Reuben Yap on Zcoin’s privacy protocol technology

0:00I'm Ashlyn Addison from event chain for investmentpitch media and FinTech news network and today on blockchain interviews we have Ruben Yap the project steward of Z coin Ruben welcome to the show it's a pleasure to have you here today it's a pleasure to be on Thank You Ashton likewise if we could kick off the interview by understanding a little bit more about the problems that the Z coin

0:23project is solving and how the privacy protocol actually works sure so I mean we are privacy cryptocurrency and I would say most cryptocurrencies now do not have any kind of meaningful privacy and the reason of that is because you know Bill chained records everything permanently permanently and publicly that means every single transaction is you know there for everyone to see and

0:51we really think that's a real problem for many reasons I mean if you want to use business use it for business you don't want your competitors to know you know about you know who is your suppliers how much you pay your staff but even on the moral of fundamental human rights level where you don't want like you know everyone surveilling how much you have as a financial privacy

1:13right when I'm paying for a cup of coffee he doesn't even need to know how much I have or where I got my money from so the idea is that Z coins privacy first digital currency and we enable untraceable transactions we really want to we see as a check and balance between the statement and and the government as well and how we achieve this is using certain types of zero knowledge proof

1:38technology that allow people to destroy their coins and to redeem them for brand new ones with no previous transaction is that brand-new coins and that's the way we kind of we achieve privacy on our platform yeah now it's really interesting and it's funny because a lot of people that aren't really involved with cryptocurrency yet think that it's super anonymous and that it can't be

2:06traced but the fact is that you know Bitcoin and aetherium can pretty easily be traced using chain analysis so I'd like to talk a little bit deeper with Z coin and Bitcoin in aetherium which most people are familiar with are there similarities to Z coin and Bitcoin and also does eco and have or does Bitcoin and aetherium have any of the privacy features at all

2:29that that Z coin does have on I think it's first of all I mean Z coin is based off of Bitcoin base so we share many of the like a key infrastructure like you know the note code and stuff like that what's what are you saying that can they actually implement the coin privacy I think this is one of the things that is going to be very hard for them to do is

2:56probably impossible for Bitcoin to do just because they're so conservative right and once you start introducing like more advanced forms of cryptography it's going to be quite divisive because if you want implement a privacy protocols not just a is it's not just an implementation is actually needs a heart fall because you need to support special type of transactions aetherium i mean

3:23they have had they don't have it and the base layer but you can kind of do it in certain types of smart contracts but similarly they aren't using our technology they're generally using stuff like ZK stocks which we had for some drawbacks as well so I would say that none of them have the kind of privacy that we have and right now the privacy solutions that Bitcoin are having are

3:50something called coin join which is you know a bunch of people coming together and agreeing to mix their funds together which actually has been shown not to be very effective if you really want high levels of privacy so no I would say none of them can match what we have at this point in time yeah that's that's good to know and with Z coin in terms of the ease of

4:16use you know between Bitcoin having a Bitcoin wallet and being able to send Bitcoin easily to another person's Bitcoin wallet on their phones is it just as easy to do the same with coin sure I mean yes I think it's exactly the same process you know sending/receiving with our current protocol you you kind of need to burn the coins first if you want anonymous transactions but you can

4:41always do that in in advance and one of our upcoming releases is with each mobile wall and that actually it blends all your coins so that when anytime you need to send an anonymous transaction it's all ready for them to use so I would say no no particular real differences in in usability then mm-hmm that's good and I've heard you know

5:08Outsiders sort of backlash against privacy coins because they could be used for nefarious purposes or for bad reasons but Zee coin claims that you know there's potential to be used for bad but there's also a lot of potential to be used for good you know can you talk about you know why the positives outweigh any potential negatives of using this kind of technology yeah I

5:31mean first of all you know privacy and encryption in general has always you know sometimes people paint it as something negative right and I guess the the most common argument is that I have nothing to hide why why should I be afraid you know don't I trust the government well first of all that's a big question mark but the other thing is that you know who said that it was gobblers who's

5:58one of the the head of the Nazi propaganda the idea is that you know first of all privacy is a human right right I would say it's a fundamental human right and it I feel that and we should be we should have ability to control what we wish to review to the world and if you take a look even at those people use privacy coins or those

6:25that use toy enjoy and also of coin mixing services the vast majority of them are for legitimate transactions I mean it's shown in a block scene analysis companies that seem very very feel like paint that funds hacked funds you know I actually using this type of assistance we should go to show that most people just want privacy you know it's not not about like hiding illegal

6:53activity and even if you want to go down that path um you can do money laundering and all this often using existing Fiat methods very easily as well like you know I would say 70% of money laundering from developing nations are done using trade based money laundering which is pretty simple to do so why would you bother with something like cryptocurrency so more importantly I

7:18hope people realize that it's not about seeing something to hide right but can you imagine like a company or government or authority or even just a nefarious like very well-equipped party being able to say oh look you know Ruben you have a thousand Bitcoin I know I'm gonna point a gun to your head I think that's a real problem right I don't think we should be

