In Praise of Shadows: Why Ethereum Needs Privacy | Zac Williamson - Aztec

[Music] all right hello everybody good afternoon so I'm here to talk about why ethereum needs privacy um why blockchain needs privacy why a lot of the issues and problems that web 3 is facing today are because we do not have privacy so you know we live in very interesting times you know the internet has been a enormous net positive for Humanity uh being able to access the entirety of the world's knowledge at our finger tips has um transformed Society but it also produced a lot of negative downsides um associated with the fact that um today you know the default monetization model of the internet is advertising and it means that as a user you are not a um customer you are a product um and all you really are is the sum of your monetizable data um and this is creating very perverse incentives it's creating online spaces where people can't distinguish between what's real and what's fake what's human and what's artificial and what is happening is that we are transitioning from a high trust Society into a low trust society and this is problematic and I think that we need new information Networks to restore this balance to build back trust infrastructure um you know this is the basic blockchain thesis one could argue but if we look at what's happened over the last 10 years um that thesis has not been fulfilled and I would argue the reason is because of a lack of privacy so I want to go on a bit of a tangent before I go into that and talk a little bit about information networks and communication complexity um because I think this is important um it's important to understand why a blockchain is such a big deal why privacy is so important and required for blockchain to succeed so I want to talk a little bit about give you a little thought experiment okay so imagine congratulations you have a time machine and you are now in the year uh 10,000 BC uh congratulations uh I think that's the the uh um early Stone Age um imagine you go up to a hunter gatherer tribe you know they're sitting by a fire tales and you you go up to the elders and you're like yo do you want to buy a road now I might look at you and go what the hell do you mean what's a road what is BU and you would say great well roads they are um they're these things that allow you to get really efficient like really quickly you can go from A to B from like one area to another area they're great they're they're going to be all their AG in 10,000 years you'll love them and they'll look at you a bit and they'll be confused and they'll be like well can I bring this road with me and and you might say no that's not how roads work it's just you know fixed fixed points A to B and and they would they would not have any use for what you're what you're studing right what a road is the most fundamental kind of uh Information Network that you can have um uh to to to transmit information between different physical locations and at some point in our prehistory roads were useless because our society was based around Hunter Gathering where you know um tribes people communities they they traveled with available resources they would move where the resources are they deete that error of resources and they would move on and the idea of just going from to two fixed points efficiently was just not was completely useless and the reason I bring this up is because we are facing a similar Paradigm today when it comes to dist distributed transaction networks particularly ones that incorporate privacy because what we're trying to build are information networks that don't exist today uh we live in a world where uh all the interactions that we form in our lives that they are they they they imesh Us in this network of obligation and responsibility where we are dependent and rely upon third parties custodians middlemen to perform all the basic interactions in our lives um and what this technology that we're the technology that our community is building is presenting a fundamentally different Paradigm where um uh transactions and interactions are Atomic they're permissionless they don't require middlemen the there there interactions where sensitive information is is held by individuals and you only proof statements about what you need where you where you're trusting uh math in cryptography instead of people and when you try to describe these networks to people and the need for them I think in a many ways it's a little bit like talking to a caveman and trying to sell a road um but things are changing this is the year of privacy um because nowadays the technolog is Advanced enough that some of these applications are being built and deployed and starting to change the narrative and that's something I'm very excited about so I also want to go on a bit of a rabo tangent when it comes to information networks so why I'm talking about Rome um imagine you're an alien and you know you have no context of humanity Human Society human civilization but you are looking at the Earth um at the height of the Roman Empire and you're looking at the physical terrain of Europe without knowing anything about about the the the intelligent beings that are occupying in that land you can you will be able to understand a few things about that Society you will you'll be able to understand that that Society is it's a hegemonic Empire that has um uh um which has an imperial core that is projecting power across a large con like a large land mass and that is as largely at peace and the reason you could do this is purely by observing Rome's Road Network because the road Network you know the phrase all Road leads to leads all roads lead to to Rome Rome is the core of the road Network and you have these arteries radiating out into the provinces into the territories and so that tells you that there is some kind of core to the society and you can tell that it's hedonic and imperialistic because um and and and at peace uh because the simple fact is that in that kind of like iron AG Society um when you have a road Network like that it means that you that armies can travel very very quickly and efficiently between towns between settlements so you better Dam well ensure that the that there's only one Army marching down those roads why do I bring this up it's because you know Information Network shape societies and Society shape information networks similarly you could look at the highway system of of of of the Europe of the European Union and you could determine from that and that alone that you have a more of a like confederated peaceful Society of um where you still have distinct Geographic polities but they're all largely at pece incoporating with each other and you can tell that because the road networks of these countries of European countries they're still very focused within the capital cities so the Road NE of France it'll be radiating