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Peter McCormack: Hi Zooko, how are you?

Zooko Wilcox: Hi there, Peter. I’m good. How are you?

Peter McCormack: I’m doing pretty good. Thank you. It’s nice to finally talk to you. We have been Twitter friends for a few months now so it’s nice to finally talk to you in person. I’ve been going through a journey with this podcast where I’m becoming more and more of a Bitcoiner.

Zooko Wilcox: Yeah. I kind of noticed. I’ve listened to a couple of your podcasts.

Peter McCormack: All right, cool. Well, I’m not completely closed yet. I still own a bit of Mineiro and I followed your suggestion. I added a Zcash [inaudible 00:00:33] to my website because I do want to have a play with it. I do want to see what it is about and I am here to learn today. But I do want to go into the background a little bit because in doing my research I’ve seen that you obviously have a cypherpunk background. You’ve been involved in this for a long time, way before ZCash, so Zooko, can you give me your background?

Zooko Wilcox: Well, I’m 44 years old. I was born in 1974 and, well, I guess really the real back story is that I was like 15 or 16 years old when the newspaper headline came out because we didn’t have the internet back then, and the newspaper headline said the Berlin Wall had suddenly been toppled and East Germans were free to travel to West Germany, and that was the thing that happened. It’s a cusp of my coming of age and having opinions about the world and theories about the future and stuff.

That seemed really momentous to me, at the time, someone named Fukuyama wrote a book that I never read but I heard people talking about called The End of History.

Peter McCormack: Never heard of it.

Zooko Wilcox: Ah, well, a lot of people during that moment had, including me, 16-year-old me, had a sort of utopian vision of major patterns of war and oppression finally being eradicated and allowing humanity to flourish as it deserves.

Yeah, so that seems like the advent of systems of oppression losing their grip and borders no longer being walls, the jail cell walls that keep people in or out. Then, the next thing that happened was to me, in my life, was about two years later when I discovered the internet. You could email or FTP or telnet to anywhere in the world. You couldn’t World Wide Web yet and it seemed to me to be all part of the same pattern.

It said to me that national borders were no longer barriers to communication because, you’re probably not old enough to remember but back before the internet, you didn’t really talk to people from other countries and you didn’t really read their newspapers or listen to their pop songs. Well, maybe pop songs on vinyl records getting smuggled in or whatever, but you didn’t have friends or playmates or business partners in other countries for the most part, except for a couple of multinational corporations who had learned how to exploit that special advantage. I thought that was really important.

Peter McCormack: I remember that. I’m only four years younger than you. I’m 40.

Zooko Wilcox: Well, you look young. Back then, you had to pay a permanent charge to make a long-distance phone call, much less an international phone call, that would be much more. I thought that was really important. I thought that there are billions and billions, there were only like five or six billion people on the planet back then, and I thought there are billions and billions of people and everyone has the potential to help every other one, and that scalability that superlinear increase in human potential and mutual aid is the most important thing that could possibly happen at this stage of our history in our evolution.

Then, the next thing in my life was probably like one year later when I discovered some science papers about cryptocurrencies. I fell down the rabbit hole as we all do when we find out about cryptocurrencies. Well, I did that in about 1993 and I started skipping class and sitting out on the lawn at CU Boulder in Boulder, Colorado reading these science papers about how to have digital money, because it seemed obvious to me that with political freedom and with informational freedom, the next thing we needed was economic freedom in order to be able to assist each other.

We can help each other a lot just with words, but we can help each other a lot more with resources and committed, like engagements like relationships contracts, charity, et cetera. That’s how I got started. I was about 19 years old I think when I fell in love with what would later become Bitcoin.

Peter McCormack: That is kind of interesting because you’ve lived through the pre-Bitcoin era.

Zooko Wilcox: Oh, yeah.

Peter McCormack: All the original ideas. All the original cypherpunk community, am I right in thinking you worked on DigiCash?

Zooko Wilcox: Yeah. I was totally in love with the idea of DigiCash, that was the science papers were mostly written, those ones that I was so enamoured of were mostly written by David Chaum and co-authors, other great cryptographers of the era.

Peter McCormack: I met David.

Zooko Wilcox: You met him?

Peter McCormack: Yeah. I met him in London a few months ago, a very interesting guy. I think I got the feeling from him almost like he is very important in the history of Bitcoin, but like the whole Bitcoin, this thing has kind of passed him by?

Zooko Wilcox: Yeah. Well, he’s now joining the whole Bitcoin thing apparently because he has some kind of a startup. I don’t know much about it. There’s so much going on. I can’t keep track of everything.

Peter McCormack: DigiCash.

Zooko Wilcox: You said, “Did I work there?” Yeah. I dropped out of school because they offered me the job of like junior encoder, and I was terrible at school anyway because I was disorganised, I’m procrastinating, and I was depressed, and had a bad diet, didn’t sleep at night, played too many computer games, and I was doing a terrible job of learning anything or getting my degree.

One of the best decisions of my entire life was dropping out of school to go work for this startup, chock-full of the some of the smartest cryptographers of the world.

Peter McCormack: What went wrong with DigiCash and was it kind of obvious to you that it wasn’t going to succeed?

