Data Privacy in the Age of Surveillance Capitalism - TOKEN2049 London 2022

hi everyone thanks so much for joining us on this panel um so privacy it's a foundational principle of much cyberpunk philosophy a quartet of financial systems and what you know very important to many of us is a fundamental human right and definitely I think the last year has been we've seen quite a lot of developments that I think raised a lot of questions as to how privacy integrates with blockchain and protocol ecosystems so today we have this esteemed panel to talk about it myself my name is min I'm a managing partner and founder of ethereal Ventures which was established by the former investment team of consensus and you know we're very privileged to have like been investing in privacy protocol since 2018 and I'll pass it on to Zach Harry and Issa to introduce themselves hi everyone I'm Zach I'm the CEO of Aztec Aztec is a privacy preserving layer to built on top of the ethereum blockchain where users can create cryptocurrency transactions create tokens interact with layer 1 D5 protocols but to do so with strong privacy guarantees where both the identities of the transactor recipients and the values are all obscured um and so yeah previously it's pretty pretty core to our what we do we want to make blockchains private and make them mainstream yeah I am Harry Halpin uh CEO and co-founder of nem Technologies and what we are is Aztec you can think of as a layer two we're layer zero we operate on the level of network packets like the peer-to-peer broadcast beneath every blockchain um somewhat like a VPN or tour replacement for messaging cryptocurrency transactions uh and we honestly you know we've launched we're releasing a new roadmap uh today so you can check that out but we think that this is a once in a lifetime chance to really rebuild the internet with privacy encoded into the code itself and this will open up a whole new realm of business opportunities that were not allowed previously hi my name is Issa I'm the CTO of a silent protocol and Silent protocol is a layer one privacy preserving solution that aims elegant full composibility to decentralized Applications so we kind of completed the circle in the full stack we've got all the layers yeah yeah and just to follow up on that point I think there's some nuances here with uh you know sort of Aztec imbuing privacy at the protocol layer area the networking layer and Esau with silent protocol at the middleware layer and all of these I think you know there's it's definitely very distinct design choices each with its own sort of potential trade-offs I don't think there's any one size fits all it really depends on what you're trying to achieve and maybe could you share a little bit of some of the thinking behind why you made this design choice in your architecture and also what kind of use cases do you hope to enable on top of it sure thing so for us we think privacy is really the missing Keystone for blockchain technology if you go back to 2015 when ethereum was was created like all of the original kind of like Cipher Punk visions of blockchain was to take existing like real world assets and bring them on chain and digitize them tokenize them um take like illiquid capital and make it much more liquid and give users and individuals control over their finances however since then uh you know like um blockchains are mostly used largely by Traders and Tech enthusiasts and it's very much not mainstream um you know you don't you know you're not really paying for things day to day with cryptocurrency you're not you're not doing investments in cryptocurrency unless you're very a very early adopter and the missing part of this is privacy you know you cannot meaningfully have um real-world assets on chain if you don't if you can't link an identity to a cryptocurrency accounts without smashing that information all over the all over the blockchain networks and so for us we very much want to effectively recreate the ethereum text stack with its programmable smart contract its composability but one where private state is a first-class primitive of the network so you can have private token balances private identities you can have you know nfts with secret genuinely secret information like protocols where you can reveal Parts about who you are without revealing everything things like maybe your credit worthiness or like you know like the the sum total of your balance or you know um like similar similar like um Edge case issues that you need in a lot of real world applications and for that you need privacy um and for that you need pretty Advanced cryptography and that's that's kind of where we come in and that's our that's our gig yeah so I I uh I used to work with uh Sandy pentland over to MIT and he had this really amazing observation he said imagine you're watching a conversation and you don't know what anyone's saying it's hidden what everyone's saying it's encrypted let's say you just don't care but you're watching who's talking to who and when they're talking to each other and how much it ends up with just that information you can predict what like 70 to 80 accuracy what decisions will be made who's going to talk next what's going to happen this is what you call the metadata the timing and the volume and the kinds of communication so at Nim after the Snowden leaks the European governments came up to a bunch of us we're like hey let's build kind of VPN that even if God himself is watching your internet connection your ISP the NSA whoever that they don't know who you're talking to and this would be very useful for governments and we said okay we'll build this for you but then we said yeah this actually be useful for everyone it'd be useful for normal people it'd be