 9:53David Hoffman?

  Do you have any, what was the indications that came to you that the world was about to go off the rails? For example?

• 10:00Speaker 01

  Well, don't forget, we think that, you know, like, you know, January 6th was a, you know, unprecedented big deal, but when I was growing up, you know, there was the whole Watergate thing and people found that, you know, equally shocking and, you know, it's, there's, I think there's a common thread running through a lot of that stuff. But, yeah, it's, you know, the war of Vietnam was not really that popular, but it was a pretty tragic thing and I think it polarized and galvanized. But there was a very different era, you know, people were extremely

• 10:42Speaker 01

  excited about the future as well because there was a lot of other vectors besides that. When, you know, the war and all, but, yeah, I think...

• 10:55Speaker 01

  Yeah, the power of technology to influence society, you know, was very much top of mind. Also with nuclear weapons, for example, in those days and, you know, Cold War and all these things. It was, um, yeah. So as someone interested in technology, I could see that this was something that, you know, could be used by the powers that be in their standard way of using these kind of mechanisms and so on to sort of buttress their position and not really innovatively, or maybe there was a different way through.

• 11:33David Hoffman?

  Yeah, I I'm wondering if you thought about technology back then, back in the sixty, seventies, but also its relationship to politics and institutions. I'm wondering, when did you make that connection or did you?

• 11:47Speaker 01

  I I'm afraid I did. I, you know, I could, you know, I got in a little bit of trouble here and there for kind of, you know, doing stuff. And I was, um, also like kind of a student of what the government was doing with technology, you know, and I would call people up and pretend to be like, uh, you know, I don't know, much older than I was and find out all kinds of things. And then people started like threatening me because they felt that I was, you know, prying into things that I shouldn't and so forth. You know, sometimes like these, you know, I'd call these companies and then they would kind of send me over to some other guy who tried to entrap me, you know, he was some

• 12:28Speaker 01

  kind of spook that worked there. I mean, scary stuff like that happened. It was, you know, there was, it was a different, different time, you know, you could order manuals for like, you know, the kind of, all kinds of stuff for free, like how to build an IBM System 360 out of, you know, or how to, um, you know, how the very sophisticated burglar alarm technology worked or all kinds of stuff was a little more available in those days. And so I was interested in all these things, but with an eye towards seeing how they could be deployed in the in the people's interest as opposed to institutional interest.

• 13:12David Hoffman?

  I'd like to jump to your time at Berkeley. What was your major at Berkeley?

• 13:17Speaker 01

  Oh, well, uh, you know, I was a, I was a, a graduate student there. I had gotten this like four-year graduate fellowship, Regions four-year graduate fellowship. They only give one every two years and uh for UCLA and I transferred to Berkeley after the first quarter. You know, I was like, I, I felt, you know, I was much happier there and uh but most of the people who were doing cryptography there left. Uh, at, at the, you know, so there were, one guy went to work for the, for the government and another guy went to try to influence government and uh so, you know, and, and Merkel had left then and, and so on, but um it was uh, uh, it was fantastic being there. It was the beginning of, you know, we had, my advisor were, were ran the Berkeley

• 14:03Speaker 01

  uh Linux, Unix uh distribution project and so my office mate was Eric Schmidt, you know, just the two of us sat in this office looking out at the, at the bell tower and Bill Joy, another founder's son was uh, you know, kind of around the corner, you know, you know, talked to him a lot and um so it was a very exciting uh uh place, but there was also this feeling like the, you know, the government wants you to work for them, you know, and this, so a lot of the funding was from DARPA and you know, all kinds of government agencies and military organizations and um you know, a lot of big corporation stuff and then there were a lot of people that didn't really want to participate in that and uh

• 14:47Speaker 01

  you know, so um, I mean, I, I saw one of these uh, you know, the, the DARPA funding, you know, they always had the tagline, their posters and stuff, uh DARPA, a mission-oriented agency. And so I thought, you know, I'm gonna be a mission-oriented agency. And, and I really decided just to devote myself to trying to use cryptography to uh make the world more, let's say, democratic. And that was my mission, and I basically stuck with that over the last forty years, you know. So there were uh people who were in sort of the, you know, the the layer minus one of cryptography,

• 15:32Speaker 01

  let's say, was public key cryptography, you know, and this is a big deal when it was invented and uh, you know, so I knew all these people, like Diffie was a buddy of mine, then he moved, he lived right at the border of of Berkeley, but then he moved to to Mountain View and uh, uh, so uh, you know, and and so Marty Hellman and uh, so Ralph Merkel had invented public key cryptography, but no one would want to publish it, his paper, so it was only published like ten years later, with apologies, you know, he didn't, uh, but Diffie and Hellman, their paper was published at a conference and, um, you know, uh, then um, uh, it turns out that some

• 16:11Speaker 01

  uh, smart summer intern at the British NSA had also invented public key cryptography earlier

• 16:19David Hoffman?

  Right.

• 16:20Speaker 01

  than these guys, and now he's running that place.

• 16:23David Hoffman?

  Mm hmm.

• 16:23Speaker 01

  So it it, you know, and then there was, you know, so there was the uh RSA work, you know, as well, and I I knew uh, uh, those folks, uh, of course, as well and, um, but, you know, this was also an era that's hard to hard to appreciate these days because there was government pressure not to do research in cryptography.

• 16:48David Hoffman?

  Hmm.

• 16:48Speaker 01

  The the, you know, public research. And in fact, the head of the National Security Agency, the NSA, you know, it's a pretty serious organization, started uh, in effect, saying that it, that cryptography could be considered born classified.

• 17:04David Hoffman?

  Right.

• 17:05Speaker 01

  Like nuclear secret, so if you just thought of it yourself.

• 17:10Speaker 01

  It could still be classified automatically. And so, and there was this guy started writing letters to the major, you know, IEEE ACM, the major scientific organizations, they say, "Don't have any conferences or sessions on cryptography, we're going to throw the book at you." And this was reported in Science Magazine, and you can read about it on my website, chaum.com. And so then I thought, "Well, man, this cannot stand because cryptography is too important a technology to, you know, to empower individuals." And so I, you know, I sat in my apartment with my girlfriend and we stuffed the envelopes for this, we created a, you know, had a conference on cryptography.