Zooko Wilcox: When I started, which was in early 1996, I and a lot of other people around the world thought it would succeed because back then, we thought that there was no other way to have commerce on the internet. In 1996, we had developed the World Wide Web, and so, now it was possible for people who weren’t computer programmers to communicate and use the internet for the first time and, but most people thought that you couldn’t use normal old commerce like credit cards and your national currencies and checks, that’s how we bought things back then and paper cash.

None of that was going to work on the internet so we needed a new form of payment so that we could have the commercial version of the internet, and so, a lot of people thought that DigiCash was the leading technology to take that role. Now, it turned out, a couple of years later by the time I left the company, that credit cards worked just fine even though they were insecure, it wasn’t private in a lot of important ways. It wasn’t secure. It wasn’t convenient but that was good enough for internet commerce to take off during those years and leave DigiCash in the dust.

This is a lesson that I still, that I took to heart and still remember ever since. Whenever I hear people saying, “Our thing. Our technology or our social movement or our ideas or whatever it is. Our thing is so good, so much better than the alternative and so important and so necessary that eventually, everyone is going to see our way.” Whenever I hear that it reminds me of what everyone said in 1996, when I joined DigiCash, that we were destined to be, to provide this important necessary service because it was the obviously the best way to do it.

I learned the hard way that a worse way to do it can totally be the way that everyone ends up doing it, and so, if you’re saying to yourself or if you’re saying to each other, “We’re going to win because our way, our thing is obviously better.” That’s a warning sign. You should raise a little red flag in your mind, and say, “Wait, what did I just say?” Where is it going to lead us if we believe that? I think it will lead you to failure.

Peter McCormack: Okay. DigiCash ends and there’s a gap between that and the arrival of Bitcoin, so what were you doing in between and were you aware of Bitcoin from the point it was announced?

Zooko Wilcox: I think I’ve heard about it on the cryptography mailing list where Satoshi posted it. A lot of the people on that list, I gave a quick read through of the white paper, and said, “Yeah. It’s really cool but this will never actually work in practice. It’s fundamentally not going to work.” I then wrote the first blog post about Bitcoin on the internet like a month later or so, and Satoshi thanked me and linked my website from the original Bitcoin.org website.

In the interim, I worked on some other privacy-enhancing decentralisation technologies. I went through the dot-com bust in 1999, 2000, which was a great practice run for the crypto bust that we’re going through right now, so I learned some more hard, I learned some more lessons the hard way, which I’ve taken to heart and continued to benefit from.

Then, there was the long like what was effectively the dot-com winter, right? Like a multiple year stent during which it was hard for me and anyone to get work at all to take care of our families and there was a lot of sort of disillusionment with the promise of the internet and the promise of these new technologies. There was a lot of like mockery like [inaudible 00:11:48], that whole thing. The whole internet business idea, especially some of the things that were dearest to my heart the whole time which was freedom of speech, privacy, decentralisation.

Decentralisation of power, I mean, decentralisation of political power, consent security all of these things were really important to my heart and during those years I kind of felt like everyone else either pivoted away or lost interest or changed their minds or whatever and this guy Scott McNealy who was a big deal in Silicon Valley for a couple years said, “Privacy is dead, get over it.”

I felt basically I couldn’t find anyone else who disagreed with it besides myself so I felt pretty lonely, and then, it was more or less just Bitcoin that single-handedly turned that around because bitcoins, the fact that Bitcoin did work in practice despite all the experts like me saying that it could, that’s what caused people to care about privacy again. I think that’s really interesting. I’m not sure what happened there that sort of a demonstration of feasibility is what got people excited and got like a whole bunch of different people who all cared about the same stuff to come out of the woodwork and meet each other and realise they had this in common and turned into a movement.

It wasn’t, in the other order, it wasn’t like a whole bunch of people who cared about this stuff got together and said, “We all are going to cooperate, we care about this stuff. Let’s find some way to make it happen.” Instead, Satoshi gave us the way in the first place and that’s how everybody met each other.

Peter McCormack: Why did Bitcoin work then?

Zooko Wilcox: Why did it work? I’m still not convinced it works. It’s only worked for like 10 years, come on. It’s a blip. It’s a fluke.

Peter McCormack: Why has it worked so far then?

Zooko Wilcox: Yeah. That’s a good question. Well, I mean the specific things that I thought wouldn’t work about it were technical details about the consensus algorithm, clock synchronisation, the game theoretic reasons why different participants like miners and full nodes would or would cooperate with each other, and that’s what I’m still not sure actually is going to continue to work.

A lot of other people had different reasons, not cypherpunks so much but more like an economist and other thinkers. Once they found out about it a few years later after it had been working for a few years in practice, then they said this can never work for their economic reasons like because we need some wise man to or wise woman I guess to steer the economy or press the accelerator and the brake on the economy, which I think is a stupid analogy. It has nothing to do with a real economy.

I remember there’s this hilarious quote, hilarious to me quote from Nick Szabo, he said something like, “I was told frequently and was …” I forget this is not a quote, this is a paraphrase. “I was told frequently and with great confidence, that money could not possibly work like that.” I love that part because both, the network security, game theory, consensus algorithm part, and the money part could still fail but having worked for 10 years is a great data point.

Peter McCormack: How involved are you? Did you contribute to the code and the community? How involved were you with early Bitcoin?