useful for cryptocurrency and so we built this mixnet which takes the packets and mixes them up a bit like a deck of cards when you shuffle a deck of cards sends them through a decentralized network and when because of all this mixing and we add in fake packets with a network sends the packets out not even an adversary they can observe every single packet coming in in every single packet coming out can successfully de-anonymize and correlate the users on the network level and that's very powerful technology that we think is necessary in the blockchain space particularly for like any project that has a wallet that wants to defend full nodes from uh client nodes that has problems with ddosing so forth and so on so as you suggested so the Milestone paper for crypto is actually David Chum's e-cash paper that the problem is defined even if two parties would get along the asset holder shouldn't be no within the internet world of course so it is of course a human right but at the same time because of the less known facts related with the privacy and also since it's an evolving technology when some of the users get used to some technology or some blockchain environment they do not want to move their assets out of it so for us this was the one of the main points so that we are trying to let the users live there already trusted environment and at the same time we are trying to provide full composability with their kind of favorite decentralized applications of course this can only be done in an efficient way in the layer 1 solution because of the different features that the decentralized applications can provide to the users without having any delay in the services without having any other lifting of the assets or moving assets from their trusted environments also this was the main concerns for us so that's why we kind of built on the layer 1 solution to let the users have the full compostable activity environments as well yeah I think one thing that definitely comes through is how technically complicated and complex it is to build a functioning privacy system so definitely want to double click on that uh you know later on in the panel but I think maybe let's take a step back and just look at the the year that we just had so certainly there's a lot of you know headlines on um you know all the data the cookie crumbs that we're leaving how evil like you know big Tech is if anyone has sort of like had their had their wallet tagged on Dancing is a really unpleasant experience as well um we all understand that privacy is very important I think at the same time we've had the you know the events of tornado NATO cash and ofac that I think has definitely sort of sent a chill around the industry uh to people with regards to privacy products um personally I think I'm a belief that I'm a believer that you know privacy by default always otherwise the system is not censorship resistant and it's not credibly neutral and then you have to take a moral Judgment of who is good or who is bad and that's not what protocols are meant to do but I just want to get an understanding from the panel how are you guys thinking about this with sort of you know there's a very very important Mission ahead and there's a way to do it but there's also a lot of regulatory like pressures that's maybe like you know encouraging you to cut corners and all that and I don't think there's a right way or a wrong way either how has your team sort of processed a lot of these regulatory developments and how are you like thinking about applying to your architectures yeah it's definitely a um a serious and important issue and I think it's going to effectively we're in for a bit of a a long grinding Battle of attrition where um ultimately I think a lot of the precedents that we're going to settle on for crypto have already been proven have already been established with the internet which is that you don't regulate content at the network level just in the same way that you regulate traffic going through an isps cables where you Regulators where that concept is being consumed at the application layer and as a as a protocol um what we want to do is make sure that those applications building on top of us can I can acquire enough information to actually like be on the right side of the law here but it's a difficult question to answer like not your question but like the general question of like how do you build a compliance privacy Network because like there is no definition of that term yet so all that we can do is is provide is built something which we think is morally legitimate and then try and fight that battle you know in the court of public opinions in the actual courts um that this is actually how how things should be structured um for us one thing which helps a lot is the fact that like the network we're building is is programmable so you can actually you can program your own custom logic into your private smart contract and so you can program in your own compliance checks if you need them or you want them and uh so we're hoping that eventually you know standards will be established by the community um based off of the applications based off this huge requirements and so and that this uh and that the issue of compliance can effectively be decentralized and devolved down to the application Builders and at that application Level um and honestly like not be part of the Mandate of their Network to enforce yeah I mean everyone wants privacy for themselves and not for their enemies so for example um even the United States uh cbdc prototypes project Hamilton uses zero knowledge proofs on chain because they're like well the financial transactions the US should be private all in all of the U.S government should know them and not for example China