• 17:53Speaker 01

  We did it without using the phone, so we got the label, the addresses on paper from Lynn Edelman and we, you know, we got, went down to this place where they printed the free press, a little like off of Telegraph Avenue, you know, this little print shop where it was like, you know, "Don't ask, don't tell, just, you know, pay us cash, we'll print stuff." And they printed the invitations and, you know, mailed them out. So but almost, most people that were interested, that we knew of in the field, came to the conference, about a hundred people and, you know, I stood up there and, because as the general chairman and organizer, I just stood up on the stage and said, "Okay, you know, thanks for coming, you know, lunch will be 12:30 or whatever, but bathrooms are over

• 18:36Speaker 01

  there, but now that you paid your, whatever it was, like 75 bucks, you're now a member of the International Association for Cryptologic Research, which I secretly founded." And these are the officers, and the next event will be in Italy, and this guy's going to run it, you know, and so there was a handful of people attending in suits, kind of like with their name badges all said, you know, "Private citizen from, you know, Laurel, Maryland." Where the NSA is. And then you want to say that they were working for NSA. But they were all there in the front row. They were very anxious. And I, you could just see them all turn green because it was over. You know, they were trying to stop this research.

• 19:21Speaker 01

  But at that point, um, you know, because it was an international organization now, it's basically backed by the UN and, you know, they couldn't stop it. So they never like put me in jail or anything. So, um, yeah, I said cryptography free. And that's still the major organization by far that does research in cryptography. We have three conferences every year plus a handful of workshops every year and publish the proceeding. You know, the Journal of Cryptology and a bunch of, you know, proceedings. And it's the main event. So it really created a community. Uh, it's, you know, pretty vibrant, uh, still.

• 20:01David Hoffman?

  And, and of course, all of this is going on during the whole counterculture of the late sixties and seventies. Right. And I'm wondering how much of that counterculture zeitgeist of the seventies worked its way into the cryptography community because it sounds like you, you are quite rebellious. Um, but I'm wondering like how, were, if you were a cryptographer, were you likely also a rebel? Or were you more willing to work inside of state lines? Or was everyone kind of on board with the whole, uh, we are not a part of, we don't work for the government. We work for cryptography. So overall, what, what would you say is the rebellious nature of the cryptography?

• 20:39Speaker 01

  I don't want to be lumped in with the rest. I don't think it's fair to do so because my, you know, angle, if you will, my vector, my approach, my mission has been, as I've mentioned, to use cryptography to protect members of society and to protect democracy and to allow democracy to flourish. And, uh, that entails what I call, and what is called privacy technology. Basically mixing and blind signatures, to put it very simply. I refer back maybe to your, your earlier show you mentioned, so, um.

• 21:20Speaker 01

  Uh, you know, the rest of the community was not working on that kind of stuff. They're working on the layer below that, which is, you know, encryption and public key encryption. Um, you know, it's a lot of good work and hard work, but it's all about communication. Uh, security of the very basic type that you understand when you're a little kid, you know? You have the key, you send the message, encrypt it, you send the message. Counterparty has the key, they decrypt it and, and they get it and the eavesdropper can't hear it. Can't, I mean, can't understand it, you know, can't decipher it. So that was the, uh, thing that Zimmerman and all these guys focused on that.

• 22:03Speaker 01

  And, uh, you know, the government was trying to block this sort of thing. They didn't want people to use it and they were trying to wheel out. Since they couldn't do the born classified thing, they were saying, well, now it's, uh, you know, export controls and this and that, it's military equipment and you can't. But, um, that was a whole war, crypto wars, unbelievable. Went on for a long time and there were all kinds of advocacy groups and people focused on that. But I steered clear of all that. So I was pretty much the only one working on privacy technology, the, the, the layer above that. So hiding, who talks to who and when? The social graph, what's called traffic, predictive traffic analysis and allowing payments in such a, a, a, a context not to unwind, uh, the protections.

• 22:47Speaker 01

  And so it was a bit different and only now with the XX network, I don't want to jump forward, but you know, we have this, uh, I founded the, this project XX, uh, network. And, uh, it has a messenger and it protects, uh, privacy and so forth. And now, you know, I have to get, I have to include the end-to-end encryption as well and, and be involved in that. But that's another story because none of the messengers today, you know, even though people moved to them thinking they were more private, none of them has, uh, quantum resistant end-to-end encryption and we do. And we announced it very widely and no one, no one followed suit.

• 23:30Speaker 01

  So it's like, uh, I think that that proves basically that.

• 23:37Speaker 01

  That that has never really been the issue. The real issue is is traffic is the metadata. Since we used to call it was military used to call it traffic analysis, you know. The the because it's far more revealing and harder to um you know. Compromised by lying or you know missing people and so on.

• 23:58David Hoffman?

  There was a paper that you wrote on this titled untraceable electronic mail return addresses and digital signatures. But there was a paper, right. And but there was a paper, but I want to get there. But before there was a paper that you didn't write that was monumental in the world of crypto called a new direction in cryptography. From Martin Hellman.

• 24:15Speaker 01

  Paper, yeah. Yeah, I'm wondering if you could just. Very, very well, but that was about that was about, you know, end to end encryption. So basically, it's a simple, it's the thing I was mentioning before. Conventional cryptography. It you basically have to drag the key that you make up over to the other guy person. And then you too can can use it to keep the eavesdropper from listening in. With with the advent of public key cryptography, which I I mentioned that, you know, the different people that come up with it. Uh, you could publish one of the keys and anyone could use it to uh, let's say encrypt a message that you could receive.

• 24:55Speaker 01

  That you could uniquely receive and and that that made it so you didn't have to physically transport the keys. You you you it was a you still had to make sure you were using the right keys. It's not a complete panacea, but that's right, yes. Yeah, that was that was a, you know, that paper and I think the RSA paper were uh, you know, widely heralded and influential. Sort of brought cryptography out from the, you know, little codes that you did as a kid out into this uh, modern cryptography world. But it was fought by governments and, you know, it was it was a it was a whole war. And in the end, you know.

• 25:36Speaker 01

  You sort of think the government lost, but really they won because they were able to delay this dramatically. And I think then in the end, misdirect people into focusing on that stuff and ignoring the metadata for the longest time until now.

• 25:51David Hoffman?

  Right, certainly, yeah. And this goes to what you were saying where this whole, this was the foundation that cryptography is built on. But what you were doing is something a little bit more applied, a little bit more on the data and privacy layer on top of like this basic cryptography. But I, but, but, and then.

• 26:07Speaker 01

  I needed new kinds of cryptography in order to do the privacy stuff.

• 26:11David Hoffman?

  Right.

• 26:11Speaker 01

  So the mixing paper that you referenced, you know, you could build that just from public key, just for the basic. But for the payments, which are also needed, you have to have privacy in payments. Otherwise it'll ruin the privacy, the unlinkability that you would have in communication, right? Uh, you know, you'd be linked by your payments. In order to achieve payment privacy, at least in those days, it was thought that you needed these, an innovation, the blind signatures, which I created. And I created a whole bunch of other kinds of signatures and no one else really did, you know, the undeniable signatures and the, all this other stuff. So it was, uh, uh, it extended the functionality of the primitives with new features that, that have proved to be of enduring value.