Zooko Wilcox: I contributed to security. I read some of the source code looking for security problems, found one, reported it to the then maintainer, Gavin. I wrote quite a few blog posts. I think there may be dead now because they were on Google+ and I haven’t gotten around to backing up my Google+ and apparently they’re taking down Google+. Anyway, but I wrote, I was somewhat active on blogs mailing list Bitcoin talk, contributed to the original Bitcoin foundation, which was some of the worst money I ever spent.

Hopefully, no Bitcoin foundation people hear me say that listen to your podcast. I went to conferences and I hung out on IRC a lot. I guess Bitcoin-Dev IRC and express my opinions about technical stuff with the other hackers who hung out there. Stuff like that. I never contributed any patches that got accepted into Bitcoin core yet.

Peter McCormack: Okay, but you were there and you’re part of it but before we start talking about Zcash like what is your view on Bitcoin now? Can you summarise for me your main kind of thinking that you have a Bitcoin right now, your interest or your disinterest?

Zooko Wilcox: My overall thinking is that Bitcoin itself was unique, right? Do you know the word sui generis? I love this Latin word. A sui generis is an animal which isn’t one member of a species, it’s the only member of its species. Like a mythological beast like the Hydra or something. Bitcoin was unique when it was born and like I say I think it’s a miracle and amazing if it worked because something so creative and out there is almost guaranteed to fail the first few times, and it’s like you got to take many struts at it before you get lucky and hit the target.

When I think about it now after 10 years and the evolution or hardening that it’s undergone is that it’s pioneering a really important part of the design space, which is the maximally predictable part of the design space. There’s a huge amount of value in that. I appreciate that Bitcoin does that so that Zcash doesn’t have to as much. People who want a maximal predictability can rely on Bitcoin for that in terms of the blockchain owning the tokens, the coins themselves, making their plans around the like what’s Bitcoin going to be like in four years.

Of course, we might be really badly surprised by Bitcoin doesn’t change but the world around it changes, and then, turns out it’s not going to operate the way we thought it would operate, but at least you can factor out the question about how the core protocol is going to change and maybe to some degree the culture because it’s such a large culture now and larger cultures I think can change more slowly or more diverse cultures.

Anyway, I really appreciate that so that Zcash can explore a more dynamic spot in the design space.

Peter McCormack: Why Zcash then? Why did you not just dedicate yourself to Bitcoin? Why did you decide actually you wanted to do something else, you wanted to do Zcash?

Zooko Wilcox: What came out of the science and the technology, I have been a technology system scientists all along, and I and a lot of bitcoiners thought from the beginning that privacy was really essential and that the first version of Bitcoin wouldn’t measure up to that need. Like Hal Finney, who was a friend of mine and I miss him and Satoshi and a lot of others talked at some length about the privacy problems in the Bitcoin design and how to mitigate them, but there was, in my opinion, at that time, like nine years ago now.

My opinion at that time was that there’s basically, and it’s still the truth. But lets like rewind into history because you’re asking me what was my motivation, how did I start working on Zcash? The answer is privacy and decentralisation were basically the two features of Bitcoin at the beginning. That’s why pretty much 100% of all the people who cared about Bitcoin and even knew what it was why they cared about it.

In fact, nowadays, my perspective is or maybe this was true at the time, I don’t remember, but my perspective is the privacy and decentralisation are basically the same things as each other. Like if you have sufficiently strong privacy that causes decentralisation and if you have sufficiently weak privacy then that causes centralisation because whoever is the most powerful organisation in your area can just say, “Hey, we’re watching and you don’t want to do stuff that we don’t like.”

That means their, the central controller of what everyone does, so I think privacy and decentralisation are pretty much inseparable. One of the reasons why Bitcoin might fail in some ways.

Peter McCormack: Because, sorry. I don’t understand. It might fail because of what?

Zooko Wilcox: Because it has such bad privacy properties that it might, it’s going to be increasingly possible for power mongers to control what everyone was allowed to do with it.

Peter McCormack: How?

Zooko Wilcox: Well, if you want to ban books, you don’t do it by like intercepting shipments of books and grabbing them before they reach like your border or whatever. What you do is you just let everyone know certain books if you’re like found with them or if people hear or see that you’ve been reading those books, we’re going to know about it and you don’t want us to think that of you or you might suffer consequences. That’s how you ban books in practice.

Privacy of who finds out what you do and really importantly, whether you get to choose who finds out or whether you don’t. That’s just necessary for decentralisation of power. Does it make sense? That’s my opinion.

Peter McCormack: Yeah, kind of. It depends what you say failure is or what fail is.

Zooko Wilcox: Yeah. I used a trigger word. It was a loaded word, right?

Peter McCormack: Yeah. It kind of is because like what does fail mean, does it die and miners give up and block don’t get created? I don’t really know what fail is but I kind of understand your point. Okay, so-

Zooko Wilcox: Well, let’s rewind because I was saying that in 2009, Satoshi and Hal and I’m, I don’t want to speak for anyone else, but I was pals with a lot of the Bitcoin core devs on IRC even before they, and I got into Bitcoin, and because we worked another open-source hackery together and I’m basically going to say that until many years after Bitcoin launched, privacy was universally I understood to be one of the essential purposes and features of the whole thing by everyone involved.