7:44giving up data willy-nilly and similarly you're not gonna give your bank statements to everybody I mean cause of the public nature of blockchain which is not just to someone you know it's to everyone we really need tools like this to protect and I guess the last point I would like to make is that if you do believe in the actual original like precepts of of cryptocurrency which is

8:11to be uncensored right and at birth any sort of power you can't be unsent through it but if you don't have privacy because you know basically I know it is I can point a gun to your head I do think that to be uncontrollable to be uncensored privacy is a necessary element and I think we should really move away from talking about whether it's height from from illicit activity

8:35because yeah honestly the the data shows that is not really the case yeah yeah yeah and part of maintaining your privacy is using this technology that's integrated into Z coin called zero knowledge proof now a lot of people have heard this word but may not understand exactly how does it work in maintaining the privacy but being able to make a transaction sure zero knowledge proof is

9:03just a type of like mathematical proof and the basic idea of zero knowledge proof is the proof that you've done something without giving any other data beyond the fact that that that thing is true so for example in NZ coin the fact that you burn coins and redeem them for brand new ones you have to prove to the network that you burn coins but without

9:28doing the exact coin that you burn because if you're showing that oh when I'm really me I'm gonna redeem this exact one that I burnt then there's no privacy there so the the beauty of this particular zero knowledge proof is to prove that yes I'm one of these people who burnt and and the basic idea of zero knowledge proof is to prove something without giving any other edition of data

9:50the user doesn't actually have to do anything on the tax that happens on the back end but and I also would like to clarify that you know zero knowledge proof is not just one thing there are many types of zero knowledge proof and in particular the proofs that we use is actually something called one out of many proofs and the most other popular one that is in use today some Nicholas

10:15II case nots which is to use in Z cache so please don't get confused there are many ways to use zero knowledge firs and many types of zero knowledge proof yeah well thank you for that and I guess part of the next step for mainstream adoption or one of the major steps is having the scalability of the network being able to do thousands or tens of thousands of

10:38transactions at the same time so that many people around the world can transact and this has been a major problem with Bitcoin and aetherium having low transaction volume you know scalability limiting their growth can you talk about have you overcome the scaling you know problems within those block chains and are you able to bring this to a level that would be possible

11:01to have mainstream adoption sure I mean first of all you based off a Bitcoin call so you know any problems that Bitcoin faces we do face as well I do I mean this is I guess it's a bit of a controversial view even at in its current state right you know bitcoins scalability is kind of artificially limited with the 1 1 megabyte block size right it's like you

11:28have a fixed bus and obviously the transactions only can fit in that and obviously the easy way to do that is to to increase the blockchain size of all arrange them more efficiently the coin even currently can do like you know four times the transaction volume of Bitcoin we can easily bring at the 8 times 10 times or so now this is not to say that this is a sufficient for like full-scale

11:54use and of course you know things other stuff like lightning and we also have other stuff like you know a potential use cases like avalanche and all this type of technology is that with you know a long greater scalability but really right now the problem of privacy's today like we have that problem now honestly the scalability if here is something that you know maybe you're

12:18five or ten years out and we have to really focus on the problems that we have today and we are the experts in privacy so we decided to focus there but yeah but another cool thing is that our privacy our transactions we do have optimizations whereby instead of verifying every single transaction we can batch them together so that we only need to do part of the work and and then

12:44the rest is like really really quick so we do have stuff in definitely scalability is concern for us but you know right now we feel that privacy is a bigger issue mm-hmm yeah that's good to know and you're right you don't need it overnight because there is sort of a gradual increase in adoption and it doesn't always happen overnight but one of the things when you continue to scale

13:06do you see a trade-off between you know increasing scalability but also maintaining a level of decentralization and also making sure that the privacy functions work with the scalability as well is there like a three-way trade off there yeah like would be quite the trilemma like that well first of all generally privacy technologies do come at a cost right

13:29because the transactions that you verify are much more complex because you have to verify the zero knowledge proof so there's additional lag for the computers to do so it does affect it a bit but I mean at current scales or even at four times the current scales that's not going to be in an issue in sense of decentralization I think that's a really good point because obviously there are

13:56many many projects that say that oh we have like you know how many thousand TPS and stuff like that and then you realize that is how they achieving is only having a couple of notes validate so that's like a real centralization if I'm only going to trust five notes to to validate everything obviously it's going to be faster than what you need a blockchain right yeah um I mean stuff

14:21like avalanche you know although it's not been deployed in the Wow yet I do think those actually scale even as you add more notes even as you add more transactions so those are really really interesting protocols I mean avalanche isn't the only one but I do think that's really good I would say that there is definitely progress in that area so I'm pretty sure that this is something that

14:48is going to be solved within the next couple of years yeah that's great and if there are viewers that are looking to follow along with the updates for Z coin or start getting involved in the community what's the best way for them to reach out and learn more sure our websites as Eko in the IO with all the community links I think I'll guess a most active community channel is Z coin

15:12project on telegram and that's bridge to everything else like a discord and an ir ser matrix service so we also pretty active on Twitter with Z coin official so yeah those are the best places great well I will leave those links in the description box for the viewers thank you so much for the time Reuben that's all the time that we have for the interview but all the

15:34best with Zee coin moving forward and let's follow up in a near future thanks so much Ashton