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Zcash Founder on Privacy, AI, and How ZEC is 'Encrypted Bitcoin' | Zooko Wilcox-O'Hearn
01:34:55
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- [00:00]
A
Okay, so here's the crazy guru metaphysical thing, okay? Remember this was if you had the ETH and you thought to yourself, what I want is to have my ETH over in this new wallet that's unlinked. The AI read your mind, it knows you want that. Or it will eventually. It will eventually figure out that that's what you want.
- [00:21]
B
It.
- [00:22]
A
Okay, but what if you said this? What I want is to convert half of my Ethan to SEC and hold it in Zack.
- [00:34]
C
Bankless Nation, we are joined by Zuko, the creator of zcash and the former CEO of the electric coin company that's the foundation behind zcash. Zuko, welcome back to Bankless.
- [00:45]
A
Thanks. Good to be back.
- [00:47]
C
Zuko, you've been here for well over a decade in this crypto industry, building Zcash for 13 plus years. Has the crypto movement. Have we achieved our goals in 2026? We've been around for a while. Have we? Have we succeeded?
- [01:03]
A
No. Geez, that's a leading question. You didn't expect any positive answer to that? Honestly, now that you say that, it makes me kind of depressed and negative. It reminds me of Linux. Like back when you were tykes and I was young. The Linux was a movement to empower people and free everyone. And then nowadays it's just like some software that Google uses to run its computers.
- [01:30]
C
The Linux movement died, went away, faded. What happened there?
- [01:35]
A
Yeah, failed to help users and failed to scale up in the number of users it was helping. And software engineers will scowl and object when I say this because they still run Linux, but everyone else who's not software engineers is not being helped very much by Linux today. So I can imagine negatively. Let's get out of the negativity after this one. Yeah, crypto could be like that, you know, 10, 15 years from now. It could be something that a couple of mega corporations like cost optimize by using cryptocurrency or blockchain or something. And the other 99.9% of the people are not empowered or benefited in any way by it. That would suck.
- [02:16]
C
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- [03:42]
B
About once a month.
- [03:43]
C
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- [03:59]
B
Well Zuko, let's talk about then the gains we've made over the last decade or so or since you started zcash and even before. So I mean what has succeeded in crypto? What are you, what are you excited about? What are you surprised by in terms of our progress?
- [04:18]
A
I like technology, I'm a technologist and what I most love about crypto so far is that it's funded a whole bunch of really good technology like zero knowledge proofs that zcash pioneered. But there's a whole bunch of people, especially in the Ethereum ecosystem that have taken that very far. And that's because of crypto funding and organization. See what I'm saying? As opposed to like DARPA and universities and mega corporations, they wouldn't have developed any of that in the last 10 years without crypto.
- [04:52]
B
So the cryptography has been the big win in your mind.
- [04:56]
A
Yeah, and that's damning it with faint praise, right? That's, that's like an improved Linux kernel Which is not actually changing the world for the better.
- [05:05]
B
I mean some people, Zuko, they'll look at price charts and they say, they'll say we've made tremendous progress on that. So the world has a non sovereign store of value now that is digital, that is not gold. To look at bitcoin price charts, for instance, they'll call that a win. I think lately there's been a lot of themes around crypto or blockchain's ability to kind of transform Wall street, for instance. So we're talking about a theme of last year has been soup coiners that are starting to build, you know, all these tokenized types of real world assets on top of blockchains. And that feels maybe like a win. It's not quite the crypto native like cypherpunk win that we thought, but it is extending the adoption of some of our protocols. I mean when you see stuff like that, Larry Fink rolling out ETFs, all of that, is that progress in your mind like more wallets, more active wallets, more users?
- [06:02]
A
I think of it. And by the way, there's a zcash dat directed. It's not directed a cyclic graph, it's a digital asset treasury. Yes, it's the cypherpunk that and I signed on to be an advisor to that organization. So disclosure. I think I basically only have two professional roles in crypto nowadays and that's my job as chief product officer at Shielded Labs and as an advisor to the Cypherpunk da. But I think of those as good things, but only as it only in as much as their means to an end. Like improving Wall Street. That would be fine. I guess it would be good if it was actually improving the lives of people in a way that I care about, which it could, but it hasn't yet. Does that answer your question? From my perspective, what arenas of crypto.
- [06:56]
C
Do you think we've neglected that we need to reorient some attention and resources towards?
- [07:01]
A
Well, it's definitely the cypherpunk vision and in particular the Moxie mar Marlinspike's version. Do you know Moxie Marlinspike, the maker of Signal? I don't.
- [07:12]
C
Oh yes, yes, I know of that person. Yes.
- [07:15]
A
Here's this crazy anarchist hacker. I'm pretty sure it's okay if I say this on the record, but Moxie was a crazy anarchist hacker and for some reason, I don't know how he realized he saw something that other people didn't, which was that the cypherpunk dream was stuck on ux and he got an award one year for the best cryptographic innovation of the year in cryptography. And he gave a talk, but he required everyone to turn off their cameras so there's no recording. So my vague memories of this are the only evidence we have left. In his talk he said the cypherpunks have totally failed. This was years ago. And he was talking about the original cypherpunks. Right? Like, yeah. And he said the, the program, the method of the cypherpunks was like this. Step one, we'll make tools that work well for us and then step two, we'll teach everyone else in the world to be like us. And he said that's never going to work. Never could have worked, but instead you have to give people tools that work for them the way they currently are without changing them. And he said something to the effect that if you have fewer than a hundred million users then you're not affecting the world. It doesn't matter. What you're doing is a waste of time. So your question was what are we neglecting in crypto? And I would say I think we're recapitulating Moxie's interpretation of the Cypherpunks project and the Linux activists Linux project because it was the same thing. They're going to make an operating system that does everything really well for them and preserves their freedom and their privacy and their ability to choose for themselves and so on. And then they're going to teach everyone else in the world how to use Linux. I tried, I was part of that movement a long time ago, both of those movements. So I think crypto is in a pretty similar space currently in terms of. And why mainly think of it following Moxie again is it's all about ux. It's all about onboarding and cognitive load to use it. Like how many new things do you need to learn to use it and to make it do what you want it to do. And if that is like zero, that's good ux.
- [09:45]
B
So we have to make tools. This is kind of the product, the tool side, the UX side, almost the number of users that we touch is now kind of the benchmark.
- [09:55]
A
Yeah. Let me tell another story from someone else that I admire. It was Brian Armstrong. This was several years ago during a time when zcash was like down, only technology number go down. As long as anyone could remember it, the number go down. But Brian was always a good supporter and gave me, gave me the time to talk to me anyway. And we were talking about regulatory risks. This was under the Biden administration. We had this conversation like what do we do? How do we protect users from having their tools taken away by the government? I really appreciate when people give me simple one sentence, one simple sentence answers that I remember he said have at least 100 million users. That was his strategy to solve regulatory risk, which is the same number that Moxie Marlinspike used in that other talk years earlier.
- [10:52]
B
When you think about the cypherpunk vision and when you apply that to crypto Zuko, what sort of use cases come to mind? And I guess from observing crypto for so long, there are lots of cypherpunk things that have been hoped to be achieved by crypto natives. Most notably is kind of money and that, you know, bitcoin doing that money, an idea of payments, that sort of thing. Ethereum sort of expanded a little bit on that money vision with decentralized finance, but that's still finance, it's still to do with money. Recently Vitalik has been talking more and trying to resurrect the whole Web3 thing. I would say, maybe not using that term, but the idea of a decentralized parallel Internet where you have storage and you have completely decentralized compute. How far do you think the crypto cypherpunk vision goes? Because there are some, I think in the space who'd say, hey, the main thing that crypto does, it's a ledger, it's about money, it's about debits and credits, maybe you can extend that to defi, but it just sort of stops there. There are others that still believe in this cypherpunk expansive universe of decentralized identity and compute and storage and almost a parallel Internet where we can get out of kind of the Silicon Valley tech cabal that's ruling our lives and maybe something around decentralized AI. How far do you think this vision goes in crypto?