• 26:55Speaker 01

  And so it wasn't just really building on an earlier layer. It used those things, but it also had fundamental cryptographic insights of its own that enabled its unique protections.

• 27:10David Hoffman?

  There's a quote that I want to read that I'm hoping that you can, uh, help elaborate for, for the listener. Uh, this is coming from Chaum's Warning to the World in 1985, again, from this before Bitcoin series where you say that there are dangers of user data that is building up around computing systems. I'm wondering if you could unpack this quote and tell us what this means.

• 27:33Speaker 01

  Well, I mean, you know, basically, it was my realization early on that the only way that, there were only two ways, it's in my early papers, in the Scientific American and the earlier version of that that was published in the academic, cover of academic journals, it basically always said there's only two ways that technology could go, and we see it today, you know, it's, one way is where the powers that be

• 28:14Speaker 01

  can see everything you do, you know, and the other way is where you have the keys to prevent that, and you run the show from, you have the, you control the use of your own information by possession of your own keys, and those are the two competing scenarios, there's really no halfway middle ground, and, you know, it's really starting to come to a head now, because the fundamental difference between China, as we perceive it, you know, in the West here, and the, and our ethos of personal liberty and rights and so on,

• 28:52Speaker 01

  liberal democracy, is, you know, is crystallized in the simple question of, does your messenger allow the government to see who you talk to and when, or not? That's basically what it comes down to, WeChat, people in China know that WeChat, you know, can see everything they do, and that information's available to the government, so it's a kind of panopticon, you know, it's, it's, it has a chilling effect on society, but it's, that's the way they want to do it, and what I said in 2018 was that, you know, our, the XX Messenger, the XX Network Project was going to, and the XX Messenger was going to be a WeChat with privacy built in.

• 29:37Speaker 01

  And that's what we've done now. And that's the fundamental difference. So, you know, we talk, you hear a lot about CBDC. Is that something you talk about on your? Certainly. Well, you know, there's only two kinds of CBDC. There's the kind with privacy and the kind without. And, you know, when the European Central Bank had a whole big comment thing on CBDC, you know, the majority of their comments were about privacy, that people wanted it. And so it's not easy to get in a CBDC. Uh, but, you know, if, if we do a CBDC like that is fully surveillance capable,

• 30:19Speaker 01

  it doesn't give the actual privacy keys to the users, allow them to create them, then, um, you know, we're not going to have the moral high ground over, uh, over China. I mean, there's people are trying to precipitate some kind of new Cold War or something. I, I'm not a big fan of that, but, uh, it would seem that the basis of it is that this is not a free society and they're spying on people and, you know, the state has too much power. And that really comes down to, does we, can we chat see who you talk to or not? And what kind of CBDC are we going to build? And what kind of messages are we going to have? The ones that actually let you protect that? Or is it going to be like, trust us, you know? Or the government has the keys because we might need to check on you, you know, and all this?

• 31:04Speaker 01

  You know, that's, that's, uh, that's basically the, the fork in the road. And I, I, I wrote about that and saw that very early on in no uncertain terms. And it, it remains the central issue because it's so fundamental. There's no way to protect your own, your own information unless you have the keys to it. You know, it's, you just can't trust other people with your keys because you don't know if they leak, what they leak and what they do. And so it's as simple as that.

• 31:34David Hoffman?

  This is one of the immaculate parts of your story, I think, is that in 1985, you talked about this fork in the road where one would lead to a panopticon and one would lead to user privacy. And it seems to have gotten true.

• 31:51Speaker 01

  Yeah.

• 31:51David Hoffman?

  Yes, certainly. And it seems to only get more and more and more true as our technology these days becomes more and more powerful.

• 31:59Speaker 01

  Yeah, people are realizing it. Now the surveys show, you know, we hear a lot about Web 3. But look at the surveys. They show, international and US surveys, the major, you know, giant thousand people surveyed show that people find, three quarters of people find privacy of the internet, so Web 2, as the biggest problem, the one thing they really don't like. It's also the top three things they don't like, you know, and different, different names, you know. So it's like, the world has come around to the, you know, so if you're going to build Web 3, you better build something that people want, which is something that, that, that, that allows them to protect their own information. It's not good enough that

• 32:44Speaker 01

  you say you're going to protect it, or that, you know, there's a presumption that you will. That's, that's just not going to cut it these days. And so that's, that's the hope for me for Web 3. And that's basically, we chat with privacy inside. That's the thin end of the wedge. And then from there, you can build out more privacy platform. And then, you know, there's other things that you want to decentralize, of course. And, you know, and I mean, and I'm not trying to diminish the significance of, you know, the new kind of, uh, uh, models and paradigms that have, uh, you know, uh, emerged from the, from the, for the crypto blockchain space. I mean, there's a lot of interesting, uh, new stuff.

• 33:27Speaker 01

  But that's the fundamental, uh, divide, yes.

• 33:32David Hoffman?

  What would you say, can you take us back to David Traum in 1985 and tell us what made it so obvious that there was this massive fork in the road? Like, what did you see that no one else saw back in 1985?

• 33:44Speaker 01

  I saw it in the late 70s.

• 33:46David Hoffman?

  Late 70s?

• 33:47Speaker 01

  79, yeah, was the first, I published the mixing article, which now there's 65,000 references to in technical papers. I don't know what that translates into in terms of likes, but I think it's a lot. And so, because it's not, you know, they had to say something about it, I guess. So, you know, that, I was sitting in the hot tub in Berkeley with my professor.

• 34:16Speaker 01

  Yeah, okay, you know, we were, you know, swim trunks or whatever. It was like, you know, it was like, he had this hot tub and he's back, he said, "Come on over, you know, our house, you know, we'll talk, you know, about your research." And, you know, that's the way it was. It was not like now, you know, where people are afraid to, you know, go to a professor's house and hang out. And so he had like the redwood trees in his backyard, you know, he was sitting there and looking up at the redwood trees and try to figure out, "Well, if we really need to solve the privacy problem, how can we work on that? Well, let's see, what would be the simplest kind of basic problem that you could start with, you know, to, you know, to kind of toy problem to work on it?" You know, that's the way often you sort of get, you know, make progress in science. And so, you know, I said, "Well, voting, you know, let's work on voting."