Satoshi and Hal talked about whether it would be possible to use some form of encryption to protect people’s information when they were using Bitcoin, and at that time, in 2009, when they were having this conversation, it wasn’t because the sufficiently advanced cryptography had not yet been discovered.

I’m trying to answer, this is a very, very long-winded answer here to your question of how did I get started on Zcash? The answer is some scientists discovered a way to add privacy into an open public ledger, and then, they asked me to productise it and make it full scale and reliable for the whole world. That’s how I got started. Oh, and one more detail. They gave a talk about this innovation, which at that time was called Zero Coin, it was a science paper.

They gave that at the 2013 San Jose Bitcoin Conference, which is just basically like the first, it wasn’t the first conference, but it was kind of the first big conference with a whole bunch of sort of outsiders, venture capitalists, and it was the first one I attended. The scientists who come up with Zero Coin gave a talk about their idea and it was presented as an extension to Bitcoin.

It was the whole science papers written like take Bitcoin, make these changes to it, and then, you could have privacy integrated into your Bitcoin. Some of the Bitcoin core devs who were also presenting on other topics at the same conference, and I forget who it was. I know Greg and Luke Jr. were there. I know Peter was there. It’s when I met at least two or three of them for the first time in real life.

But someone from the Bitcoin core dev team made a statement during like at the end of their presentation, they said, “Oh, by the way, we’ve been hearing a lot of buzz about the Zero Coin proposal.” It was true because like I said like literally everyone, maybe by now it’s not everyone. This is 2013, maybe there’s like 5% at the people at the conference you don’t care about privacy, but a lot of people basically cared a lot about privacy and there’s a lot of a buzz about the Zero Coin proposal, and so, the Bitcoin core dev whoever it was said, “By the way we’re hearing a lot of buzz about this proposal to add this new feature at the Bitcoin. We just want to be absolutely clear, that’s not going to happen anytime soon. We’re not going to support putting this radical experiment, this whole new thing right into the core protocol. The message size is like 40 kilobytes for every transaction, we don’t know if that would work. The coin is too important to be experimenting on like that.”

Instead they should take this idea and deploy it in some kind of alt clean like Litecoin, and then, if it works there then we could consider upgrading Bitcoin after we learned from that, which is one of the first good signals of this thing that we talked about it earlier about how Bitcoin has gotten very, very stable and like conservative and reliable or like predictable.

Anyway, that’s how I got started is that the Bitcoin core dev said they weren’t going to support modifying Bitcoin anytime soon, and then, the scientists after a couple more science innovations they had to come up with, ask me to productise it. That’s how we got started.

Peter McCormack: Would you say that Zcash is superior to Bitcoin and that is obviously a loaded question?

Zooko Wilcox: Yeah. It’s another like trigger word loaded question. It’s at a technology level its kind of like got one more feature and most of all the features that it cloned off a Bitcoin in the first place, but more importantly at a might culture and network level, they’re different. They’re exploring different parts of the design space, right? Because Zcash has regular network upgrades in which everyone has to upgrade if they want to use the new rules and Bitcoin explicitly doesn’t do that so it’s a lot more long-term predictable and changes a lot more slowly at that layer like layer one.

Zcash changes faster at layer one than Bitcoin does but probably slower than Ethereum does.

Peter McCormack: Right. Is Zcash a company then?

Zooko Wilcox: That’s a good question. You’re asking really good questions. I really appreciate having this opportunity. There’s a company that we’ve been calling the Zcash company but that’s confusing and we’re going to rename it. It’s the legal name if you want to look it up and like the Secretary of State or whatever is the Zerocoin Electric Coin Company and that’s in, that’s not Zcash, right?

It’s like asking it’s like somebody coming along from outside and they mistake Blockstream for Bitcoin. They’re like, “I want to talk to the CEO of Bitcoin.” That’s kind of a similar mistake. The Zerocoin Electric Coin Company of which I am the CEO is far from all of Zcash. For one thing, there’s a whole bunch of open-source hackers and other companies around the world that support Zcash in various ways.

For another thing, there’s a non-profit foundation, which is separate from the company that’s called the Zcash Foundation that supports Zcash in different ways. No, it’s not a company.

Peter McCormack: It is not a company but from an outsider, someone like me there appears to be an intrinsic link between the protocol and the company.

Zooko Wilcox: Yeah, there are two intrinsic links. One is the founders reward where the consensus rules send money directly to several different parties including the company and the foundation and a bunch of early founders, so that’s on like a financial funding link, which is super important because your funding I think strongly influences your course over the long haul over multiple years, and the other link is just that the company is the most organised and vigorous writer of software.

The company has authored almost all of the patches that have gone into the mainline like reference client, Zcash the primary client that everyone runs. Now, there’s recently been a project launched by the foundation and Parity, that Ethereum company, Parity. They have agreed to make a separate independent client so they succeeded that and I know that their GitHub has been active so they’re actually doing something but I haven’t tried it yet or anything.

If they actually succeeded that, that will really change this, but currently the Zcash company is super important because we’re the only ones that implement and maintain and upgrade the core implementation.

Peter McCormack: Right, so if something was to happen to the company then the protocol would, what likely die?

Zooko Wilcox: Oh, I totally disagree.

Peter McCormack: Oh, okay. What would happen? Would it just open-source into the community?