around Paris there'll be one you'll have Berlin as a core you have lots and lots of different cores um uh and no like one no no centralized area so you'll be able to tell that you know there's that that the you have quite somewhat isolated distinct cultures but there there's a lot of communication and AD mixture between them um whereas I would argue that the American interstate highway system is much more mixed so you could tell that it's a much more homogeneous culture um much more organized anyway so what are the information networks that we're trying to build on ethereum what with with privacy um you know one of the problems that we have today is that um you know with the internet the rise of the internet for the first time we are able to engage in some in a in a many to many style of communication between human beings if I have an idea that I want to that I that I want to express I can share it with millions of people tens of millions of people hundreds of millions of people um and they can share their ideas with me and this has never been possible before you know before the internet you have mass media where where it's a one to many style of communication you know if you're if you're publishing in a magazine or broadcasting from a from a TV show um and the problem with that information network of the internet is that you cannot distinguish signal from noise it means everybody's communicating with each other everybody's talking but it is but but there's there's it's it's almost impossible to distinguish like the what's high quality what's low quality because the incentives are all completely misaligned um and this is where blockchain comes in in my opinion blockchain is an Information Network where you can kind of you can put your money where your mouth is it allows individuals to decide on how they are going to coordinate with each other collaborate to deploy their resources um to achieve outcomes to to to engage and enable projects um uh and it allows for in my opinion which we're going to see over the coming decades a much more efficient and effective form of many to many communication because um it's not just raw information there's there's value attached to it anyway that's what we're trying to build in a in an abstract way but why does privacy matter um what is privacy to begin with you know privacy for me is being able to prove statements derived from undisclosed information like I have a I have a UK passport here's a digital signature of that passport but I'm going to hide my name and my my age um it's information symmetries it's being able to vote and um your vote can be counted into the total but nobody knows how you voted that's an information is symmetry it enables things like identity Technologies it enables you to bring information from web 2 and put it into web 3 and ATT test about what's happening in the real world and it enables you to build trust infrastructure so why privacy why privacy if you look around in blockchain today all value in blockchain is sourced from two um location as an only two you have the economic value of consensus on a network and you have dollar back stable coins and you have nothing else and this is a problem because that Revenue universe is very very capped it's not we're not talking to the real world you don't have real world assets or even like intellectual property from The Real World or anything derived from The Real World doesn't exist on chain apart from a proxy into us treasuries if the price of ethereum went to zero the value of every single token on ethereum except USD your new would go to zero so the the sources of fundamental value in our ecosystem is extremely limited and that's why we are in this trap uh where like all the economic activity is focused around gambling and meme coins um and celebrity m coins uh and it's not becoming more meaningful it's been 10 years by the way 10 years more or less since ethereum launched and we've not be beyond that yet so how do we Pierce this web three bubble the solution is privacy you need to do three things in my opinion one you need to be able to seemlessly interface with web two systems you need to get information from web 2 and the real world into web 3 in a trustless manner um where you can authenticate it the data Providence I can should be able to prove that I have an Apple account I should be able to prove that I um I should be able to prove uh I own a Twitter account that has over a thousand followers so I'm probably not a bot I should be able to say I am a UK taxpayer because here is an email sent to me by uh the UK um tax authorities um like recognizing my my contributions because once you can prove data Providence without sharing personal data then you can start to build me meaningful onchain systems that talk to the offchain world step two is you link accounts cryptocurrency accounts to identities this is fundamental to talk to the real world instead of when I transact on chain right now I'm saying you know hello I am Ox 3 AF ff2 220 you know b or whatever or you know I am uh I am you know ZK proofs. e synthetic abstract identities here's what I want to be able to do I want to go to a Smart contract and I want to be able to say to that smart contract to that algorithm my name is Zachary James Williamson I am a British citizen I am 36 years old and I live in London if I can do that then the applications and products and services you can build on chain suddenly explode into something which is much more meaningful and the design space of what you can do with a smart contract changes fundamentally um you know this unlocks decentralized applications that can interface with the real world that can perform checks um and and and and uh logical controls on on who you are to distinguish like to determine whether you can transact in that system and once you have these tools once you have these Technologies then you can actually really meaningfully push to establish digital sovereignty you can establish precedence that digital ownership of chain assets implies a legal claim to property and Assets in the real world this is the fun this is the H Grail and this will not be achieved unless we as a community can build compelling products and services that require this functionality and none of this can happen none of this can happen without privacy technology because without privacy technology you can put not put your identity on chain and prove things about it without privacy technology you cannot trustly attest to information that's come from web 2 without privacy technology you're stuck we are stuck in this in this in this this in this coins and monkeys equilibrium that I don't think many people are satisfied with so how is the missing link built I mean I'm a broken record here and also biased Aztec's building The Missing Link um so you need three things you need a programming language