Note: Placeholder holds Zcash’s ZEC.
Many folks in crypto today think about privacy backwards; instead of making sure their assets are private, they make the mistake of solely fixating on transactions being private. This is why we see people sending assets through mixers or coin-tumblers, only to return to transparent and trackable addresses, defeating the point of the mixer. Zooko Wilcox, a core contributing member of the Zcash community, voiced the confusion as follows:
“You have to *store* your crypto in a private cryptosystem if you want privacy. Then it is safe to *move* it through a transparent system! Unfortunately, almost everyone has this backwards.”
We envision a world where large amounts of value is privately stored on Zcash, with myriad integrations into smart-contract protocols and vibrant digital economies. From the private store of value that ZEC (Zcash’s native cryptomoney) represents, people can safely transact in open economic systems. Already it’s possible to enter Ethereum privately through the combination of Zcash and Ren Protocol, and as much as we appreciate this implementation, it’s just the beginning. Efforts like the Zcash Developer Alliance are working to make the vision of interoperable-and-private-value stemming from Zcash a widespread reality. Vitalik gets it.
The instinct to keep the value of private-assets private is naturally baked into our social structure; it’s not typical to discuss the value of your house, your stock holdings, your annual pay. The reason is simple. Once someone knows these things, this new information causes them to treat you differently, even if the information isn’t relevant to your relationship. The simple act of observation changes the relation.
We see this phenomenon all the way down to the quantum scale, where a particle that is not actively observed as it passes through two slits behaves like a wave (potentialities), whereas a particle that is observed collapses down to a single point, a single potentiality. The watcher changes the action of the actor, even down to the quantum scale. And so, without privacy, there is no sovereignty.
While privacy can be important for preserving relationships amongst individuals, it’s also important for the relationship between the individual and the state. Whoever is in power, and mainly, whoever is able to take your life, liberty or property, is able to define what is (subjectively) nefarious. If you disagree but don’t have privacy, too bad. If you disagree but do have privacy, then you can better maintain your life, liberty, and property. A major point of ensuring privacy around one’s assets, and thereby privacy around one’s action, is that we protect ourselves from certain dystopian outcomes, regardless of the current flavor of power. And if 2020 has taught us anything, it’s how fast society can hurtle towards dystopian outcomes.
Why Zcash is the Community to Bring Us Privacy
The crypto-community most capable of bringing privacy to the masses is Zcash. The engineers behind the effort have more than 200 combined “cryptography-years” under their belt, more years of cryptography experience than many crypto teams have lived. Zooko, the most well-known Zcash community member and CEO of the Electric Coin Company (ECC), dropped out of college in the early 1990’s to join cryptography-legend David Chaum in a digital money pursuit that had them narrowly missing a native integration with Netscape in 1994. It’s now almost 30-years later, and while Zooko’s put on some grey-hairs in the interim, he and Zcash’s community of moon-mathematicians and crypto-magicians have the context, talent, and network for what’s at stake here, and thus they have earned Placeholder’s investment as the privacy team to tackle financial privacy for the Information Age.
Hot money investors will tell you privacy is all the same, and that privacy is just one feature that every chain will have. Saying such things may serve their personal pursuits, but is dangerously misleading for society. When in the realm of privacy, nothing could be further from the truth. For privacy to be worthwhile, it needs to be an airtight solution, not one that mostly works. A privacy solution that “mostly works” is one that doesn’t work at all. Furthermore, privacy through encryption is a game of cat-and-mouse against the decrypters. In order for a privacy network to be reliable, one has to have faith that the talent behind the network will forever stay ahead of the decrypters curve.
During its short life, Zcash has always been at the frontier of privacy. When it launched in October 2016, Zcash was the first practical implementation of Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge (zkSNARKs). In May 2014 a group of rockstar cryptography professors published a paper on the potential of zkSNARKs to be implemented in a bitcoin-like currency. To help productize and release this vision into the real world, they chose Zooko to lead the initial effort, due to his wealth of practical experience, credibility in the cryptography community (he corresponded with Satoshi!), and alignment of values.
While Zcash was in part inspired by Bitcoin, the community has never been content being “Bitcoin but with privacy.” Instead, they have recognized other core deficiencies in Bitcoin’s design, and worked to create a more sustainable system. For example, in Bitcoin’s case an organic community of companies have patched together the employment of enough core developers to keep Bitcoin moving, but the protocol itself does not pay for anything other than hardware contributions (miners). Zcash, on the other hand, compensates both hardware contributions (80% of ZEC supply goes to miners) and software contributions (20% of supply).
In the software contributions bucket, come the first-halving in late November 2020, 7% of new ZEC issuance will fund the ECC’s efforts, including its development of zcashd (C++ based protocol implementation), user-friendly wallets, growth efforts and regulatory relations; 5% will fund Zcash Foundation’s (ZF) efforts, including their development of zebra (Rust based protocol implementation); and 8% of newly minted ZEC will be allocated by a community elected committee that funds grassroots efforts that aim to fill the gap between the ECC and ZF.
Zcash has taken heat over the years for its governance innovations, mainly due to the waning shadow of Bitcoin Maximalist propaganda. But in our experience working with over 20 networks and their cryptoeconomic + governance experiments, few teams take the governance of their network more seriously than Zcash. That’s because Zcash understands the gravity of providing sovereign financial privacy to all of Earth’s citizens. Consider comments like the below from ECC’s Head of Growth, Josh Swihart:
Failing isn’t an option for us. Hundreds of millions to potentially billions of dollars are at stake. People’s privacy (and all that it means to those people) is at stake. The future of our collective access to private, uncensorable, digital cash is at stake.
What’s the cost to build and support this form of privacy-preserving global money? Based on all the data I have, the cost is much greater than what ECC is spending. We can tell you what we think is a reasonable amount for us to do our part, but this is really up to you and whether you believe it’s worth it. For me personally, it consumes almost every waking moment of my life. This cause is worthy.
Meanwhile, efforts like Crypto in Context demonstrate the Zcash community’s desire and action to interface with underserved communities, working to help their financial literacy, as well as to better understand what these communities need for crypto to become a material reality that moves the needle for them.
It’s not just the engineering chops that draw us to Zcash; it’s the heart and commitment to the societal cause, with a multi-decadal plan to succeed. Because in this case, failing to provide all of us privacy and economic freedom isn’t an option. Don’t believe us? Join a Zcash community call or hop into the forum today.