• 34:58Speaker 01

  And so I came up with MixNet to solve voting. And it's still in that mixed paper, there's a couple paragraphs on the voting, but it's a little bit broader than that. You know, and then I read this article, this guy named Paul Barron at the RAND Institute, you know, like these kind of government-sponsored think tank that, you know, was involved in all kinds of spooky stuff. You know, they were talking about traffic analysis and all this, and I'm like, "Hmm, this is bad news." So, yeah, I was like... doubly motivated uh uh to to to work on it in uh you know in in uh in those days so um yeah I think what gave me the insight that you know circle back your question is

• 35:42Speaker 01

  is that I knew that you could solve it. I think that is still the case. A lot of people think, oh, you know, I can't, I know they're spying on me, they're they're spamming me with fake news, they're this and that. They're exploiting my data for making money off it, but you know, what can I do? I need to be on this or that platform to, you know, I, you know, this, you know, there's nowhere else to go, really. You can't really vote with your feet. I mean, some of the the platforms that have held themselves out, like I said, to provide privacy, I now really question, I don't want to, you know, malign them, but I I challenge you to find any messenger besides the X, you know, the Elixir, that actually uses quantum resistant security on the end to end encryption. So they've always been saying, use that, you know, end to end encryption, that's the be all, that's why you should move to our

• 36:28Speaker 01

  but it's it's fake because they're not upgrading it and the US government has, you know, there's a presidential directive. All government has to use quantum resistant uh VPN and everything because otherwise, you know, the point is, you know, for privacy, if you know, you may say quantum resistance has some has some tin foil hat connection, but it actually for privacy, it's like extremely conservative solid because it's not questioned that quantum computers will ultimately be able to break these codes that are used to, you know, because people use public key to set up the communications, quantum computers can break it. And so ironically, so

• 37:14Speaker 01

  uh it you know, Ed Snowden told us that the government was involved in what they called the full take.

• 37:23Speaker 01

  They capture everything and they save it. They've always been doing that. We knew that back, back in the day. The NSA said, oh, send us your used magnetic tapes with all those phone records on them. You know, we'll give you brand new tapes in exchange. And the phone company said, oh, that's, that's great. It's like, yeah, they have these huge facilities. So you could, you know, look them up online. It's frightening. They store all this stuff and they're just waiting, or maybe they already have quantum computers or whatever. When they're interested enough, they'll be able to, to, you know, to look into that data retroactively. And so governments have taken the affirmative action and stopped this possibility. And I think that the public should as well. But

• 38:06Speaker 01

  the people that we're trusting with, to help us seem to be asleep at the switch. And that's leaving the whole metadata issue out. There is no messenger out there besides Elixir that's protecting your metadata. So they're all just keep talking about how they have strong end encryption, but it's not that strong anymore. Sure. You know, it's, it's public key based, which means it's, it can be broken by a quantum computer. So, um, yeah, I mean, roughly speaking, it's so, it's based on, you know, earlier and governments standardize public key security systems, which are, um, yeah.

• 38:45Speaker 01

  Uh, so, yeah, I think it, you know, it was, you know, the more I looked into it, okay. And I said, well, great. I've got this communication system that can solve the metadata problem, that can solve, keep confidential who you talk to and when. But then I had to find a way to do payments over that system that, that doesn't undo the privacy. And I found that. And then the third and final piece with the blind signatures was that the blind signatures could actually be generalized into what I call the credential mechanism, that which you might think of as a kind of zero acknowledgement and disclosure proof or something like that, but it's a little different than that, uh, that allows you to basically

• 39:26Speaker 01

  Answer, you know, you can keep the full database of information about yourself that normally would be, under the current paradigm, would be maintained piecemeal by different organizations, you know, government agencies and companies and so on. And they could potentially link all your records together by your identity, right? You could maintain all that data yourself. They wouldn't have it because you would deal with each of them under a different digital pseudonym, a different public key. And then if they wanted to know something about you, they could ask you. And then you would, you could answer if you chose to in whatever way you wanted, but then

• 40:07Speaker 01

  you could prove that your answer was correct. With like zero knowledge, minimum disclosure, this was the cryptographic stuff. So that you could achieve, so basically you could organize society that way. Only you would know who you talked to, when, you could do payments privately, and the database of information about yourself would be your exclusive property. But I argued in those papers in the mid eighties that the data that organizations would get would actually be better and more useful to them. Because right now, they ask you to voluntarily tell them all this stuff, and you could lie to them and so on. And then they have to sift through all this, and whereas this way, you know, you just

• 40:51Speaker 01

  answer the exact question that they want to know. Are you allowed to be here in this event? You know, do you have a driver's license? You pay your car insurance, or you're at least eighteen years old, you know, whatever. And you just say, yes, I am qualified, and that's it. They don't need to know all the, you know, supporting information, and why do they need it? It doesn't really help them. And then, so it's just, it's a better way to do it. And I, that was the, I showed how to do that in the Scientific American article, Achieving Electronic Privacy and Its More Technical Antecedents. So, but that, so once I realized that you could do all, all three parts, just all you really need, that's when I, you know, that caused me to double down on my commitment to, to try to push this all forward, but the public awareness wasn't really there,

• 41:36Speaker 01

  of course. You know, back in the day, you'd talk about privacy, it sounds like a very kind of wimpy, you know, issue or some kind of thing. But now, you know, there's a massive recognition that this is the whole game, I think. That's what I've always watched.

• 41:53David Hoffman?

  You said the phrase "minimum disclosure." I'm wondering if you could just unpack and elaborate on what that means and how you might organize that around as a principle.

• 42:01Speaker 01

  It's a different kettle of fish. So I was at an event in Marseille, a university called Lumini. It was a little mansion and there were these ladies there in cook outfits making this giant kettle of Marseille fish soup to celebrate the end of our one-week conference on randomness. But at that conference, I presented a model that a technique, basically promuted to circuit diagrams, and you can still see it on my website, that my publication is Strom.com, that with Kropow and Bressard, I believe,

• 42:43Speaker 01

  that included both models, both what's called zero knowledge and what's called minimum disclosure. And the zero knowledge people just hated us and they kept trying to say, "Oh, you didn't really do it," and suppressing our papers and the references. It was so painful and dishonest, in my view. But in any case, we cut a deal with them that they would call the more you know, the one model, minimum disclosure, and they would call the model that they created, zero knowledge.

• 43:28Speaker 01

  So I showed you could do both. One construction, they could do either mix and match them. And then also, if you look on my website, the Spy Masterson Double Agent, that showed how you can combine all the models and get the best of both worlds. So it's, that's why. So it was a weird political thing that happened in science. And that's why it's called minimum disclosure. But it just depends on whether you want the secrets to be protected unconditionally. In other words, against a quantum computer or infinite computing power? Or whether you're willing to allow the secrets to be protected by some problem that you assume is hard to solve?