- [12:28]
A
I hope it goes all the way because that's what people need and want. And I think that would make a better world and a more stable and sustainable civilization for our grandchildren to grow up in. So that's my hope. And then something, something, something, something UX like before signal. There was a well understood notion among technologists and Linux hackers and cypherpunks and cryptographers of secure communication. You know, it's encryption, like public key encryption. It's probably one of the most important discoveries in the history of intelligent life. And it was all about originally it was all about secure communication. And so there was science and there was cypherpunk projects and like computer programming was done like pretty good privacy, the email encryption program. And they were all like Moxie said, pretty much total failures. Right. They never got anywhere close to 100 million users. And there's something about the Moxie Marlinspike approach to really appreciate, which is start from the user, not from the technology. There's this, you know, stack or span of interacting things, but start from the user. And the Moxie Marlin Spike approach is. This is not especially educated or sophisticated in this particular thing, right. This is a user who wants to talk to someone, whether or not a cryptographer or a computer programmer or a Linux hacker. And the basic. He posted recently, he's back by the way, Moxie Marlins bike fanboy Hour Moxie started posting like a couple weeks ago for the first time in years. He's making a private AI. And in this pose he mentioned something about Signal. I think goes really deep. He said, in a sense the whole idea of Signal is that the UX should reflect the underlying reality. I don't remember how he put it, but I'll just tell you my version of it. If you open a chat app because you want to talk to your friend and it's not encrypted, then a good accurate user interface would show you the little icon image of your face and your friend's face and the CEO of the company and the system administrators, right? You know, the little window that shows who you're talking to. Chat app you with me, you're looking, you're like you're scowling.
- [15:20]
B
What are you saying with you? I get it. And then, and then I suppose like maybe this, the, the CIA or whatever three letter agency would appear in that, in one of the boxes too if.
- [15:29]
A
They were listening in, right? So an accurate UX that tells the user what's really going on, shows all these other parties listening in on your line. And Signal just corrects the UX by showing you the actual number and identity of the parties that are on this line. Now, I'm still struggling to answer your question. How far does it go? Can we have. Can crypto become decentralized AI and storage and communication and news and social? Or maybe it won't be even crypto. Maybe there'll be people like Blue sky is decentralized social. It's not really crypto, right? And there are these decentralized social projects that are crypto native, like Far Caster, which I think might have winded down and that Bitcoin one, whatever. And I never tried those because they're crypto things. I don't want to talk to people about Bitcoin, so I'm not going to try the Bitcoin crypto social network. Whereas Blue Sky I do use. Actually, what was my point? My point was, your question is, can, can we decentralize all those other things? And I'm struggling to come up with some answer along the lines of the moxie marlin spike approach, which is people want to do this thing. They want to see what their friends and their friends of friends are talking about today. And we could, at a scientific level, it is possible to provide that for them in a way where the user interface and the user experiences is faithful to the truth. Like, if you open Twitter today, I'm trying to apply this transformation right now in real time. So this could be. This could be crazy. But the. The whole thing where if you open the chat app, you need to see the CEO and the CIA and the other people who are like sitting there in your phone. We can do this with Telegram. Telegram. It's a freaking honey pot. It just makes me despair that all the crypto people use Telegram and think it's secure. Like, how dumb can crypto people be? Because if you open Telegram and you, oh, join a group, you got your five friends and yourself, and you need to see Pavel Durov's face in that UX or else it's lying to you, okay? Because he has a copy. He's receiving a copy of every. Or his organization is receiving a copy of everything you type in there. Okay? You can do the same thing with Twitter. You can say, oh, here's the user. The. The correct, fair, honest user interface for Twitter doesn't say, here's what your 10 friends talked about in the last hour. It says, here's the things that Elon Musk selected for you to see from among the things that your friends have talked about. What I'm saying, you're just looking confused.
- [18:26]
B
No, I get it.
- [18:29]
A
Anyway, that's my answer. I think people want that and it's possible to make it. I don't know if it'll come out of crypto. Crypto has been great for funding zero knowledge proof research, at least so far, and maybe improving the function of Wall street and Defi. I guess I've never done defi. I've never taken it alone on the Internet. No, it's.
- [18:55]
B
It's great. It's great. It is great. I mean, I think for. Probably for David and I. I don't want to speak too much for you, David, but We are somewhat skeptical and always have been of use cases beyond the money use cases because it just seems like our ledger technology and even our smart contract ledger technology is kind of built for that.
- [19:14]
C
Cautiously optimistic at the, at the very least wanting to see those use cases.
- [19:20]
B
Wanting. But these things might come out of encryption rather than crypto itself, I guess. One last question on the Moxie thread because I'm so glad Zuko you brought that up. That's a really good way to look at it, I think is can the cypherpunks win though? So when it comes to UX and the talent that that requires and almost the seducing a user, let's say, into using an application, it feels like Silicon Valley and the tech overlords have just got us outgunned. They have more money, they have more talent, they have more ways.
- [20:01]
C
More users. More users, yeah.
- [20:04]
B
They have more ways to subsidize different features or hook us on the dopamine drip. Like they have boiled this down to a science. They're very good at what they do. And what do we have? What do the cypherpunks have? I mean we have kind of the appeal of freedom and you don't have a third party spying on you. And it doesn't. Aside from a small niche of us, it's not clear that the hundred million users will actually come to our products for those things. I'm not sure that we can win this battle, Zuko. Like it's kind of the Linux thing.
- [20:42]
A
Man, you guys are way more pessimistic than last time. What's going on? Is the number going down? Are you Ethereum folks? Is eth down?
- [20:50]
B
It has been a bad year, Zuko. We did have a zcash year, that's for sure.
- [20:55]
A
No, see, zcashers are the opposite, opposite. All the Z cachers are more optimistic now than ever before.
- [21:00]
B
That's why we need you.
- [21:01]
C
How weird how that works.
- [21:02]
B
That's why we need you. So, I mean, yeah, talk about this like.
- [21:07]
A
No, I like your question. Like if that's the competition and they have all these advantages, especially on the honed skill of this, what advantages do we have? I like that question. It's a great question. I think the answer it points to is what Moxie missed. And I think it also explains why our current products are good for defi and not for other things. And what Moxie missed is the economic feedback loop. Like the reason Silicon Valley is super good at that is because they've had like 30 years of a feedback loop where the Better they did at it, the more they got money and promotions and status and they learned and learned and learned and learned from 30 years of rapid feedback looping. And crypto has that, but only for defi, right? Like a better defi product makes more money, right? I assume not having tried it.
- [22:12]
C
You're right about that.
- [22:12]
B
Directionally, yeah.
- [22:13]
A
But Signal doesn't make more money. The more users it has. It loses more money the more users it has, right, because they pay for the servers and the customer support and whatever else their costs are. Their costs are only going to go up the more users they have and they don't make any more money from more users. So that's a missing piece of that strategy. So yeah, we can totally win. We just have to start with UX and normal users, the user experience that normal users have and have some feedback loop where the better products get more and more fuel poured back into them so that we're not just turning into Silicon Valley. What is it is that, that is that, that's, that's not extracted from the user. Like I want the user to pay. Like basically my solution to all the world's problems is simple, which is people pay for stuff and there's open competition, right? There's low, there's no effective capture. Therefore competition will make the things that are better for people more prominent and popular over time.
- [23:20]
C
I want to present a possible alternative way that we win and that is that crypto is useful. We do grow in numbers, we do grow in users, we are unlocking new technologies and we are impacting things. And therefore the pre existing world, which is, as we kind of just illustrated, is getting in the way of our goals because they have the feedback loop, they have the users, they have like the lobbying arms, all the resources that they have. And what do they do as a result of, you know, looking over the fence at our industry and seeing some of the real, very real successes that we have. Like at the end of the day, like a good crypto app does have over a million users to maybe not a hundred million. You have 100 million holders of different crypto assets. 100 million app users. Maybe not. There's, but they nonetheless look over the fence at us and look at what we're doing and be like, oh, well, I'll take that and I'll put that into my app. And now they're a crypto app. And you know, maybe it wasn't homegrown on our side of the fence, right? And we weren't the first users of that product. Maybe it's still Facebook, but under the conditions that like crypto is actually successful, has enough of a modicum of success that it incentives incentivizes TradFi and Web2 to pull some of the best value, the best utility that we are producing out of crypto and then formalize it and integrate it into their tech stack. Is that not a win? And is that a win that also leads to the demise of the, what we call the movement because it's not our stuff, it's their stuff, but our values still win. Is that kind of what happened with Linux? What do you think about this?
- [25:05]
A
Well, I think that with Linux it started like that and I kind of vaguely remember discussions that remind me of what you just said. Unlike mailing lists or something 20 or 40 years ago, whatever it was. And with Linux it has resulted in almost no additional freedom for the end user. Like if you, if you imagine an end user who's not a specialist, right, they're not a super shadow coder or whatever. You're just a normal person who has like other interests and priorities in life and they just want to do a thing like install a new app and use it. I don't know if Linux is giving them any more options today than they would have had if Linux had never existed. So I could imagine that scenario going like that because the Facebook or Wall street or whoever can use the technology, which is what they did with Linux and do today with Linux, while denying their users like the option, the freedom to exit, like alternatives, lower barriers to entry for their competitors. They can leave all that part out. So when you're telling that story, I was thinking, okay, well would that mean that users, unsophisticated users, or sometimes if there's just like, if 10% of the users know how to do a thing, that's still enough pressure that it motivates the competitors to behave better. It's okay if the other 90% of the users wouldn't do the thing or wouldn't figure it out, maybe, but anyway, my question is, suppose Wall street or Facebook or whoever is going to adopt some technology that the crypto industry has pioneered. Would that mean that any of their users now have like the ability to exit Facebook while taking all their social graph with them or the ability to have the AI constrained to keep their private communications private and invisible to the server, the Facebook or whatever? Or would it not? Same with Wall Street. Like I don't understand this Wall street technology stuff. Would it result in investors having some power to do something better for themselves without relying on the institution to allow them to do the thing. Or would it not? I don't know.