Zooko Wilcox: Well, there’s already a community. They wouldn’t stop I don’t think if the company like imploded. We might actually stimulate more energy because it could be, there’s sort of a crowding out concept, which is if everybody thinks you’re going to do a thing then nobody else is going to start doing it. But even, we don’t even have to speculate about what would happen if the company were to turn evil or get bought by Microsoft or whatever, because we can already see that there are a bunch of other things outside the company like there’s a wallet, which they have a new release with new user-visible features like Tor integration and other kinds of like cool-sounding features like every month I think pretty frequently.

I mean, you might be right like Zcash might die, Bitcoin might die, might not, hard to tell about the future.

Peter McCormack: If the founders reward is used to support the company, does that put an additional downward pressure on the price because I’m guessing that the founders reward is kind of cashed in monthly and when Zcash is at $50 as opposed to $800 then there is additional pressure to sell it, then if more is being sold by the company that is being bought to be used then this puts additional pressure on the price. I mean, I don’t trade anymore so it doesn’t really affect me but it will affect others.

Zooko Wilcox: I read your story about trading and mining, that was amazing, man.

Peter McCormack: Yeah. Oh, God. Yeah.

Zooko Wilcox: Thank you so much. I really appreciated you being able, being like willing to be transparent about your own experience, like you’re exposing yourself financially and emotionally to the public and I really appreciate that because that kind of like so many things like that have happened to so many people but almost nobody wants to talk about it and that means everyone else doesn’t get to learn and understand and sympathise with people.

Peter McCormack: But people are talking about it now.

Zooko Wilcox: Maybe partially you’ve inspired them.

Peter McCormack: Yeah, but maybe. Do you know what it was? I said about this before and people are like, “Oh, you were so brave.” But I never felt like that. I just felt a responsibility because I have a podcast and I’ve talked about trading before. Back to my original point.

Zooko Wilcox: Yeah. Your question was just the selling of them, does the founder’s reward put downward pressure on the price? That’s great. I love these questions. This is exactly the kind of stuff I was hoping for because these are questions that a lot of people seem to have based on like Twitter, based on me reading Twitter, and so, I’m glad you bring it up, but I think I totally disagree. I think it doesn’t make any sense at all to think that because the founder’s reward, so what we did is we took, we cloned Bitcoin, right?

We said, “So, in Bitcoin, there’s 100% of the coins, it’s like 50 coins every block and there’s a block every 10 minutes for the first 4 years, and we cloned that.” Then, we said, “But instead of coins 50 every 10 minutes, it’s going to be 40 coins every 10 minutes to the miners and 10 coins every 10 minutes to the founders.” Now, why would you think there would be in a higher sell pressure from founders than for miners?

Peter McCormack: It’s a fair point. I hadn’t really thought about it like that.

Zooko Wilcox: I think it’s the opposite. I think I can, I mean, mostly the founders are not me like probably 90% of the founder’s reward, I don’t even know what happens to it because it goes to other parties that I have no insight or control of. But I’m guessing based on who they are and what they say that they’ve probably sold very little of it ever. It’s my guess.

I think it’s quite the opposite. I think miners have to sell because they have expenses as you well know. Founders maybe don’t, so I think it’s the opposite, but also I think it shows, I think the question itself the fact that so many people on Twitter have this question. I think it shows a real misunderstanding about the founder’s reward. I think they basically are thinking because there’s this founders reward, there’s more issuance, whereas if you think about it as the same issuance but part of it goes to founders instead of going to miners then that totally changes your thoughts about it. Do you know what I mean?

Peter McCormack: Yeah, and really crossed my mind like that. The other thing I’m considering that this bear market has been rough, right? We have seen it with Giga Watt going bust-

Zooko Wilcox: Oh, hell. Yeah.

Peter McCormack: … Bitmain not looking great, ShapeShift has had to lay off a bunch of people. I mean, ultimately, I think it is healthy but I guess there must have been some impact on the company as well, right?

Zooko Wilcox: Oh, yeah.

Peter McCormack: Because if Zcash is your funding a bit like … Sorry to compare you to Ripple coin, but they are funded by selling XRP, right?

Zooko Wilcox: Oh, yeah.

Peter McCormack: Their major source of funding, so I guess if your company’s funding is from the founder’s reward, and the reward is getting lower, it must put additional pressure on the company, has it?

Zooko Wilcox: Yeah. Oh, for sure. The company is funded entirely … I mean, we originally raised $3 million way back in the day from these private investors to get started and hire engineers and build it in the first place, but that’s long since run out. We had spent most of the three million before it even launched, so we’ve been depending on the part of the founder’s reward. I call that part the dev fund because like I say 80% goes to the miners, like about 15% goes to reward early founders, like scientists, employees, advisors, early employees, stuff like that.

Me, I’m one of those, but I get like 1%, so 14% … I get less than 1% so like 14% for all of the other early founders, 1%, less than 1% for me. 2% or 3% for the company and that’s what I call the dev fund and 2% or 3% for the foundation, which actually is a pledge from me and a few other people, but I had the most so when I pledged to send half of mine to the foundation that was the most.

My point is, yeah, the company is totally depending on this 2% or 3% that it gets every month, every block from the founder’s reward. Now, we’ve basically looked out or maybe I should say, we were very prudent because like I said I went through the dot-com boom and bust, and there’s a lot of experienced people involved in the Zcash company who either was there or have learned carefully or both.