• 44:10Speaker 01

  And so, of course, in my early career, I was all about protecting secrets unconditionally. Because I argued that, you know, how can an individual know what kind of computing power, you know, governments would have or in the future and so on. But it turns out that in, uh, in voting, um, you, what you really want to be sure of is that the outcome is correct. And so what we, you know, what we proved is you can't have it both ways. You know, you, you have the secrecy of the secrets and the correctness of the outcome. And one of them can be unconditional and that forces the other one, at best, that forces

• 44:54Speaker 01

  the other one to be based on a computational assumption, assuming a certain kind of, you know, problem can't be solved. And so for voting, you want the other, you, you want to do it the other way and, uh, you know, um, can I just interject something about voting? I don't want to, uh, I just want to mention this because it's another thing a lot of people don't realize and it's very interesting to me because we just saw that we just got this paper accepted in the last couple of weeks. So there's this longstanding issue with voting technology, want to vote online, you know, uh, you're not in a booth. So someone could bribe you or coerce you, like threaten you and this really, you know, you could live stream your voting act. So there has not been a satisfactory solution to that in the literature.

• 45:37Speaker 01

  You look at my website, you see I did a lot to try to create a voting technology community as well, um, uh, the books that I published and stuff. So, um, it turns out that, uh, uh, we finally found a way to do it and, uh, it's called votxx.org, you can, you can look, you can see it. But basically it just says, it's kind of like.

• 46:05Speaker 01

  Quantum mechanics, it's an interesting result, I won't go into it here, but it's quite practical and we built the software for it and we're going to let a lot of people help us and some people voluntarily incentivize that process and so we're going to try to make it really usable, but the basic algorithms are running and so we proved it with the strongest type of proofs, which is the so-called universal composability framework proof, so it's like really, really strong, but basically it renders voting improperly influenceable, you can't

• 46:50Speaker 01

  coerce or bribe voters really effectively and so that's necessary for if you want democracy to flourish because, you know, I think you need a little more voting and a little more unstruck, you know, sample voting, if you could read about it on my website, you know, that's the way I think it really needs to be done because that, that scales with the complexity of society, you know, and that is a, and I've got some new results coming out, it's, you know, it obviates a lot of these theorems like Arrow's theorem and stuff like that, you know, big problems with social choice theory, so it's, sample voting is a really, really nice, but it means that people aren't always voting at the same time,

• 47:35Speaker 01

  so you can't really go to booths, you gotta do it, you gotta be able to, that's what everyone realizes, you got, it's democracy to flourish, you gotta be able, you can't have the booths, because booths sometimes they spy on you, people, you know, harass you, you can't get there, all this stuff, and, you know, and here, like in LA, you know, there's a lot of polling places that just don't ever open every election, handful of them, you know, because that, and that just, that locks out a certain group of votes. So in any event, yeah, we solved that recently in the Vote XX and that...

• 48:06Speaker 01

  It's a subtle thing, but it was the final sort of missing link to allow democracy to flourish because it's not enough just to be able to vote securely online. You have to stop this improper influence. And so it's proven elusive, but now we got it. We nailed it.

• 48:23David Hoffman?

  Certainly, certainly. The other part thing I'd like to define is just the traffic problem. We talked about that a number of times. Could you talk about traffic analysis and just the nuances that that brings to the table when it comes to like privacy?

• 48:38Speaker 01

  Yeah, well, there's a, it, thanks for asking. It's a, you know, the basic traffic analysis. That's what the military used to call it. And I mean, one, let me just fill in a little bit so your listeners could get the sense of this, because one of the really crazy things about try, trying to find out who talks to whom and when is that it's always been legal for any government agency to ask for that information. So there was something called a mail cover. You know, any agency, US government could fill out a form and get your, make your postman write down every single address you send to and every single address it sends to you and

• 49:20Speaker 01

  the weight of each envelope, but not open them. Open them, that's different. That requires, you know, a court order. And the same thing with the phone company, you know, like, oh, sure, we, you know, we can tell you who you, who this, who calls and who you call and so on. And I think that, you know, where mobile phones are sort of seems to fall into that category too, right? And so, you know, most people are unaware of this. And they think that that's information is somehow protected. And so when a, when a company says, oh, we don't, you know, we don't respond to, you know, unless they have a subpoena, we're not going to tell them, you know, but, but the traffic data they give, look at the, you know, Apple said, oh, we're not gonna.

• 50:04Speaker 01

  Give the keys to open this phone, you know, the password for that phone famously, but they gave tons of information about all the transactions that were done with that phone. You can read it's in the court records. It was known, you know, it's there's a it's this is the double thing that I was referring to, right, that that people say, you know, oh, you know, it's like, don't look behind the curtain. Don't look at that, you know, the man behind the curtains, you know, you've got strong end in encryption here. Let's look at this. Look up, you know, statements on privacy that he's made several really long statements even, and it's all about this. Well, you know, it's strong end in encryption. We're going to move to that, but don't worry about the traffic data. We'll take care of that. We

• 50:46Speaker 01

  may need that to stop spam, you know, something like that. So it's always been uh, something that's never really discussed in a clear, open manner. But yeah, but basically, you know, the the social graph, who your friends are, and when you talk to them and so on, is so revealing. Like I said earlier, you can't lie about that, really. You can't mislead, you know. So, for instance, when I was at Berkeley, I went over to the, you know, the Doe Library, the main library, and they had the Congressional Record on the

• 51:28Speaker 01

  stacks, you know, in the basement there. And you could read the hearings where, unless you recall, but during that period, the CIA was compelled to reveal their methods in one example of their covert, you know, whatever they call it, plans and methods. And the Congress was going to get to choose which which instance they would look into. And that wouldn't really set them back too much, but it would give the Congress this oversight. And so they chose the the coup in Chile.

• 52:02Speaker 01

  And so that you could read the sworn testimony of the CIA about how they did it. How did they go in there and just take it over and get, you know, switch the government there? And how did they do it? Traffic analysis. They just put software in the phone exchange at the presidential, whatever, you know, palace or whatever it was facility. Uh, because it was an American made phone exchange probably, right? They just put some like malware in there that um would every night call Washington DC to some random number and upload all the traffic data, which which phone called which phone at what time and how long they spoke.

• 52:46Speaker 01

  And then the CIA, it's also public that they, it was they, they paid all these universities to develop sophisticated analysis of of data like that. You know, it wasn't, I don't know exactly, it was maybe, I think it was in advance so that they had this capability, social graphs, and they could, so basically you could look and see, oh, who called who just before this event and then who called who after it and so on. They knew exactly who was running the country and they just went in there and uh, you know, surgically took it over. No big deal. Traffic analysis. That's, that's.

• 53:18David Hoffman?

  And so just to double down on the metaphor that you used earlier, we have this envelope that has a packet of data inside of it, so it's just a letter, for example. And end to end encryption assures that that envelope is going to stay closed and it's going to protect the data that's inside of that message.

• 53:35Speaker 01

  Right.

• 53:36David Hoffman?