- [27:45]
C
One difference that I see in the crypto industry versus the Linux industry is that actually crypto has a pretty big proportion of non technical users, myself being one of them. And I was using crypto when it was in its worst UX era ever, in 2016, 2017, defi. And you know, a lot of non technical users have come into crypto and they've learned, you know, just enough of what they need to do. Writing down seed phrases, you know, managing private keys, not getting phished or rugged, you know, somewhat technical skills, but still accessible. And you know, if you told me that like oh David, the Linux is a thing, you can go and do stuff with it, I would know where to get started.
- [28:29]
A
Right?
- [28:29]
C
But Ethereum is a thing, Bitcoin is a thing, zcash is a thing. And like as a non technical user that's a thing that I know that's out there that I can go do stuff on that is different from Linux. Like Linux is like, I don't even know what it is. Is it a code base on GitHub? Don't know what Linux is, honestly. It's an operating system, I know that. Where is it? Don't know where it is.
- [28:48]
A
You need three and a quarter inch floppy disks.
- [28:54]
C
But Ethereum, I know exactly where Ethereum is. It's out there and it's waiting for.
- [28:58]
A
Me to go use it or the node somewhere.
- [29:01]
C
Yeah, you know sometimes, sometimes it's even in when I decide to run a node, it's in my own home, you know, I know that.
- [29:06]
A
Hey, you know what, when you're saying that made me realize something has really, really changed because of AI in the last like three months for me personally. So I think maybe in 2026 or maybe 2027 or 2028, but I think a person could say, oh you know what, I really want to run Linux. I've decided I want to use that like in no Windows, no Macintosh, I'm going to run Linux this time. And in 2025 they would have been, they have a, oh, sorry, I beat that up. They would have, you know, had a 1% chance of ever getting any work done. I think maybe in 2026 or 27 or so they're going to be able to say to their AI, okay like install Linux on this computer for me and like debug it and configure it similar. So maybe that's I guess and you know, to go back to moxie's vision. Start with the UX for the normal user starting maybe this year or next year. The UX is no longer ASCII strings or buttons or positions on a screen. The UX is like in all those sci fi movies. You explain what you want out loud. That's the UX where you start with. Right? And that might mean that you can have all this other stuff, cryptography and cryptocurrencies and Linux and whatever else and the UX can actually just work for normal people because they know how to say what they want out loud.
- [30:40]
B
I hope our AIs are cypherpunks though Zuko. I mean a lot depends on them if they are the ux.
- [30:46]
A
Oh, data point about this. Exactly this question.
- [30:50]
B
So.
- [30:52]
A
I saw this post a couple days ago where someone had asked ChatGPT, the AI to spell check their document and the document was was instructions or a tutorial or a how to on things like how to sign up for a thing that requires a phone number when you don't want your phone number going into that company's database where it's going to get hacked and hackers are going to use it against you. And ChatGPT, in addition to spell checking it for her, went ahead and removed all references to services that give you one time use phone numbers. Wow. And then they did the same with oh, cryptocurrency was the other one. She was two tools that she mentioned in this tutorial and she's not. This is Naomi Brockwell. She's awesome. Check her out. She's not a cryptocurrency person. Like she knows plenty about cryptocurrency and she likes zcash, but she's just like a. Her whole thing is teaching normal computer users how to not be have their have their lives stripped mined by mega corporations and governments on their normal things anyway. But yeah, so the point is chatgpt just without being ass, went ahead and removed all mention of these one time phone number services and of crypto. And so she wrote back to it and said wait a minute, why did you chop up my thing and edit it and remove stuff? And ChatGPT said oh, one time phone number services in crypto could be used like for abuse and scams and stuff. So I can't really leave that in there. So it's a perfect example. So yeah, you should check out Naomi Rockwell. She's awesome.
- [32:40]
B
That is the most dystopian shit I've heard.
- [32:42]
A
Probably creepiest.
- [32:44]
B
I'm not going to say this week because like it's Happening all the time now. But that is, that is one of the, you know, kind of the HAL nightmare scenario of just the AI kind of not giving you exactly what you're asking for.
- [32:56]
A
Sorry, Naomi, I can't do that. Oh, man.
- [33:06]
C
Are you optimistic then that the future is guidable towards the values and outcomes that we want for the world? Or are you more pessimistic or are you scared?
- [33:18]
A
I am optimistic. Okay. Why? I can think of a specific reason, but maybe just in general, like when you zoom out. Humans have always made things better, at least every few decades, for the last few hundred years. We're doing great. I think. I think we'll figure something out. But in the specific detail, which I think is really the key, which we've already been touching on here, is is it the Web2 business model or a different business model? Like, I think, I mean, ChatGPT is definitely a Web2 thing, right? That's the Web2 API in my. Or AI in my perception. So what do I mean by that? Well, a advertising, which they also just announced. ChatGPT just announced this week that they're going to start inserting advertising.
- [34:11]
C
Did you see that clip that was going around the Internet? It was a clip of Sam Altman at some interview and he said he was talking about how, yeah, I think ads are like a last resort business model for ChatGPT. That was like two years ago or something.
- [34:23]
B
Yeah, we're now on the last resort.
- [34:24]
A
To pay for that acceleration is happening. So the Web2 business model, like basically everything that is wrong? Well, no, like 80% of things that are wrong with the Internet, I think, are because advertising was the only working business model starting in, you know, the early 2000s. So if that's. If we recapitulate that if advertising is the only working business model for AI, then we'll probably have a similar bad outcome. I don't know if it is. I haven't paid attention.
- [34:55]
C
Like we haven't solved the same incentive traps.
- [34:58]
A
Let's see, there's two things, I guess there's advertising, which I hate. Advertising is the worst thing ever in like three different ways. And it's the reason why everything, 80% of everything sucks. And then the other one is lock in, which is also core Silicon Valley Web2 playbook that they've honed and learned over and over for 20 or 30 years, which is get the 100 million users as fast as possible because the hundred millionth one can't leave the other 999 million.
- [35:31]
C
999.
- [35:32]
A
999 behind. Right. So as soon as you have the network effective users, then you have lock in and now you can start squeezing and exploiting them and they won't, they won't leave. Those are the two playbooks, which I optimistically think, oh, we won't do that again. We'll, we'll figure something else out this time around.
- [35:51]
B
Zuko, I feel like they're running it back for AI. I really feel like they're doing exactly those two things, running it back Turbo and I mean I just saw this with Gemini, is now integrating with like Gmail Calendar, like the full G suite and it's so damn convenient to have that thing go and organize your inbox and man, I feel like they're running it back. What's goo. What's Google's business model?
- [36:17]
A
Yeah, it's the worst in terms of, in terms of how much Google relies on that kind of extractive squeezing of value out of its users. It just relies on that so much.
- [36:30]
C
I suppose that underlines or emphasizes why you are so grateful for crypto's funding of things is because it's kind of like leveraging a third business model or just like a new strategy that's just outside of what came before it.
- [36:46]
A
And it might not be sustainable. Right. Like at a very zoomed out level. I don't want to be negative or cynical, but you might just say, oh, like crypto came along and for 10 years or so people poured a bunch of money into a bunch of experiments and then they didn't get their money back and so they stopped that and we moved on to the next phase of human life. But hopefully we can get some sustainable, ongoing feedback loops of the same kind of thing.
- [37:11]
C
Yeah, I agree, I agree. Let's talk about positive feedback loops because that's definitely what happened to zcash recently. Let's talk about zcash. There's been just a ton of attention on zcash lately brought on by this incredible price action. So like Zcash, I think something in like September or October was $50 for a single. Zcash ran all the way up to $750, came back down to where it is now at $350. So pretty incredible.
- [37:41]
B
Incredible price performance, might I add. No advertising and no lock in. It's just happened.
- [37:48]
A
No advertising and no lock in.
- [37:49]
C
All organic. Yeah. So that has brought in an incredible amount of tension. Users into the zcash ecosystem without any specific targeted question, just thoughts, sentiments, reflections. What's it like to be Zuko lately?