We didn’t ramp up as high, we didn’t increase our spend nearly as much as most other projects did. I remember I went to some conference two years ago maybe where Ripple was there, and their whole pitch, their whole speech, I forget who that guy was, but his whole speech was like, “We have this giant office in San Francisco and we have like 135 engineers who were improving it every day.”

I was really intimidated. I was like, “Oh, fuck. They have so much money. If they have like as much money, they can do whatever they want and I just got like these 15 coders and me and a couple of marketing and admins.” I was kind of intimidated, but anyway, the bottom line is we have not, we operate pretty efficiently so we can endure crypto winter as this with our 32 employees and keep doing what we’ve been doing, which I’m really proud of both parts.

We don’t have to do layoffs, which is really great for the people who would otherwise have to be laid off, and the rest of the community can depend on the company to keep doing the kind of innovation that it has done until the founder’s reward runs out. That’s a different question.

Peter McCormack: All right, well, listen, look, I’m not going to go into the tech. I think this has been covered well, and you did a great show with Laura Shin and I’ll share that on the show notes if people want to find out more about the tech.

Zooko Wilcox: Okay. Well, allow me to just say the tech is awesome. We have done such a fantastic job. It’s absolutely the best. It’s the only time that that level of sophisticated new science has been productised and deployed to this large number of people so reliably in so few years basically ever.

Peter McCormack: Yeah, but the most important thing now is to explore adoption because, look, you can you have the best tech in the world, if there’s no adoption this is kind of meaningless and like I did in Ethereum show, I did an Ethereum interview recently and I read a whole bunch of stuff about Ethereum too and if they can achieve their technical goals, if they can solve these technical problems and the level of computer engineer required is insane, but it means nothing if all it can do is issue a stable coin, but who is the target user for Zcash because I’m looking at adaption, right?

We have Dai which appears to being used. Okay, so we have that. There’s Augur with a small amount of use, and there are some random stuff on EOS but I don’t really care about that.

Zooko Wilcox: What was the other thing before EOS?

Peter McCormack: Augur

Zooko Wilcox: I don’t know what that is?

Peter McCormack: You don’t know Augur, the betting app?

Zooko Wilcox: Oh, yeah. Yeah. The betting thing. Yeah. But it has very low usage, right?

Peter McCormack: Yeah, very low usage and they apparently have fudged some of the figures. Have they or somebody else has, I don’t know. I read about that. Bitcoin is being used to a certain extent, probably the most of anything. I mean, I use it yesterday on Bitrefill to buy my son a PlayStation voucher and I guess Monero is being used to like a limited amount in some dark markets, so there are some use cases but I haven’t seen it with Zcash, probably because I’m not close to it, but who is the target user of Zcash and what would they use it for?

Zooko Wilcox: You’re asking currently, who currently uses it or who are we designing it for the future adoption?

Peter McCormack: I think both questions are valid.

Zooko Wilcox: Yeah. I love that question. Once again good job on the questions. Dark markets are a lot more Bitcoin centric than Monero, right?

Peter McCormack: Of course, yeah, but that is the only use of Monero that I am aware of. I’ve also read about these drop gangs.

Zooko Wilcox: Oh, that was baloney. That was like speculative fiction or design work. That thing doesn’t actually exist. It was presented as though it actually exists but it was like hypothetical in my opinion. I don’t think that really happens yet.

I’m looking at my dashboard on messari.io which shows a whole bunch of blockchain statistics. I’m looking at what they called known payments, which is messari.io’s measure of financial transactions on a blockchain, and they say, “4660 per day for Monero right now. 340,000 per day for Bitcoin right now and 210,000 per day for you Ethereum right now.”

All right, so on there, there’s a thing called known payments and this is misari.io attempt to count the number of like a financial transaction. It’s not like computer transactions on a blockchain, so that’s why Ethereum they figure there were 210,000 Ethereum payments just in the last 24 hours but there were a lot more Ethereum transactions which were just like whatever smart contract API calls or something that weren’t payments.

Peter McCormack: You’re number 10 in terms of payments so I am looking at this for Zcash, it says 33,205 but what makes up those?

Zooko Wilcox: Yeah. I don’t know. That’s a really good question. I think a lot of it must be mining because there are a lot of Zcash miners. There were a lot more. There were probably 10 times as many Zcash miners before the [A6 00:43:41] kicked in last summer, but this number didn’t fall by 10 times when the mining, the number of miners fell, I estimate 10 times. I don’t know how far this number fell last summer.

Peter McCormack: Ah, it feels a little bit like when I had my web agency and we used to look at page views, it feels a bit like a vanity metric. I wanted to know where people are actually using this and who should and who could as adoption is a problem across the space.

Zooko Wilcox: Yeah. There are a whole bunch of like shops who care about privacy and decentralisation who accepts Zcash in return for their goods and services. There’s this community thing called Pay with Zcash. I don’t know who it is, but there’s somebody out there called whose name is Pay with Zcash that monitors all the shops around the world that accept Zcash payments. You can check them out, but I don’t imagine there’s that many. I don’t think there are 33,000 payments a day to those shops.