a programming language that you can use to code up smart contracts that have private state so you need an idiomatic way of writing these programs that works over in crypto states with with semantics to handle those State transformations um and convert that program execution into a zero knowledge proof this is extremely non-trivial private state is not just as simple as just encrypting data there's a lot more to it than that um and ensuring that you have a language which makes it easy is fundamental and then you can make a private blockchain uh a distributed L where you have support both for regular smart contract trans semantics but also this concept of private State privacy being able to obscure who you are what contracts you're interacting with what's the data that you're modifying um and this requires a fundamental re chitecture of what a blockchain even is because the state models are so different and then on top of that you finally you need an absolute state-of-the-art cryptographic proving system to ensure that you can turn all these mathematical zero knowledge proofs you need into um you can you can you can have software that produces these proofs that can run on local hardware that can run on phones and laptops because if you're trying to prove statements about sensitive data you do not want that data to leave the user's device which means the user the person sending their blockchain transaction they need to make the proof and this is very challenging this this is what honestly like I've been spending seven years focusing on um but we have the we have the ingredients we have the missing links and we're building these Technologies meaningful privacy decentralized privacy privacy where no information is being leaked not to a counterparty not to some offchain service or an app chain you are interacting with a smart contract and disclosing information to the smart contract algorithm and nobody else and nobody sees what you're doing so normally I talk about like what could be done with privacy Tech you know it's always about potentials and abstractions but in 2025 this is no longer the case because the technolog is Advanced enough to build actual products and services which utilize this this this this capability um it's being used to build the future of we free so you know spoiler alert these all built with Noir Noir is the ZK programing language of the ASC network but it goes far beyond Aztec so here are some like examples that I that excite me incredibly so uh in January we at as we held a little Hacker House in London and one of the teams that came they used the open banking API to create trustless peer-to-peer on and off boarding uh into web 3 open banking API is basically European Banks UK Banks they expose an API you can talk to to uh trigger Financial transactions um from account holders in that bank and the very nice thing about it is that um A banks have to have it and B um the response you get when you in when you talk to this API the response is signed digitally signed by the bank which means you can use it you can wrap it in as EK proof and you can put it on chain and you can prove to somebody that you've sent the money in the real world and then you can use that to create escro services on chain to swap real world money for crypto um peer-to-peer between strangers that don't know each other or trust each other absolutely radical and they got this working they got a proof of con they got a prototype working in a hacker house over a weekend you have we built like people are building bankg grade private security tokens passport grade on grade onchain credentials so you can prove your citizenship on chain to a Smart contract you have Anonymous social media with an onast that was built over a weekend with Noir um zika email now the fastest client s approver is built with Noir where you can get a trustless proof of email you can get like a strong data Providence so you can say here like I have a here's an email I received from Facebook you know talking about my account I am therefore an account owner on Facebook um and then privacy preserving wallets being built on the a network which are forming the seeds of real dbanks actual dbanks not just like banking like services for for for tokens and meme coins but actually like real banking services for real world assets I mean this is just the seeds of it the start of it but this is where things are going and this excites me incredibly like these are being built today you can use some of them today you can use an onast today you can use ZK email today like the the the future is is is here so I just want to end by saying you know this is um been an interesting year for web 3 you know I don't think I'm alone in saying that the the the uh the the the headwinds that we're running into are deeply problematic uh what are the major news stories in crypto this year it's the Deluge of celebrity memec coins like Trump mle Kanye West uh all sorts of nonsense um and and one billion dollar hacks uh from North Korea uh you know there's certainly in my opinion um a feeling of stagnation what you can do with a smart contract hasn't changed in years and despite this though I'm extraordinarily positive about the future for web 3 and ethereum because because like the premere state-of-the-art Privacy technology is being built with ethereum in mind today it's being built on top of ethereum and it's going to mean that ethereum can finally fulfill the original like Ambitions and aspirations that it had all those years ago when not when Aztec was hosting this little Hacker House in January it reminded me of something it reminded me of the feelings that I felt when I was getting into crypto and web 3 8 years ago in 2017 I was going to hacker houses back then um and hackathons and people were building Innovative interesting ambitious stuff you know like the the the the the the stuff that people don't work on today anymore like supply chain stuff Logistics um you know real world assets real world payments they're working on um uh you know like um the like the the like the Insurance like basically like these they were trying to take existing products and services from web2 from trafi and decentralizing them and competing against those centralized Services um uh with and cutting out the middleman but we all know how that ended right like these projects nothing ever happened to them because the technology did not exist for all these projects to work you need privacy technology which did not exist in 2017 but now it does and that was the vibe I got in that hacker house cuz those were the products that people were building real world payment Supply Chain Services and not only were they building them but they were getting endtoend demos working in a in a in a weekend because the technology is here and and ethereum will be Cipher Punk again thank you [Music]