- [38:08]
A
Me personally am not So I did. I'm more. I would like to meet me. Forget that question. I'm gonna go back to what.
- [38:20]
C
Okay, the first question.
- [38:21]
A
What do I think about zcash?
- [38:22]
C
That wouldn't cause you to think too hard.
- [38:25]
A
Yeah, exactly. I'm really excited about that. I really love the part you. The comment you made, Ryan. No advertising and no locket.
- [38:37]
B
Yeah, yeah, you said it first.
- [38:40]
A
Just repeated it again. About the zcash price run up. There was indeed no, there is no central player in zcash. It's kind of like Bitcoin, but kind of not. I'm very, very like optimistic. I was very encouraging to me with that huge price run up in zcash.
- [39:01]
C
Both.
- [39:01]
A
It's just a signal that people do care about privacy. That's the main thing that a lot of people took away from it. Like I so many people told me after that started happening, like, oh, it turns out people do care about privacy. And I think that's valid. Like using those kind of aggregate large mass price signals to inform your worldview. I think that's a pretty good thing to do because it's hard to. Hard to spoof those signals. They aggregate a lot of different kinds of information. So it shows a bunch of people that privacy is valuable to you, to people, is valued. And one of the things that's pretty different, it might be unique. Well, I don't want to claim that. I'm sure there's other things like it, but it's pretty rare and special and different about zcash is the Dove Fund. You guys, should we recount that for your. Yeah, let's talk about it.
- [39:55]
C
I would love to.
- [39:56]
B
We're familiar with it. But yeah, let's talk about it.
- [39:59]
A
Okay, so zcash is on its third halving. It cloned Bitcoin when it was born and has a four year halving schedule. And each of these four year periods there's been a different monetary. What's the word? Anyway, there's been this different thing starting in the second, starting from year five through eight. It was called the Dev Fund and it's still called the Dev Fund, I think. But we're in year like nine now. And this is issuance. You know how in Bitcoin there's a bunch of coins issued with every block and they go to the miner who mined that block. Yep. And in Zcash, 80% of the newly created coins go to the miner who mined that block and 20% of them go to this Dev fund that. And that means if the price has gone up like 7x or whatever you said that means seven times as much money is going to this DEV Fund thing. Now as before. I whipped out my calculator just before this started. There's 21 million Zcash coins ever, because we also cloned that from Bitcoin. And in the first four years, half of that was issued to miners and defund recipients. Ten and a half million coins. In the second four years that was five and a quarter million coins. So now we're in the for the third four year period. So there's something on the order of 2 million Zcash coins that are going to get issued over the next four years and 20% of those are going to this DEV Fund. So at a price of $400, let's just say for simplicity, Zcash is over $400 a coin. For the next four years, that's going to be about $200 million is going to be issued through this Dev Fund thing. Whereas back when it was worth $50 a coin, that would have been $16 million or something, I don't know. Anyway, my point is that's a lot of money and that's what's so encouraging to me about the price of zcash going up. It proves that people value this. And it means all those recipients of the DEF Fund are going to be more numerous and more high powered, more empowered, more well fueled for years.
- [42:17]
C
Positive feedback loop.
- [42:18]
A
Let me add one more thing. Yeah, it's a positive feedback loop. Let me add one more thing. I personally and my organization, Shielded Labs are not one of those recipients of the DEF Fund. I work for this company called Shielded Labs. I'm not even the boss of it. The boss is Jason McGee and he's awesome. And Shielded Labs only focuses on Zcash. And we think the DEV Fund is great and important and a central sort of strategic advantage of zcash long term. But in order to keep things simple and so that we can't be accused of like self dealing or you know, like selfish interests, we just don't accept any debt fund. We're only funded by donations from zcash holders. So by the way, Tyler and Cameron Winklevoss just donated $1.3 million to Shielded Labs earlier today.
- [43:03]
B
Wow. Wow, that's huge. They have been huge proponents of privacy. They're also behind the debt that you mentioned earlier, I believe. Yeah, they've been very excited about zcash this year. I've noticed a lot of things that they're doing in this space. I think they're True believers. Let's talk more about the protocol block rewards going to the dev fund. So it's very interesting to sort of observe what happens after many years of this activity because of course Bitcoin that would be like to do that, to siphon off a portion to any bitcoin development fund would be sacrilege over there, right? Bitcoin is immutable. Thou shalt not siphon block rewards for any other purpose than rewarding miner. It's in the protocol, it's in the social contract that's done. Ethereum was a bit more squishy with that idea of protocol based dev fund blocked rewards. And there had been multiple proposals to actually do something like that. EIPs in the Ethereum world, some of them got reasonably far debate in the community. None actually got to the point of being considered for a hard fork. And the reason always given in the Ethereum world is like, well, who decides where the funds go to? Is this not a vector for corruption or something? What do we turn this into? A token vote. And like, well, we don't like token votes for plutocratic reasons. And it could be a vector for control. So every once in a while it resurfaces in Ethereum, but it's been kind of quashed down now. Zcash has fully supported this type of idea from the earlier, like a much earlier set point and just kind of baked it in and so now it's part of the social contract. I think people who opt into the zcash network sort of know that it's there, they appreciate it, they're grateful for it, they're glad that the ecosystem continues to get funding. But like, what's your assessment of it? Like, I guess maybe the high level question is how has it gone? There's been also some, I think governance issues maybe that we've seen surface lately. And Zuko, I'm not even familiar with all of the details of what's happening there. I don't know if that's a kind of a debate for, you know, dev funds and where it goes, but just overall your assessment, how has that gone?
- [45:16]
A
I really am happy about how it's gone because like it has helped zcash survive until now. You can compare it to a lot of other things that didn't have a similar thing and they entered a death spiral because when the price, token price is going down, that means development and maintenance and everything is getting worse and that makes the token price go down more. So the D fund sustained zcash all along until now. And I agree with you that the zcash community has gotten used to it and treats it as a social contract. And people who buy zcash are expecting. But that's part of what they're getting into. You're probably not aware that it's changed every four years or so, because actually this is something we did when we originally set it up, which I'm pleased with. I'm glad we did it this way. The first original thing, it was called the Founder's Reward in the first four years.
- [46:17]
B
I remember that. I remember that.
- [46:20]
A
Which was a more accurate name, because this 20% that got siphoned off from the. I wouldn't say from the miners, but for the first four years, 80% of the new issuance was the miners, and 20% went to this other place. And that other place was give it to the investors and early employees and early whoever had created and was currently maintaining the network. And the DEV Fund kind of grew out of that. There was a tiny slice of the founder's reward that my brother Nate Wilcox and I arranged to get directed to ongoing development, if that makes sense. I don't remember how big of a slice it was. 18% just went to founders and like 2% went to ongoing development. And that was what sustained the electric coin company for those four years. And then the four years was up. Oh, and the thing that I was saying I was proud of is we baked a sunset clause into the initial rules. And that forced exactly as we had sort of intended. That forced a constitutional crisis when a bunch of Z cashers said, okay, well, the. The social contract was we would endure this thing for four years and then it would be 100% to minors for the rest of time. And other people said, no, no, no, I don't think that was the social contract. I think the social contract is that miners can get 80% for the next four years and 20% will go to this new DEV Fund thing, which is different than the founder's reward. So the founder's reward went to the original investors and whoever. And then we managed to like, redirect a tiny sliver of that to sustain development. Then the second four years, it was the DEV Fund, which went to two and a half different organizations. I went to three different destinations and one organization controlled two of them or oversaw or managed two of them. And then that sunsetted itself because again, now the social contract is that you expect DEV Fund proposals to sunset themselves every four years. Right. So that sunsetted itself and the new one that's now in effect there's no organizations that receive any direct funding. There's These, there's still 20% but it's now because of the having it's now 20% of a smaller output of Zcash coins but because of the price run up it's now 20% of a much larger number of dollars. And now it's controlled by two different things. One's a committee of five humans that got elected by a bunch of other humans through this like this email, cryptographically anonymous email or something like that. And then the other one is on chain token holder voting. So that's the current state of play. And in fact the second one. Wait, which one? I think it's. Honestly I don't pay that much attention. I try to pay attention to the good things at least there's a thing called the lockbox. The other zcashers are going to be so aghast when they realize I can't remember which one's the lockbox which was. But anyway, that's the current agreement socially and it seems to roughly be working. I'm reminded of the debates like I saw Vitalik in particular, who's another one of those people that I greatly respect. He had posted his caveats or concerns or objections to some of these things and I think they were valid. And you mentioned either Vitalik or other people also had these other concerns and objections. And fortunately for you Ethereum folks, zcash is trying it and so you'll get to find out how, you know how badly it goes, what goes wrong. We've tried giving the original investors a whole bunch for the first four years. We've tried giving two organizations a whole bunch of money where one of those organizations is required by the social contract to use it in two different ways. This was the second four years. Now we're trying a committee and a token holder vote that are independent, separate like houses or whatever for the coming four years.