  But what it doesn't do is all the rest of the data that's outside of the envelope, which is who is coming from, where it's going, the time that it's going, and then what you said also, like how, how much of a, of a payload that data is, like how, is there a little bit of data or a lot of data? And what I'm, what you're saying is that, well, you, sure, if there encryption, it hides the actual, actual message, but when you have so much of the metadata, the peripheral data, and you have, you collect all of that, it's a little bit like a Sudoku puzzle. You can kind of fill in the blanks just by, just by kind of figuring it out.

• 54:11Speaker 01

  You can link it to all kinds of other databases like this, this data about where your phone is at all times. That's like, you can buy that for almost nothing from these companies that just capture it. You know, it's, it's so it, you could, you know, any other data you have, you can start to uh correlate and, and, and link in. And um, so let, let me mention something else real briefly. I just presented this at a conference in Berlin. Uh, a couple of days ago for the first time, but let me just point out to you that if you are listening, you know, maybe some, some messenger service, let's just say, is not going to give you the traffic data. Cause they know it, cause they route all the messages, right?

• 54:52Speaker 01

  You just listen near their location, cause you have the full take, right? So, or whatever, you just tap the internet near their location. And you just notice all that the IP addresses coming in and going out. Well, it doesn't take long to use statistical techniques to find out how many, let's say, server processes there, they are running, how many threads, how many cores and threads are running in there. And you, cause you'll start to see that certain IP addresses always end up talking to other ones. So then, assuming that, that the processing is first in, first out, which of course it is. All of a sudden, now you can see the full interconnection, which IP addresses are talking to which IP addresses.

• 55:36Speaker 01

  And then, you know, and then you're, you're, you know, then you can link that with the phone number stuff and you're, you're, you've got it all. You don't have to um, you know, get the, the cooperation of the messenger services. So, that's, that's a programming project for undergraduates, in my opinion. That's not like, you know, that's not really that hard to do. So, uh, it, it's, you know, uh, this traffic data is not well protected, not, not under law and not in, in, in practice. The only really way. Is, is this what supports?

• 56:09David Hoffman?

  Is this what supports this surveillance capitalism that we have today? Where I get targeted ads based off of certain data that I exhaust into the internet? Is this that same problem that we're talking about?

• 56:22Speaker 01

  It's tightly coupled. I mean, in a lot of cases, Web 2, you have no real choice. You sign up naively for this service and you start exposing a lot of data to it. They have a lot of data internally. They don't need to do traffic analysis. I mean, they can just link all kinds of things. They have the data and that's, I think, a part of it. But yes, those surprising little ads you get or whatever, these funny things. Yeah, that's when one service links to another just based on your IP address, for example. Yeah, so it's extremely porous. Maybe the wrong analogy. It's easily interlinked based on...

• 57:06Speaker 01

  Just riffing on what I was saying about breaking your messenger's traffic data. But there's a lot of different sources of data and it's not hard to link them all together because they're all based, in effect, on your identity. It could be your IP address, your name, your Google, whatever. But it's your location. There's a lot of different clues and you can just link it all together. That's why, like you said, in the mid 80s, I said, "Look, the only way so that you can control your own information is just to make sure that you talk to everyone under a different pseudonym and you talk over a mixed network." So there is no metadata linking.

• 57:50Speaker 01

  No one knows your IP address. That's how people were surprised to see how much Bitcoin, what they're doing with Bitcoin, right? It's the IP address. No one sees your IP address because you speak over a mixed network and use a different pseudonym. So yes, you can authenticate yourself as the owner of that account or whatever and you can prove that your answers are correct with minimum disclosure, as we discussed, right? But you don't have to allow those entities that you talk to to know enough about you to link whatever it is they're collecting about, each one is collecting about you, to the stuff that the other ones have collected. That's precluded.

• 58:35Speaker 01

  By that technique, you divide them up, you know, you partition them, you're building, you know, firewalls between them because you have different identities with each one. That's the only way.

• 58:44David Hoffman?

  I think the metaphor in the crypto world is that it would be like if you made a new transaction with a brand new wallet every single time.

• 58:53Speaker 01

  Well, no, but that's not going to do it, but yes, but with a different IP address.

• 58:57David Hoffman?

  With a different IP, well, yes, right.

• 58:59Speaker 01

  The only way to get that different IP address is to use a mixed network to appear somewhere else in the world. So basically, you're gonna have mixing and you're gonna have digital pseudonyms and you have to have a way to prove stuff between them if you want to benefit from your, you know, you could do everything out totally out of the card and, but if you want to be able to say, well, look, I paid my taxes, I, you know, I've got this much money in the bank, I paid my insurance, I got this advanced degree or whatever it is, this passport, this, you know, I'm at this age or whatever, then you need to have a credential mechanism that

• 59:37Speaker 01

  allows you to approve things about the statements that each individual organization gives you under the respective pseudonym that uniquely used with them.

• 59:50David Hoffman?

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  security and low fees. You can be a part of Across's story by joining their Discord and using Across for all of your Layer 2 transferring needs. So go to across.to to quickly and securely bridge your assets between Ethereum, Optimism, Polygon, Arbitrum, or Boba networks. And there's a, I want to go back to this fork in the road comment, and there's another quote that I want to read that I thought was really, really powerful. This is from an article that says, "Projecting the vision of the two futures, one built with the current technology and one built with decentralized services, David saw that their two approaches appear to hold quite different answers. Large-scale automated transaction systems are imminent, and as the initial choice for their architecture gathers economic and social momentum, it becomes increasingly..."

• 1:02:47David Hoffman?

  ...difficult to reverse. Whichever approach prevails, it will likely have a profound and enduring impact on economic freedom, democracy, and our informational rights. Now sadly, I already kind of know Dave, David, which path we went down. It's kind of the one that we give away all of our privacy. But I'm wondering like if we go back to 1985 and look and then and then zoom forward to where we are today. Is it as bad as you worried about? Is it not as bad? Currently, the date, the state of like user sovereignty and user data today. Is it as bad as you thought it could get? Is it worse? Is it better? Just like, how bad is it? And like, what were your thoughts on where we are today?

• 1:03:26Speaker 01

  Well, it's pretty bad currently. Much worse than it seems to be because, you know, as they say, they keep it all hid. You know, if you had a lot of massive data, you're not gonna, you know, announce it. And there's a lot of progress in machine learning and so on that's unreported. And that, you know, this people economically benefited enormously from this data capture, as you know. And they're, they're, you know, going ahead very aggressively trying to, you know, squeeze more out of it. But what I would like to, so it's worse than you think. However, in my own defense, I want to say that if you go back and read those, you know, those statements,

• 1:04:09Speaker 01

  what I actually, let's say prophesized was not so much an inevitability. I mean, I was trying to, you know, scare people, say this, you know, if you get really bad, hard to dig your way out of. But, you know, what I, what I prophesized was that, you know, it would be kind of a Hegelian, you know, thing with the, you know, the people would get all riled up and push back and win some stuff back. It would be, it would become a bit of a struggle. And, uh, but make no mistake, you cannot win a local war. You know, it's one thing. It's, it's, you know, it's all that data is legible or not.