I know that Zcash is one of the most heavily traded coins in OTC markets like these big private traders like Circle and Galaxy and whoever else, because we talked to them and they say that Zcash is like … I think what they say is it’s one of the top five most frequently traded or most heavily traded coins in their books. But I don’t know. Maybe most of its mining. There’s still a lot of Zcash miners because it’s still one of the most profitable coins to mine overall worldwide.

On this list, if you still have that Masari thing open, there’s a really important number which is new issuance 24-hour USD. I basically think that’s the number one most important number because it’s the hardest to fake. It’s the hardest for it to be off for some bizarre reason like or somebody’s left a bot running that generates 10,000 transactions a day or whatever, right?

It’s the hardest for anyone to fake, misreport game, fake, whatever, and so, it says that Zcash is worth, it says that every day there’s $400,000 worth of Zcash that’s either mined and sold or mined and held, which basically makes it, it’s been basically tied for third is what, for the years that I’ve been watching after Ethereum and Bitcoin, and it’s tied with either Bitcoin Cash or Litecoin although recently Bitcoin Cash dropped by half on this metric, so now it’s just tied with Litecoin. Zcash is tied with Litecoin on this metric.

I don’t know. There’s a lot of nonprofits that accepts Zcash donations. There are people who have used Zcash in Venezuela, but none of this can add up to 33,000 payments a day so I don’t know. It must be miners or traders.

Peter McCormack: It feels a little bit like these are just kind of like small examples. It doesn’t feel like there is mass usage there or mass adoption and for something like Zcash and Mineiro and to some extent Bitcoin, it needs to be used because look, Zcash is not a store of value, right? It’s a method of transfer but it’s going to be an issue for everyone if there’s no adoption then the miners will keep selling every day and while there will always be someone willing to buy a certain price on an exchange, right?

If the price keeps going down, there will come to a point where is not profitable to mine, and then, there will be less miners, and then, it will be less secure, so it’s almost like a death spiral without adoption, so is adoption something that you, the company is focusing on?

Zooko Wilcox: Oh, absolutely. Yeah, that’s one of our core pillars of our company strategy. Our company strategy is adoption without sacrificing security; and B, investing in our own team, which as I said is small and efficient enough that we can keep doing it; and C, openness and transparency like facilitating these third parties like Parity and those hackers that I mentioned to be rewarded and like effective at contributing to the whole ecosystem.

Adoption is absolutely one of our primary focuses and there are two parts to that distribution and user experience. Distribution is things like, what does it take to get a hold of a Zcash? This is where I’m really sad about the mining dropping from like literally hundreds of thousands of miners to tens of thousands of miners is my estimate, because that’s a way for people to get a hold of Zcash, even if they mostly have to sell it, hopefully, they don’t sell all of it right away or whatever.

Another form of distribution is being able to buy on exchanges or being able to sell your goods and services in return for accepting Zcash payments, and that’s where we’ve done a fantastic job of getting Zcash listed on all the major, almost all the major exchanges including Gemini and most recently Coinbase, which are the most important ones in the United States.

I’m really proud of that because for a long time people very confidently said just like people used to tell Szabo money can never work like that, people used to always go around saying, “Privacy can never be on a mainstream exchange.” I was like, “I don’t think you’re going to be proven right,” and so, far I’ve been proven right.

Peter McCormack: I thought those mainstream exchange listings don’t allow you to use the privacy option?

Zooko Wilcox: That is another common sort of misunderstanding of the ways it works like, but it’s true that Gemini and Kraken and Coinbase and the other large exchanges that support Zcash don’t use shielded addresses. They only use transparent addresses, right? But they can’t stop you from using the privacy features if you withdraw to your own wallet, right? Are we talking about using an exchange as a way to acquire Zcash, which is what I think it’s for? It’s like a distribution method because if someone is interested and they want to try it, they have to have a way to get some or are we talking about using the exchanges as your hot wallet, which nobody thinks is a good idea?

Peter McCormack: No. No. It’s more like, look, I understand there is a difference between shielded and unshielded transactions. I guess it’s good for onboarding because people can buy now but how does it work for offboarding if I can’t send shielded transactions to Coinbase to sell?

Zooko Wilcox: All right, so let’s not talk about transactions being shielded or unshielded, let’s talk about addresses as being shielded or unshielded, and that shows you, and that’s the fact, at the technical level. You can have any combination of shielded inputs or unshielded inputs and shielded outputs or unshielded outputs, okay? At the light protocol level.

Then, at the business and user experience level, the way it works in practice today is that each user gets to choose like when you create a new address, do you create a shielded one or do you create an unshielded one? Okay? Now, Coinbase, when it creates new addresses for its users to deposit into, it only creates transparent ones. Although they have said that they intend to upgrade to creating shielded ones for themselves in the future as has Gemini. But like if you have a Zcash wallet on your laptop and you create an address, you’re the one who gets to choose whether to create a shielded or unshielded address on your laptop.

Then, if you send from your wallet on your laptop to Coinbase, you can send from a shielded address on your laptop to Coinbase.

Peter McCormack: Is there any history to that coin which exposes it?

Zooko Wilcox: It’s like this. Have you seen a blockchain, you’ve looked at Bitcoin Block Explorers right, right? Did they show you inputs, outputs change, like probable change or whatever? You can’t tell exactly what’s the change but there are a few inputs, there are a few outputs, they each have an address, there’s amounts, et cetera, there are transaction fees, you see all that, right?