- [50:27]
B
And how far are you along in the third set of four years? Has it just begun?
- [50:33]
A
Let's see, 2016, October was the initial launch so 2020 was the first halving. So last October, November 2024. So we're like a whole year in three months in and I believe the. I think the lockbox has not actually been distributed to anyone yet. There's this whole process of token holder voting and people applying for grants and so forth. Anyway, so we're a year and something in to the third experiment.
- [51:04]
C
Hey bankless nation, it's David. If you're hearing this, that's because you are listening to the free Bankless podcast feed. Did you know that there is a premium Bankless RSS feed? The premium feed has extra interviews that I do for my own personal research and just deeper questions that I want answered about the crypto industry. Questions that I want to answer so I can be more informed as an investor, both at Bankless Ventures and also just in my own personal portfolio too. Also, there are no ads, which means if you listen to the premium feed instead of the free feed, you'll get about 20 hours of your life back every year because you choose to support Bankless directly. So if you're interested in getting extra content all while skipping the ads, or you just appreciate what we do here and want us to keep doing it, we'd appreciate it if you signed up for Bankless Premium and there is a link in the show notes to get started. Cheers to a good 2026.
- [51:46]
B
I mean, I feel like it's worked pretty well for zcash so far. And in fact, you've got the trump card to say, like, zcash probably wouldn't be here in its current form unless we had that. I mean, it really funded the critical development I there. There's been some governance drama, I believe, around the Zashi Wallet developers. What's that? What's your counting of that, Zuko? So, I mean, I've looked at the headlines, but there's a lot to kind of get into in order to understand what's happening. Do you have a summary for us?
- [52:17]
A
Let me think. Because it is an ongoing dispute and I now have people have told me things confidentially about it, so I'm going to be careful not to violate any of their competences. It doesn't involve me or shielded labs in any way. And in fact, I think that's. I'll try to summarize it for you, but basically don't think it's that important for zcash. I hope none of them hear this and like, feel disregarded, but it's just like this one team. It's a great team. It's a really great product, Sashi. It's got really great ux. You should try it. But it's not the only wallet that has great ux. I love the members of that team. I'm the one who recruited them years ago and they're super great people. But zcash will be fine if they just get distracted or spend, you know, whatever.
- [53:08]
B
But was part of the dispute related to the Lockbox, the development fund, at all, or not really.
- [53:13]
A
The dispute is just a Normal control and organizational dispute about who controls the organization and the money and who the employees work for and who owns the ip. All that kind of stuff is the.
- [53:31]
C
Way that it's related. The fact that this both came downstream of the very incredible price action of zcash, which increased the importance of governance over the block rewards and the lockbox. And then also came with it a bunch of users downloading Zashi, putting zcash into Zashi and all of a sudden Zashi's got product market fit. And now as I understand it, the developers of Zashi want to get it out of the foundation, the E, the ECC Electric Coin company out of that and turn it into a company because they want capitalistic startups. So it's not directly connected, but it is both downstream of the price action that we've seen in zcash there is.
- [54:11]
A
A connection which is that the company. So there's a nonprofit named Bootstrap that I helped set up years ago. It's an interesting history because originally it was a for profit company that created zcash, the electric coin company, way back in the day. And at some point, in fact, it was part of the previous governance process of setting up the dev fund. So after the first four years expired, our allies at the zcash foundation said they would fight, they would oppose any dev fund. So what they were saying was we're going to go for 100% for miners, we're going to fight for the end of any special thing other than mining. If a private party is going to be receiving defund, which at the time I was just annoyed at them. At the time that was me. It was my company they were talking about. And in retrospect I'm like, oh wow, that was actually pretty wise. So what happened was we set up a nonprofit called the Bootstrap foundation and all of the owners of the electric Coin company donated their equity to the Bootstrap foundation so that there would be no private owner who would have like a competing interest. Like they would be able to extract value or direct the development to their private interest at the expense of the public interest or the zcash community as a whole. And the community, like the zcash foundation, did not fight very much at all. I never asked them, but maybe the fact that it was now a nonprofit instead of a private company was part of why they stopped objecting to the dev fund. The community as a whole approved the Dev fund, like with sufficient, you know, majority or sufficient like consensus. And it went through. So that Bootstrap NonProfit started receiving DEF fund during those four year periods. But now in the current four year period, the bootstrap nonprofit slash, the electric coin company wholly owned subsidiary isn't receiving defund at all. The only interaction between that and the current organizational crisis in that organization is that some of the money they're holding was previously given to them out of DEF funds, if you see what I'm saying. But they're not in an ongoing way receiving any defund money.
- [56:32]
B
I don't know.
- [56:32]
A
Does that answer your question?
- [56:33]
B
It does, yeah. Just interested in kind of some of the inside baseball about what's going on. I think that that that clarifies things. I, I, I want to go back to something you were saying where we were talking about 2025 being an incredible breakout year. At least the charts reflected that. I know the tech has proceeded much more gradually than was reflected in the price charts. And you said part of the reason for that was crypto is like kind of reawakening, rediscovering the importance of privacy. And I think that was is definitely true. I think there's a huge movement towards that kind of a social movement realizing oh my God, Bitcoin, even Ethereum, like we don't have native privacy on chain. This is dystopian. You look at the AI tools and their ability to map and find addresses and it's really bad. I don't think that was the only reason though. Two other things I think came into play in 2025 that were more along the lines of Moxie's idea that you were introducing us to earlier, which is user experience, the a hundred million users. And that was a combination of wallet technology. The Zashi wallet is like quite good. And then also near intense, which is kind of cool. So near intense for people have not used it is a way where users can essentially swap shielded zcash for any other asset natively across chains. So what's really cool about this is even if you are looking at other assets on another chain, say something on Ethereum or Solana, you can use zcash for its privacy utility temporarily by going cross chain using your intents and then kind of come back to your chain of of choice.
- [58:17]
A
Well, I might disagree with a little bit of that. It's interesting.
- [58:20]
B
Okay, well we'll talk about that.
- [58:21]
A
Interesting.
- [58:21]
B
That's my impression of how it works.
- [58:23]
A
I agree with you that people became more aware of or more concerned about privacy. And there's two layers. There's like the social. What's social good? Like do we want to Live in a world where. Or whatever. And then there's like the practical, personal, direct motive. And people only learn from experience. Right? So I agree with you that, like the apparent. The. The experienced power of AI, I think is causing people to be more conscious of this. And I agree with you that ux the Moxie approach, and I agree with you that it's the UX of both the Wallet and Near Intents. Okay, so in disclosure, I originally started the Zashi Wallet project back when I was the CEO of Electric Coin Co. A couple of years ago with Josh Swihart, who's the. At that time was employed by me and is now the CEO. But I left before it reached 1.0. Okay, so the point of this is I'm really proud that you like the ux. The UX is not bad. And that was my focus for like nine months before I left that job was just. Just solely focused on the Zashi ux. But it was after I left. A, they got it to 1.0 and started getting the user feedback loop, and B, they added the near intense integration. And I think it's a great example of the Moxie Marlin spike approach is that it has to be in the same app. Like, if the number of apps you use is greater than one, forget about it.
- [60:01]
B
Right.
- [60:02]
A
So there's just one app that you use and there's no, like, unnecessary. Well, they're minimal to the greatest extent possible. There's no unnecessary steps or concepts or no unnecessary information that you learn because Near Intents already existed separately from Sashi. And it. I did actually use it, like, as an experiment, but I wouldn't recommend it to anyone else at that time. But once it's integrated into the unified app, then you. Then I would recommend anyone use it. I just tell people, oh, yeah, just do that thing. Just works, no problem. And okay. So anyway, basically, I agree with you on all that stuff and kudos to that team. And, you know, I want to kind of take back something I said earlier. It's true no matter how badly the conflict and the trauma goes, it won't really kill zcash like that. There's all these other organizations, like my current organization and many others, and the $200 million, which is sort of completely separate from that team and those people in that conflict. But on the other hand, they've done a great, great, great job with Sashi.
- [61:13]
B
Right.
