Forget Bitcoin. Meet Zcash I Fortune

Blockchain is like an Excel spreadsheet
that anyone in the world can add information into it. You have three columns – the sender’s address, the recipient’s address,
and how much money they’re sending, and whenever you want to make a transaction you append a new row that says this address will send this much of its money to this other address. The problem that I’m most concerned about is that the history of all those transactions is visible to everyone in the world, and so if that – if
you, if you actually rely on that for your real life like if you get paid
in that kind of ledger and then you go buy coffee you’d be revealing to the
coffee shop owner what your salary is. Every time you transact with anyone
you’re exposing more and more of the history and your behavior to more and
more people or to everyone. So in Zcash we approach that by adding –
by using encryption. Zcash is a virtual currency, sort of
like Bitcoin – in fact a lot of it is ported over from Bitcoin’s code base –
with one pretty big difference. And that is the fact that Zcash uses encryption to conceal payments on the blockchain. All important information today is
protected by modern encryption, and we use the same style of modern encryption in Zcash to protect the information about who’s transacting with whom and
what they’re doing. The interesting thing is they employ a mathematical technique called zero knowledge proofs in order to make this ledger still auditable. We can prove to everyone that a certain transaction moves money that was
correctly, like, legitimately owned by the, by the owner, wasn’t like, fraudulent, and we can prove that without revealing what’s underneath the encryption. So it proves a fact about encrypted data without opening the encryption. And so the only reason we need zero knowledge proofs in Zcash is to allow us to have encryption
and also to have a ledger filled with only valid transactions. There are lots of reasons why I might
want to be able to prove to someone that I know something without them
seeing exactly what it is. You might want to pay
your daughter for a medical bill. I want to do it maybe over blockchain technology,
and you don’t want your neighbor to see it. Using zero knowledge proofs allows us
both to understand the contents of our transaction, without displaying it – the contents –
to other parties. Jamie Dimon: There will be no currency that gets around government controls. Alan Murray: Anybody here want to take a…
an opposite view? Robert Hackett: So Jamie Dimon, the CEO of
JPMorgan Chase, has been pretty vocal about his distaste for cryptocurrencies.
He’s called Bitcoin a fraud. That being said – his company is working on
blockchain technology, which is a really promising new way to create databases. Umm… In very simple terms… Zooko Wilcox: JPMorgan and the Zcash Company
– my company – are in a technology partnership. They asked us to work with them to add
the Zcash-style encryption into the JPMorgan Enterprise blockchain. Quorum – which is the blockchain that JPMorgan Chase has built – it does not use open cryptocurrencies like Bitcoin
or like Zcash for that matter. What they’ve done instead is, they’ve taken some of the privacy technology that Zcash has
developed and incorporated in their cryptocurrency, and they’ve stripped that out and basically put it into their blockchain system. It’s a great data point showing why privacy is important, which is that privacy is necessary for
business. Because JPMorgan and the other
makers of enterprise blockchains are trying to make a technology that is fitting for various enterprise use cases, and over the past two years or so all of the people in that whole industry –
the whole blockchain industry – have come to realize that privacy is a strong
requirement – it’s an absolute showstopper. You can’t run a financial marketplace
– a real financial marketplace – where everybody knows what’s gonna happen in
the future, because literally what you are trying to, to trade on is
expectations about the future. So the more that that information is known in
advance, you end up with kind of the Heisenberg uncertainty principle of
financial markets, like it exists too quickly. So privacy is, is integral to
having functioning markets. Samuel Cassatt: If I’m JPMorgan and I’m conducting a trade with Goldman Sachs, I don’t necessarily want Santander to see my trade,
or vice-versa. While they might want certain parties, like regulators for instance,
to see the trade, they don’t want their competition to see the trade. It’s also necessary for business
for consumer protection reasons. If you’re running a large business and
taking care of a lot of people’s personal information you can’t risk
leaking that to the world. There’s also regulatory requirements
like the Health Information Protection Act, and the Child Online Protection Act, and
things like that, which specifically require that you protect information as
part of your business. Robert Hackett: Zooko is a longtime cypherpunk,
which is sort of a term that encompasses somebody who’s part activist, part coder. They tend to be pretty libertarian in their views, and have really, really strong respect for privacy, and they try to bake these into
the technologies they build. If you spend even a little bit of time with Zooko, as I had the pleasure of
doing this fall for writing this story, it becomes clear that he’s not motivated by
material gain. He’s definitely more of an idealist. Certainly working with JPMorgan
is a good business opportunity for for his company Zcash, but you get the sense that Zooko wouldn’t be working on this project if he didn’t feel as
though it had some great potential to benefit society at large. Do you know the story of the
encrypted love notes in the blockchain? Robert Hackett: I don’t… Very shortly after Zcash
launched about a year ago, after the blockchain launched,
a young woman of my acquaintance, said she had received a Zcash payment, of a tiny amount, and in the encrypted memo field there was a document. It was tickets to an event that she and her boyfriend
had been talking about going to. So it was an encrypted love note
in the blockchain! And that, that actually exists! Now I’ve never seen it,
I take her word for it. Only the sender and the receiver can see it,
but it’s in the Zcash blockchain. Robert Hackett: That’s beautiful. Encrypted love notes in the blockchain…

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