If you look at the Zcash block explorer, any one of the Zcash block explorers, what you’ll see is whenever the input was a transparent address, which I call a zatter for short because I say it too many times a day. Whenever the input was a tatter then it looks just like a Bitcoin block explorer, you see the address on the block explorer, on the publicly visible way.

If the input was a zatter then what you see is like just a question mark or a blank space depending on how the block explorer shows it, because the block explorer doesn’t know which zatter is the origin of this outgoing payment, and then, similarly with the outputs, if the recipient of the transaction is a tatter then you just see that tatter, which looks exactly like a Bitcoin address except it starts with a T.

If the recipient was zatter then you just see a blank space that says like, “10 Zcash went to your question mark.” Okay? If you have some Zcash or somebody tips you Zcash, which they totally should, all Zcash users should tip you right now in order to motivate you to play around with it and learn how it works.

Peter McCormack: You should be the first one.

Zooko Wilcox: Okay. But you won’t know if I am because I’ll do it from me a zatter so all you’ll see is like a question mark saying, like when you look at the block explorer or your wallet, it’ll say somebody but we don’t know who sent you 1 Zcash to your tatter. I will have to be fast to be the first one.

Peter McCormack: Well, the show won’t come out until next week and nobody has done one yet so you can be the first one but I would have broken your privacy there, right? I would know it was you.

Zooko Wilcox: That’s a really good lesson about the fragility of privacy due to metadata. Absolutely correct. Really important. But, yeah, if you got a Zcash in your wallet, in your local wallet. What wallet are you using?

Peter McCormack: I did it on a Ledger.

Zooko Wilcox: Okay. Yeah. Ledger is great because it’s a hardware wallet and it’s much safer against being hacked over the internet. Downside is Ledger does not yet support shielded addresses, so what you would see on the blockchain is question mark sent 1 Zcash to your tatter, which is in your ledger, and then, if you deposit it to Coinbase what you’ll see is your tatter sent 1 Zcash to Coinbase’s tatter.

Peter McCormack: It sounds so complicated, and this is one of the things with adoption. My fave book when I have my agency was Don’t Make Me Think by Steve Krug, which is just a brilliant design book. This sounds complicated. Like Bitcoin is already complicated and this is like another layer. Is this another thing you are coming up against for adoption?

Zooko Wilcox: Absolutely. I told you the distribution and UX are the two ingredients for adoption, right, and like product, market fit? A use case where people need it and it’s better, substantially better than anything else they could use to satisfy their need. Well, distribution, we’re doing great at because of Coinbase and Gemini and many, many others all around the world.

UX, Zcash, and Bitcoin, and Ethereum suck at UX, right? The user experience is baffling, scary, people accidentally delete their money all the time, people get robbed all the time, even if they don’t get robbed even if they don’t manage to delete their money, they still can’t figure out how to buy a thing, how much the thing will cost, how to get paid. It’s so bad in all possible ways, worst UX that has ever been this successful as successful as it is today.

That’s one of the things we do at the Zcash company is out of those 32 employees that I mentioned, several of them are full-time user experience experts they have been working for months now since like mid last year on designing a better experience that makes sense to people, and testing it on live users, like asking a whole bunch of users, “Hey, try this out. Tell us what you think while you’re trying it so we can learn.”

Anyway, one point about UX, I totally take to heart is I’m sitting here trying to explain to you there are two different things, they interact in this way, you get better privacy in some cases than others, and I think you’re very correctly saying that is way too much for normal users to even listen to, much less just make decisions about how they’re going to handle it.

In the long run for better-improved user experience what we have to do is make shielded the ubiquitous default, right? The right way for UX to work is you bought a Ledger, it arrived in the mail, you hold it, please give me a Zcash address so I can receive tips. It gave you a zatter and it didn’t ask you about, would you like the old bad kind or the new good kind?

No. It doesn’t ask you that, it just gives you a new good kind, and then, you put it on your website and then people tip you and nothing about your finances or what addresses you’re using is revealed to hackers throughout that process. That’s good UX. We’re aiming in that direction. It’s a lot of work.

Peter McCormack: Well, we’ve rattled through an hour easily there, but before we finish up, can you just tell me why people should care about Zcash? What is coming up and how they can find out more about it?

Zooko Wilcox: People should care about Zcash because privacy is really important. It’s necessary to really be yourself, you can be yourself when you’re alone, you can be yourself with your friends, you can be yourself if you choose to get up in front of somebody like I don’t know, you’re going to your own wedding, you’re going to give a talk or whatever, you can be yourself when you choose who’s watching. You can’t be yourself when a whole bunch of faceless strangers who may or may not have your best interests at heart are watching you at all times.

It’s really important for humanity that we allow people to choose who they share information about themselves with.

Peter McCormack: How do people find out more about Zcash? Is there a certain resource they should go to?

Zooko Wilcox: Yeah. The company has Z.cash as our website, so type in Z-dot-C-A-S-H enter, and there we have videos, tutorials and all that.

Peter McCormack: Right. Awesome. We should do this again as I have more questions so let’s definitely do a follow-up. Have a great day. Thanks for coming on and great to talk to you.

Zooko Wilcox: Thank you so much, Peter. I really appreciate it. Looking forward to hearing the results.