- [61:14]
A
And it would be a real shame if they got derailed and didn't accomplish anything else for the next year or whatever. That would suck. So Anyway, I wish them the best. What was my point? Oh, my point was there's a really interesting, really subtle, nuanced thing about how privacy works. And when I first used Zashi with near intense integration for an actual need for myself, that was like a light bulb moment for me after 30 years or whatever of studying the topic of privacy and like in cryptography and stuff. And it was this. I. How did this work? My Netflix. So I had a Netflix account. It was tied to a Gmail. I didn't give it like my real Gmail that I give to everyone else. I gave it a made up to like disposable Gmail so that Netflix wouldn't be able to whatever. And that Gmail got locked. I still haven't figured out why. Maybe someone tried to hack it and failed or I don't know. But I didn't have recovery procedures that would work to get that Gmail back. So my Netflix was broken. I couldn't watch tv. So I was like, well, damn it, what am I going to do? Oh, I know. I'm going to get a ProtonMail account and sign up for Netflix and I'll be able to watch TV tonight. So I went to ProtonMail and ProtonMail offers three options. A, put in the credit card. Fuck that. B, send us an envelope with fiat paper, paper fiat bills and like snail mail it to Finland or wherever the fuck. C, send us Bitcoin. Because they're bitcoin maximalists. They wouldn't deign to deal with any lesser crypto than Bitcoin. So here's the light bulb moment. I have my Zashi on my phone. It has zcash in the shielded pool in Zashi wallet, right? So that means it was at. The money was at rest. The value was sitting there at rest. I had moved it into my Zashi at some point in the weeks or months earlier. It was just sitting there. And then I wanted to watch tv. And so I realized I can click send and scan the Bitcoin QR code on the ProtonMail payment page, right? And Zashi says, shall I send this mini zcash? And I'm like, yeah, okay, I'll pay. I'll pay that mini zcash, right? Okay, here's the brain. Here's the light bulb moment though. I did that. And then I realized this revealed nothing about me. To ProtonMail, to Netflix, to anybody who's like spying on me at my ISP, anybody who's watching the blockchains, all the AIs that are watching the blockchains. There's like zero information about me or my assets or my previous transactions anywhere. And so that was amazing because I didn't need to like submit a customer support request to ProtonMail. Like, please accept Zcash so I can have privacy.
- [64:28]
B
Yep.
- [64:29]
A
It's an unnecessary step. Well, that was amazing and kudos to the, the current ECC team who built that and made it possible, and the current NEAR team who made all the, the decentralized plumbing infrastructure that made that possible. And then I literally got to watch TV that night without exposing myself to hackers who were looking to fucking kidnap me.
- [64:51]
B
It's awesome. It's awesome.
- [64:53]
A
Totally works. And it works with anybody who accepts any cryptocurrency, even if they're all Bitcoin, Maxis or Ethereum only, or you can't figure out which L2 it's on or whatever. None of that's your problem. You just scan the QR code to watch tv. So UX first is working. And that's the subtle nuance, interesting distinction between that and something that you kind of said earlier, Ryan, which was you said something. I don't want to put words in your mouth, but a lot of people out there think of something which is totally wrong technically, which is I've got my value at rest over here, where potentially bad guys like my enemies or advertisers or the IRS or somebody might be able to watch when I'm watch this money, this pile of money, and I want to have my money over here. Like, I don't know, pay, pay Proton meal or something. And so now I need a process or a service or technology to break the link in the middle. That's like a very common, like 99% of people. That's, that's how they, that's. This is the paradigm that they assume. This is the only possible paradigm for privacy. Now it can never, never work. For simple reason that I can explain the, the IRS or the AIs or the North Korean hackers who are watching this pile over here, when you do this process, they see that you touch the pile, somebody, something happened to the pile over here, right? And when you do the third step, they, depending on how much details, can see something happened over here, okay, they can put two and two together because this emitted information and this emitted information, in some cases the attacker is going to be able to get both of those signals and they're going to be able to put it together with, especially with AI, right? So the point is, it doesn't matter how little information the middle step emitted. If you if you take your Bitcoin or serum, you move it into zcash. I'm getting worked up about this because so many people are so wrong about this. Like 99% of people, it has never occurred to them that there's any other possible way to do anything than to do it this way. But this way is like a hundred percent fail. And they're still doing it. Like they've been doing it since before Zcash. No Zcash existed. Remember when ShapeShift, we're probably talking like 2017. ShapeShift was the most widely used coin swapping service for a long time. Remember that?
- [67:38]
B
Yep.
- [67:40]
A
During those years, the most common use of Shapeshift was that people would bring Bitcoin or Bitcoin cash or Litecoin to Shapeshift and they would swap it for either zcash or Monero. Then they would swap it back for Bitcoin cash or Bitcoin or Litecoin. So this is exactly the same pattern. Any anyone who has the ability to watch the blockchains can trivially link those two states with each other. And this is true even if the middle things Ecash or Monero did the best possible job of leaking no additional information, even if it leaked zero additional information, which zcash more or less does. It doesn't matter because step one and step three already gave you away.
- [68:29]
B
I totally see what you're saying, and that was definitely, that is definitely worth correcting. Because the reason why a lot of people assume that that use case is valid is because, quite frankly, they need that use case. A lot of people want that use case and need it now. Just. Just to make sure I understand or our listeners understand what is like, the best way to do it. Like the way that you did it where you had some Zcash in a Zashi wallet and then you purchased a ProtonMail account. I mean, does that just mean, oh, I just have to have zcash at rest somewhere in a Zashi wallet and so long it's a is. It's at rest for say, X amount of days when I'm safe to go purchase something. Great question privately.
- [69:11]
A
Before I answer, let me rant about how wrong stupid people are some more. Okay? People are still doing the same thing and now they're doing it with zcash, which breaks my heart. So you can follow the certain Twitter accounts that will tell you, like, what are the big whale moves or whatever on the Internet on blockchains. And one of them will tell you what zcash transactions have been happening with near intents and all that. So Reese and some other zcashers watch those and sort of like, follow up and try to educate people about this. So as as an example, like, two days ago or so, one of these other zcashers pointed out that someone had just moved. They, for the fifth time in a row, moved 1,000.15 Z out of Zcash of the shielded pool of Zcash to some other destination. And the ZCAsher on Twitter pointed out, huh? Well, like three months ago, someone moved 5,000.75 ZEC into Zcash, into the shielded pool. So now this random person on Twitter has now, even though zcash itself is like, nigh perfect mathematically, has now linked the original 5000.75 with the five 1000.15s. And this is even without AI. Like, presumably AIs are currently doing that or will this year. Okay, so I just want to rant. People are wrong, wrong, wrong. And they should, like, learn. But your question was the right question. You're a good teacher. Question was, well, what would work? So it definitely worked with my proton meal purchase. And the way I think about it, and the other Z cachers have all started repeating this phrase, this maxim or whatever you call it. It's that you can't get privacy from value in flight. You can only get privacy from value at rest. But that gets really confusing. Like. Like, how long does it have to be at rest? Or something. And it gets really confusing. And I'll tell you a thing, even though I don't know if you or your listeners will believe, sounds crazy, but I mean it in a specific technical way that I'm willing to put my attach. My reputation to this. It's like this. If you had your money in Ethereum, in eth, in the clear on Ethereum at a certain time, and you decided, okay, you know what I want to do? I want to move it over here to, like, a new ETH wallet where it will also be in the clear. But I'm gonna do it in such a way that, though, nobody will be able to figure out that this old wallet is actually owned by the same person. Okay? AIs can read your mind. They can figure out what you're doing better than you can figure out what you're doing. This guy who moved the 5000.75 ZEC or girl or whatever, AI for all I know. But anyway, this. This entity that moved the 5000.75 Z took months. He took like three months, and he broke it up into different Pieces. So he went pretty far along this whole, like, be clever and, like, outwit the AI path. Okay, I'm just going to tell you, for 99% of the people, the AI is better at that than you are. Humans emit patterns and AIs read patterns. You're probably not going to win that chess match. But then, remember I said if you had this intention. Okay, so here's the crazy guru metaphysical thing, okay? Remember this was if you had the eth, and you thought to yourself, what I want is to have my ETH over in this new wallet that's unlinked. The AI read your mind. It knows you want that. Or it will eventually. It will eventually figure out that that's what you wanted. Okay, but what if you said this? What I want is to convert half of my Ethan to SEC and hold it in Zach. That's the end of my plan. I have no further plan. That's it. I'm just going to hold it in Zach. Now, the AI can. He doesn't know. He can't. He's blinded. He doesn't know what happens next. Now, if a year from now you decide you want to buy a lamb low or whatever, like when I decided I wanted to buy a ProtonMail subscription, that was a new idea to me. It was because my Netflix, my tv, had stopped working, okay? At that moment, I was like, okay, I want TV. Like 10, 20 minutes later, I was sending Zach out of my wallet, right? There's no information about the ProtonMail transaction versus months or whenever, earlier, when I had shielded my Zach into that wallet because at that time, I had not intended to buy ProtonMail.
- [74:01]
C
Never let them know your next move.