• 1:04:52Speaker 01

  You're either hosed or you're not. You can't, can't have it halfway. And I was like, well, it's pretty much okay because in this part it's, you know, okay. But what I will say also, though, to qualify that briefly, and I think, and importantly, is

• 1:05:09Speaker 01

  That, and this is an insight that I've had subsequent to those publications. You know, I mean, because of the Internet of Things, let's say. And all the cameras that people seem to have put up with and all this existing data that's out there, right? Um, you know, there are certain things that are pretty much hopeless. And probably not worth finding about. And there's certain, you know, when you're walking down the street, you know, you're gonna wear a bag over your head or what, you know, it's kind of hard to really, uh, win in that domain.

• 1:05:48Speaker 01

  So what I argue now is that what is strictly needed for democracy to prevail is that individuals must have a protected sphere. Where they are certain that they are free to discuss, you know, political and other matters and pay for information and be paid for information with their, let's say, friends and family and their people that, that, that, that they want to communicate with. Um, you must have that protected sphere, otherwise you cannot have, uh, democracy. It's a necessary, uh, condition and then out with the stuff we know about voting and so on.

• 1:06:30Speaker 01

  It's actually sufficient to have democracy. Uh, and then that democracy can later, you know, say, take the cameras down and do the same. But you've got to get over the, the idea that the government needs to see everything you do. You have to give people a protected sphere or there is no possibility that they can really be participants in a democracy. So, you know, if you want to say that we're different from China, then you, you, you either have to provide the protected sphere wholeheartedly. You know, uh, no, no, no secret little, uh, holdbacks or, or just, you know,

• 1:07:11Speaker 01

  just give it up and say, okay, we're, we're, you know, we're just gonna spy on everybody just like they do and there's no real difference. Um, that, that, that's, so that's, um...

• 1:07:23Speaker 01

  My, you know, I, I think that's a very pragmatic approach, so it's very optimistic because the XX network has those capabilities already. We have a way to have those protected spheres. You know, a thing that, that, just to drive it home for a minute, you know, colorful thing, is, you know, that, I don't know how many of your listeners realize that coffee was criminalized, both in, in England and also in the Middle East, for, for the longest time by rulers who felt that if people got together in coffee houses, who knows what they would be talking about? It's, look it up, it's startling, you know, and this was-

• 1:08:08Speaker 01

  Revolutionary thought? Yeah, it's, it's really, it's quite surprising. So, yeah, look, 500 years, there's a very, so it's like, um, you know, uh, this is, I think it makes the point, you know, you'd need, uh, you know, there was this bookstore in San Francisco, I think it's from now, but it was called The Clean Well-Well-Lighted Place For Books. I always liked the name of it. You need a protected sphere, a place where you can, uh, be you, where you can have an actual, uh, political, uh, consciousness and development and, and discuss, uh, issues and actually meaningfully participate i- in governance.

• 1:08:50Speaker 01

  Absent that, there's no, there's no, uh, democracy, and, and it's not much to ask for. And, you know, if you try to criminalize that, claiming, you know, some kind of, you know, abuse of this or that, I mean, you're throwing the baby out with the bathwater, you know? Yeah, sure, there might be some trade-offs, and I don't want to get into all this kind of, you know, duds don't kill people, it's the people, whatever, it's, but, no, you want democracy, that is a necessary condition.

• 1:09:18Speaker 01

  So just understand that and get over it. And you know, like, the thing is that, you know, the NSA said, oh, we need to spy on everybody. And they had all these programs, spent billions and billions of dollars. They never caught anybody. And if you read the reports on that, it's just, it's ridiculous. You know, they, they, they had all this, this surveillance, and they never really found any, you know, so it's like, okay, you know, if, if there are a few people that are really doing evil, then, then follow them around, you know? Use the old, you don't need to use the new techniques to, to stop that. It's, there isn't, it isn't at that scale. There's really no rationalization for it. And then if you take it to the next level, I mean, those countries that try to suppress this

• 1:10:02Speaker 01

  will lose out, in my view, in the, in the, you know, in the, in the medium term, because there's so much economic opportunity in creating, let's say, a level playing field for financial transactions and services globally. Uh, you know, that we're, we're paying basically three trillion dollars annually in fees for financial services. It depends on your school of economics, but that's at a huge cost to society. And what, one thing that blockchain has done is shown that you don't actually need that. You, you can do financial service. I mean, two trillion of that is payments.

• 1:10:43Speaker 01

  You can do it without, you know, uh, always whole, uh, huge, uh, overhead. And, and so when you, you know, if you unleash this, there's a lot of economic opportunity there. And if those governments that don't have a way to allow people to pay their taxes meaningfully in that context will suffer, they'll either try to stop it, and that'll be horrible for them, or they won't get the revenue, and that could be a big problem. And so those kind of techniques that I mentioned, the credential mechanism, will allow you to say, okay, I'm proving that I'm paying the correct taxes without telling you anything about what I'm doing. And that's way better for, just like I said, for, you know, for companies, it's way better.

• 1:11:26Speaker 01

  Because now they actually have a proof, you know, you send in the taxes, who knows, it's really true, whatever, you know, everyone's fudging on it. Depends on the country, right? In Brazil, it's like fifty percent fudging. I think that's what I heard when I was there. So it's, uh, you know, you, you basically prove that you're paying the right amount and that's it, done. Uh, you know, uh, uh, so, uh, that's far better strategy for a liberal democracy than uh, trying to say, oh, no, no, we can't let you have your pro, you know, your protected sphere, uh, because it's just too dangerous uh, to society, you know, that would, that's, that's, it's really a doomed, uh, uh, take. So it, it, you know, we, we are at a critical juncture.

• 1:12:06David Hoffman?

  Certainly. Uh, I, I'd like to actually zoom back in time really quick because there's this line that stuck out to me while I, I was doing some of my homework from one of your head teachers, I believe at, uh, I believe at, at, at Berkeley. And it was while you were working on your mixed networks.

• 1:12:24Speaker 01

  Yeah.

• 1:12:24David Hoffman?

  And the, uh, the, your head teacher said, uh, and this is, this is when you were getting into.

• 1:12:29Speaker 01

  Manuel Blum was the head of the department. He's a theoretical computer scientist. Um, you know, I took his graduate theory seminar. And I'm the only one who got an A plus in it. Because I proved a more general result in half a page. All his, his, you know, star students like McCully and, and, and, uh, and so on, they did, they're, they didn't do anywhere near as well as, but I wasn't a theory student.

• 1:12:56David Hoffman?

  Right.