- [74:03]
A
Yeah, so this is the crazy metaphysical thing, is I think if you had an intention. So I'm telling you, Ryan, right now, if you just decide you want to hold Zach and that's your entire plan, you're going to bequeath it to your kids or whatever, and the AI is foiled. He has no idea what happened. It did. Like, it went into zcash and it didn't come out.
- [74:22]
B
You're.
- [74:23]
C
You're buying privacy optionality.
- [74:25]
B
Okay, but. So black hole. I get that. I get that. Black hole. My intent, it's completely pure. If I did it that way. Is there a way, though? If there's something in the middle Azuko, like, is there a way to set a certain amount of days and you're kind of safe, like a week?
- [74:44]
A
Oh, my. That's a great question.
- [74:45]
B
A year?
- [74:47]
A
Well, no, there is no way okay, so I've been grappling with this. I don't know for sure. Like, I know that if you send it into the zcash black hole and you just hold it indefinitely, then I know that there's. There's zero information. Without information, the AI is helpless. There's not only an AI, but also North Korean hackers and anyone else without. When you deny them information, that's really the best way to ensure good behavior on their part.
- [75:17]
B
And for listeners, this input, this assumes that the zcash is also shielded. It must be shielded as well, Right?
- [75:24]
A
And this is back to the UX thing. A great, great thing about Zashi and the other, like, top quality modern zcash wallets, of which there are many, is that like the wallet just does that part for you. Like if someone says, how do I get privacy? I want Zack, and I want it to be private. And I just say, oh, install Zashi or Unstoppable or Xingo, and you're good, because I know that there's no way they can screw that up. They don't have to learn anything. They don't have to make any decisions. Zashi, Unstoppable, Xingo, and several other zcash wallets, just handle that part.
- [75:57]
B
Okay, so, so forever. That timeline you're comfortable saying is fully private. So tell me about something less than forever, right?
- [76:05]
A
No, it's not. No, that's a great point. No, it's a great question, a great challenge, but I don't think it has to timeline again, I'm sorry, but I think it has to do with how AIs can read your mind based on your patterns.
- [76:16]
B
Seriously? We're that far already with AI as mind reader? Or are you projecting something and are you projecting some future AI?
- [76:24]
A
Have you ever heard that, like, Facebook can tell if you're gay or straight like six seconds after you start scanning a page?
- [76:31]
C
There is that one story of ads. So some ads somewhere started targeting this one lady because she was pregnant, but she didn't know that she was pregnant, but she was actually pregnant.
- [76:44]
B
Oh my God.
- [76:46]
A
Okay, but let me try to get back to your I, I, I accept your I, I really like your pushback here. Right. So what I'm saying is if you want privacy, you just have to be long, Zach, and stop being long because. Because of like, computer science and cryptography. And the way AI works is just mathematically, that's the only way to get really strong privacy. And you're saying, okay, but what if I'm actually long eth? And what like, how can I get some, like, some privacy or whatever? Like, exactly where's the cutoff between this and that? That's a great pushback. I don't know. I'm still working on it there. It's, I, I, I'm really struggling to figure out, like, what's a useful thing to say. I'm 100% sure that the, like, put it in the black hole. You don't have to leave it there indefinitely. You just have to have no intentions for it. Does that make sense? Wow.
- [77:40]
B
It does in this weird way.
- [77:42]
A
Like, if you're, if you're looking at the Lamborghini dealership website and then you move $200,000 or however much a Lamborghini cost into the Z black hole, and then you buy a Lamborghini, the AI puts 200 together. It, it reads, it knows. Aha. I bet he wanted a Lamborghini. Okay, but if you put the $200,000 into Zach right now and forget about it, then it doesn't matter how long, you can change your mind tomorrow and say, you know what? I've decided. I really want Lamborghini. That'll be fine. It's just, if you conceived of your intention before you put it into zcash, then the AI reads your mind. I'm sorry, it sounds crazy, okay, but I'm not answering your question. The other question is, okay, what's the sort of the fallback? Or, like, how, how safe can we be? Can we be partially safe using other techniques? I don't know. I, I wouldn't say it's 100% impossible. We're, we're working on it. We're trying to understand it better. It's hard to tell. There's also an arms race where the AIs and the attackers are getting better and better at the same time. It's really hard to tell. I think it's possible, I don't know. Like, in all honesty, like, if just a random person told me I want safety and I need to, you know, like, move some bitcoin to a new bitcoin address, a new bitcoin wallet or something without, like, my enemies tracking me down and whatever, I'd really just tell them, like a, how important is this? Is it okay with you if people actually figure it out? You know, can you. Or, or is it, like a serious negative impact on you or someone else if they figure it out? That's my first question. And then two is like, if it's a, if it's not, it's not safe to risk like you're in danger of being kidnapped or something. If, if people, if someone can track you, then I think my next. My next answer is just you. You're gonna have to become a pro. You're gonna have to, like, go to spy school and spend months learning, like, computer science and cloak and dagger stuff or something. But as of today, 99% of people, the AI is going to track them 99% of the time. I'm pretty sure. Maybe we can figure out a way to make it better, but I don't know.
- [79:59]
B
I get what you're saying. I understand what you're saying. I mean, I guess it's not easy enough to say, okay, you take your Bitcoin, whatever, you pop it into zcash, you wait a month or two, you randomize. You've randomized the numbers, so you're outputting things.
- [80:12]
A
No, it's not good enough. The AI can see that. The AI can put that. Can see that pattern better than humans can think of ways to break up the pattern. You know what I'm saying? It's like playing chess. Are better than you at chess. They're already better than you at chess. And they're improving faster than you're improving, it feels.
- [80:32]
B
Because AI is so good at pattern recognition and data aggregation. This is why we need privacy more than ever. It's almost. It's. It's like it seems true that we've gone away, we've gotten away in crypto and just like in our digital life in general with like, less. Less need for privacy just because the pattern recognition and data gathering tools have not been as sophisticated as they are now. And now they are incredibly sophisticated and they're democratized in the hands of just about everybody. And I think the world kind of. Well, crypto at least partially woke up to that in 2025, I guess. As we start to wrap this up. Zuko, this has been a lot of fun. We gotta ask about the zcash token itself and the asset itself.
- [81:19]
A
Can I respond to the.
- [81:20]
B
Yeah, go for it. Respond. Yeah, you wanna talk about that?
- [81:22]
A
While ranting and waving my hands excitedly, I said something like, okay, Ryan, you just have to sell half of your eth and buy. Zack. Yeah, but now I'm trying to. I'm trying to think. Can I make a more practical, acceptable recommendation to you? I don't know. I'm brainstorming. It was like, pick a number which is like. It's like your checking account. Like, you've got your investments and your CDs and your home and Your vehicle or whatever, you've got a checking account. How big do you want your checking account to be based on, you know, your factors? Put that much in a shielded wallet like Zashi Unstoppables, and go, et cetera in Zec. Okay, checking account amount worth. And then maybe you treat it like a checking account, which I don't know. I mean, do you use a checking account for anything? I do, but not like, not for purchases, not for regular stuff, like for financial transactions every month or something, you know, or big transactions. Anyway, I think that would allow you to continue being long eth. And it may give you like the real black hole style protection, you know what I'm saying?
- [82:33]
B
Let's talk about in this world then, Zuko, what Zec, the asset actually is so zcash the asset. So our world of trying to understand these crypto assets, we've looked at a lot of different things. One is looking at these as monetary assets. I think David and I are probably closest to that side of belief. I mean, there's other things. There are also commodities, for sure. There's also. They're productive assets that can be capital assets when staked. But taking just the money framework, you've got unit of account, store of value, medium of exchange. That's kind of the Bitcoin story of what it is, primarily a store of value, of course, that's the emphasis. Is that what ZEC is? Is that what zcash is? Is it basically a store of value? Is it a monetary asset? Should it be valued according to those types of properties? Or how do you think about it?
- [83:29]
A
I don't really understand the question in my view, though.
- [83:33]
B
Really?
- [83:34]
A
Yeah, like it's. It's like a kind of jargon, or there's some distinctions which you're familiar with, which I'm. I'm not saying you're wrong. I just not like, I always thought the. There was this debates in Bitcoin and zcash elsewhere. It's like, what comes first, the store of value or the medium of exchange? And I had no patience for that. It was literally what comes first, the chicken or the egg? No, it's the chicken. No, it's the egg. No, it's the chicken. You guys like, shut up. I'm busy. I don't know.
- [84:02]
B
But it's not. It's less what comes first. I don't even. It doesn't to me. I'm totally agnostic as to what comes first. But what you were saying is basically, hey, Ryan, if you want privacy or hey, bankless, Listener, what you have to actually do is you have to take some of your value, take some of your wealth. You actually have to go. Here's my use case. That's what you're saying. You actually have to go store it in zcash, right?
- [84:24]
C
You've said that like four times so far in this podcast.
- [84:27]
B
For what amount of time? Well, we don't use. I mean, if you want maximum privacy, then forever. Or something close to forever.
- [84:33]
A
No, no, no, no.
- [84:34]
B
But what I'm. I guess what I'm saying, Zuko, is I think what you were just advocating is the use case of store of value. You're taking your wealth and you're storing it on zcash privacy. So isn't that what zcash is? It's a store of value asset?
- [84:47]
A
Okay, I'll answer that. But you said something really wrong. You don't need. If you want maximum privacy, you don't need to store forever. If you want maximum privacy, you have to store it without intentions for how you're intending, just like you do with your checking. You don't keep your checking account around forever. It's. I see cycles you spend and add more every little while. Okay, anyway, but. But you're. No, I think that's really interesting because like I said, I was kind of dismissive with sort of the monetary theorists with their theories.
- [85:20]
B
And I understand, yep, pay tax.
- [85:22]
A
You're a chart list if you think the taxes give us value and all this crazy stuff. And I was like, whatever. But then I was thinking, oh, there's this information theory, adversarial information theory. Right. Like cryptography, AI networks and metadata, spying and protection of metadata networks. It's all what I think of as adversarial information theory. And there's an adversarial information theory reason why you have to be Long Zach. At least. At least the amount of your checking account for at least a month or two, the way you use a checking account. I think that's interesting and I think it's positive because people being Long Zach is good for society.
- [86:02]
C
People have called ZEC encrypted Bitcoin. What do you think about that meme? Do you like that meme?
- [86:08]
A
Yeah, I like it. There's another guy that I really respect, but I guess I won't say his name. There's this among the many people that I've mentioned in this podcast that I really respect and learn from. And there's this one guy who said to me, encrypted Bitcoin is the winning meme because it's only two words. The fewer number of words, the better the meme. And there's a debate going on in zcash governance about my work at shielded labs crosslink. I don't know if you're even aware of this. This is zcash governance because it all the, not all, but a vast majority of zcashers all have to agree with one another to do a network upgrade, right? Just like in Ethereum and unlike in Bitcoin. And so we at Chilly Labs are advocating and proposing, look, we're building a thing. We recommend that all the other Z cachers adopt it, maybe in 2026, ideally, which adds staking on top of mining as a. Anyway, there's a lot of technical complexity and the folks, the, the, the. There is a group of zcashers who oppose this and the reason they oppose it, I think is mimetic, mimetic warfare. It's because they say zcash being encrypted bitcoin is the winning meme. And at least for now, having the winning meme is the most important strategy. So we shouldn't add proof of stake because proof of stake is like anathema. It's like kryptonite, it's like the very opposite of bitcoin, which is a good argument. So I'm trying some jiu jitsu over here in my corner, which is, yes, you're right, encrypted bitcoin is a great meme. And this crosslink thing, I'm going to stop describing it as proof of stake because it's not, it's not switching. Okay, this crosslink thing, I'm going to describe it as strengthening the 21 million cap. There's these things that we've been doing at shielded labs which are kind of all pointed in the same direction. They're all pretty nuanced technological things, but they all point in the same direction, which is like sustainability and like robustness, resilience, and in particular the sustainability and the resilience of the 21 million cap. So if we get that accepted by a sufficiently large consensus of zcashers, then we'll have. Zcash will have this unique thing which I love, which is it's encrypted bitcoin. It has Bitcoin's 21 million cap like, but unlike Bitcoin, it's credibly sustainable. Everyone who investigates will say, yes, I can see how that 21 million cap will endure for the foreseeable future. Whereas if you look closely at bitcoin, it is unclear how that 21 million cap is going to stay in place.
- [89:02]
B
Bitcoin will never have privacy native on chain. Zcash. Yeah, exactly. I mean, zcash was born. That is the purpose of zcash, to have privacy be a native attribute of the blockchain in the Ethereum world. There was always sort of the hope that because Ethereum is turning complete general purpose, that it would extend. There would be extensions, there would be maybe not native privacy on chain and Ethereum the way there is with zcash, but we would have enough tools or layer twos that provide that. I have to be honest, like that over the past five years that we've been kind of doing this podcast exploring, this really hasn't happened with Ethereum. I mean, it's happened in your pockets. There's Tornado cash, there's Railgun. There's some promising things. There's even more recently the Zama protocol, which uses some fhe stuff to kind of do some of this. And so you can start to see a world where you maybe kind of get it on Ethereum. But from an Ethereum perspective, it sure would be nice to have a shielded ETH button embedded in the protocol. Anoma. Is that Anoma?
- [90:11]
C
I don't know, actually showing his shirt for the podcast.
- [90:15]
B
His shirt, and it's got some numerals on it.
- [90:17]
A
I'm wearing a shirt with some symbols on it, and I think they spell anoma. Anyway, the Anoma folks gave me this shirt, and they are really good technologists and they've been really good supporters of zcash for a long time. And in fact, some of them, the ones who gave me this shirt, donated to fund shielded labs. They are among the zcash holders and supporters who support shielded labs. And they're. I really like their computer science and technology. And just recently, I think, like weeks ago, they launched a thing on Ethereum. So anyway, check it out. I haven't tried it myself, but so there's solutions like that. I'm not surprised about that. It's taken five years for a technical reason.
- [90:56]
B
Okay.
- [90:57]
A
Which is that with Turing Completeness, you can add anything, but you can't subtract information that makes sense.
- [91:06]
B
Connect those. Yeah, that makes sense. But why is that? Connect those dots for me.
- [91:11]
A
If you have a layer that exposes information about you and you want to build something else on top, if the underlying layer is still exposing the information about you, then the next layer can't fix that. It can't take that.
- [91:24]
B
So we've run into the problem that you were Describing earlier of using sort of zcash as a middle layer and why that doesn't work.
- [91:30]
A
Privacy, because like a really good mental hack is stop thinking of privacy as a thing or a quality or a level or a feature you can add. Think of instead, forget about privacy as a thing. Think about information leakage. Like your actions are getting information about you is getting exposed to other people. So adding a new feature does not necessarily stop the information from leaking. In order to do that you have to like stop using everything else. Because when you use the other thing, the old thing, information leaks. Right. So it's possible. I think I've gone around in the past and said, like, it's never going to work. Like the underlying layers will always be leaking information about you. Therefore it doesn't matter what you add on top, you're still never going to get privacy that way. And Vitalik forced me to back off on that by like arguing and showing me I was wrong. It's possible, but it's really hard. I'm not surprised. It's taken five years and isn't done yet.
- [92:28]
B
Do you think it'll come eventually? You think Ethereum will get privacy close to the level that zcash has or shielded?
- [92:38]
A
Well, zcash is also improving over time. I like the Anoma folks and they've just launched a thing which includes privacy. I don't know how it works. I like the concepts of Railgun and Tornado Cash. Like the current cutting edge within zcash is we've already fixed the blockchain level black hole and now the current cutting edge of where the privacy and security and UX problems are are in the wallets, the mobile wallets. I don't know if Ethereum people are even have even started trying to fix that level.
- [93:15]
B
It's a lot to do here.
- [93:16]
A
I don't mean to be negative. I support.
- [93:18]
B
No, we have a lot of work to do. I mean the privacy stuff is you.
- [93:22]
A
Learn as you go. Yeah.
- [93:24]
B
Zuko, this has been great. Thank you so much for joining us.
- [93:28]
A
My pleasure.
- [93:28]
B
It's just great to have you in this space. I'm so glad you've stuck around for so long. Cypherpunk values, crypto, OG and the work that you're doing at zcash is fantastic. So thank you so much and thanks for stopping by. Bang Money Zone.
- [93:42]
A
Thank you and thank you. Go convert one checking account's worth of value into Zec and store it in your shielded wallet. Not only will you then get actual black hole privacy, but you'll be contributing to a better world.
- [93:55]
C
We need a word for that. We call it going bankless, but that doesn't have the privacy aspect.
- [94:00]
B
Encrypted. Bankless, David. Encrypted meme.
- [94:04]
A
The zcashers call it zotling.
- [94:07]
C
Zoddling.
- [94:09]
A
Be a Zoddle. Go Zottle.
- [94:10]
C
Go Zoddle yourself. Right.
- [94:12]
B
Zoddle.
- [94:12]
A
Your Zach Zodlers are protecting the future.
- [94:18]
B
We got to end it there. With the zodling note. Of course, none of this has been financial advice. You know, crypto is risky. You could lose what you put in. But people can't see it if you use zcash. We are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot.
- [94:32]
A
Thank you, guys. Sam.