• 1:12:57Speaker 01

  So, uh, but yeah, Manny was, you know, quite a, uh, you know, a presence in the department.

• 1:13:06David Hoffman?

  Uh huh. And, uh, again, this, yeah, going, this is going, I believe in, with, uh, mixed networks, which is the concept of like decentralization. But, you know, all the, all the way back then, and, uh, he said, don't work on this. Because you can never tell the effects of a new idea on society.

• 1:13:23Speaker 01

  That's right.

• 1:13:23David Hoffman?

  What, what did you, what did you think when your professor told you this?

• 1:13:26Speaker 01

  Yeah, well, this was, this was about my dissertation topic, which was, you see it on my website, is actually blockchain. It was actually, uh, it was called a, you know, computer systems established, maintained, and trusted by mutually suspicious parties. It was a way to do a consensus, you know, with cryptography. There's a bunch of nodes and they could add nodes and take them out and so on. This was, uh, you know, aimed at providing, uh, multi-party computation, which later I found a theoretical way to solve. And you can also read about that on my website, the, uh, the, uh, uh, Spymaster's double agent problem that I mentioned earlier.

• 1:14:04Speaker 01

  But yeah, so, uh, in that, it's in the acknowledgements, my dissertation, I thanked Manuel Blum for, you know, trying to tell me that you could never anticipate the effect of technologies on society. This is a common, uh, thing that's believed, you know, uh, because it's too hard to anticipate, you know, so I should not work on things that I thought would make the world better because who knows, they might make it worse. But I dedicated it to him because I said it was the rejection of that principle that, you know, uh, you know, it was the motivation for, for, for doing this dissertation because I think that privacy

• 1:14:46Speaker 01

  technology is different, uh, from other technologies in that respect. The only known use is really to allow, you know, liberal democracy to flourish. It's really only about empowering people. You don't need anything fancy to allow like what I call the monolithic model of security where, you know, it's all controlled by the government and everything's hierarchical. Uh, and so there's no real evil use for privacy technology in my, in my view. It's, it's, it's our main way through. It's the way to make information technology

• 1:15:27Speaker 01

  create a, a, a, a real, a new world that we would like to live in as opposed to a new world that we really will not like to live in.

• 1:15:36David Hoffman?

  David Chaum, privacy is the way to have a flourishing liberal democracy is definitely one of the, the subtexts that, that we talk about on this bankless podcast. So you could not have said it better myself. If you had a message for the cryptocurrency industry, not the cryptography industry, what, what would it be? What would you say to the collective cryptocurrency industry?

• 1:16:04Speaker 01

  Well, I mean, it's been a blast. It's been so, you know, what has been achieved is so fantastic because it, you've created so much outside of the the control of government. It's, it's, it's caused a lot of heads to turn and, and, and possibilities to be opened up. And, uh, you know, it's a, it's a, it's a very, uh, exciting, um, community and, um, you know, uh, I'm, um, yeah, I'm, I'm, I'm just, I'm thrilled that I, you know, could have been doing some of the early work that, uh,

• 1:16:45Speaker 01

  you know, that led to this and, but, uh, yeah, I think it's also, you know, don't, don't forget about the kind of future we're trying to build here also. Well, that would be, I guess, based on, you know, uh, but I mean, it's not front and center, you know, it's not everyone's focus. It is mine. Um, you know, and, and, uh, um, I, I mean, I'm not naive enough to think that, you know, you, one can force this through. I mean, you have to find sort of a way to incentivize everyone and then sort of spread the word and, and, uh, create a situation where it's, uh, you know, uh, everyone's pulling in together to make it happen. But I guess

• 1:17:27Speaker 01

  right now we have the wind at our back because the vast majority of the public realizes this is what's needed. It's quite different from just even a few years ago. It's really, uh, you know, it's, it's, it's a profound, uh, opportunity at this moment. And, um, yeah, so I hope we can, uh, seize it and, uh, yeah.

• 1:17:51David Hoffman?

  Yeah, having, uh, trying to get the crypto world to zoom out and focus on the long term sometimes only works in the bear markets and not, not the bull markets.

• 1:18:01Speaker 01

  Yeah, well, that's an optimistic way to look at the current situation. Yeah, people can, yeah, work on stuff now. Because yeah, when you, when things are really, yeah, I, I hear you. That's, that's a good point. Yeah, this is the time to do it. And, and, you know, I'm certainly, uh, trying to double down and, and, and move this all forward. And, um, yeah, I'm, I'm, uh, I'm excited. I mean, yeah, it's, it's, uh, it's a little bit of, you know, uh, unfortunate that we can't all like. You know, meat and other was kind of wearing me out, you know.

• 1:18:34Speaker 01

  You know, but uh, um, yeah, it's, it's, uh, hopefully, I mean, I think, yeah, it's certain. I believe it's certain that we're going to pull through this and, uh, it's, you know, and, uh, and I think you're right, we will probably come out way more medium term focused than we were when we went in. And so that's a huge opportunity right there. Yeah.

• 1:19:00David Hoffman?

  Certainly. Uh, the other fantastic thing I really enjoy about this industry is that the cryptocurrency industry stands on top of the cryptography industry, but the cryptography industry is, it's, it was built in the sixties and thrived in the seventies and then came alive in the eighties. And that is not that long ago. And so it's an honor, David, to be able to talk to you and, and host you on this podcast because we stand on top of the shoulders of giants and you are one of those giants that the entire industry stands upon. So just thank you so much for everything you've done for the world of data, privacy, cryptography, and allowing us to have this flourishing ecosystem to, uh, play fun games in.

• 1:19:39Speaker 01

  Well, I, you know, thanks, thanks for recognizing it, David and I, I, I just, I have to say, watch this space, as they say, you know, I've got some, uh, new stuff which I'm very, very excited about, uh, some of it, you can see on my website, some of it's not up yet, but, uh, yeah, I, I was, you know, even though we saw the basic problems and our, uh, current stuff is, uh, really, uh, enough to move things forward, uh, there's some, some interesting new developments that I'm also super excited about and I, uh, uh, I'd urge you to, to, uh, listeners to, you know, keep your ears open for some new stuff coming out soon. It's, uh, it's, uh, pretty, pretty exciting stuff.

• 1:20:25David Hoffman?

  Certainly, we will put all of the links to chaum.com, I believe, in the show notes, and also everything about links out to XX Network as well.

• 1:20:34Speaker 01

  Awesome. This was so great. Thank you so much.

• 1:20:37David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast, and community as a Bankless Premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks, and exclusive content, and even the Bankless token for airdrops, raffles, and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless Premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings, and

• 1:21:20David Hoffman?

  weekly rollups where we summarize the week in crypto and other fantastic content. Thanks, everyone, for watching and being on the journey as we build out the Bankless Nation.