likewise you know Nim really we come out of a European commission research Grant uh one of the largest they ever did in order to figure out how we could build Network level tools to help enforce General data protection regulation how we could how we could make data protection real and not just something you have to pay a lot of lawyers uh to do but enforce it technically and when you have things like the tornado cash case I think what happens is that while most governments and institutions realize that they would like some privacy they get very upset when they feel like someone's using privacy Tech that they don't like so for the case of tornado cash I think it was very clear it was uh you know U.S national security apparatus she's like okay someone from North Korea is using tornado cash what Hammer can we use to shut this down they chose ofac uh very quickly I don't think that was well considered I think it was probably a wrong choice of instruments uh previously uh fincen the U.S financial crimes enforcement network has said that building anonymizing software and privacy software is legal what is illegal is using it for illegal things uh and so what we've done at Nim is we've put together an industry alliance called the universal privacy Alliance what electric Coin Company one of the zcash teams secret Manta so forth and so on and we've hired lawyers like Ahmed Kapoor who used to deal with ofac and Guantanamo cases something a bit more even serious than um the tornado cash case and which you know we've won some uh in order to basically be prepared to both Lobby governments to recognize the importance of privacy educate the general public so people realize that everyone should have this as a fundamental right and you know if we have to fight Court battles we're more than happy to fight it out in court and I think I am fairly certain we're going to win and the reason I think we're going to win is because surveillance capitalism as a business model is not doing very well the profits of Advertising based networks I mean Apple's doing pretty good because they sell Hardware but look at Google look at Facebook look at Twitter they're running on empty even their own internal uh kind of docs show that behavioral advertising eventually goes to random almost in terms of how much profit they return for money put in so there has to be new privacy enhanced business models that aren't based on mass surveillance all otherwise the technology industry and the internet as a whole has a large problem and we think everyone's going to eventually recognize that yeah I totally agree with you earlier on this part so the issue here is there's the one point that the national interests are coming towards so because of the different National politics there is some pressure that will be going on and this should be fight against I totally agree on this part from this when we set this apart so there is one other case where the Privacy preserving Solutions may also be used as a shielded for the specific criminal like criminal activities yeah this part is kind of hard to decide sorry this part is actually when it is uh certainly notified that there should be some capabilities that can be act upon it so if and some amount of asset is stolen and if it if those are brought into some privacy preserving Solutions then it it would be really nice to separate these kind of activities from the innocent part so that the innocent people and the end users can happily use or by trusting it used and then so that they can be free of it and wouldn't be frightened of getting sanctioned through them that's why from our side in silent protocol we kind of trying to find a balance for a point so that in a decentralized manner in uncompliant we are forming an compliance group so that at the certain case where this group can vote and if the outcome is for it then this group can provide the data that would be need on the certain instant activities so of course it's still a debating issue because in in any cases so there will be a specific occurrence that we can see both sides and conflicting and debating so we have some of course we need to develop these kind of Solutions in much further way so the the funny part is here so there is the term privacy by design that was coined in late 19th was evolving but still as you said it was purposely declined and the companies didn't include this kind of systems into the their existing environment because of their business logic so this should start to change from now and now maybe we can move on to like some of the technical aspects of Designing these privacy systems and Harry we were talking about buzzword Bingo as it relates to privacy systems everyone loves zero knowledge these days and as you know a lot of like cryptography is also used for scaling blockchains and you know compute which I imagine must be quite frustrating when you're dealing with the day-to-day of like very heavy cryptography research and applied engineering so Harry maybe walk us through a little bit about like you know what some of the nuances are with like how does zero knowledge actually work in like private privacy systems especially for Nim like you know you're building on like kind of mixed Nets like VPN level so thinking about the integrated stack how should one think about it so the way to think about it is the you know we it's like a layer cake right you have a layer a TCP IP UDP layer they have a layer on top of it blockchains another layer you know l2s and then app and so forth and so on and privacy is a holistic property of the whole system if you know I may have a perfectly zero knowledge privacy preserving blockchain but if the app asks for my credit card number it has my credit number can D anonymize whatever is on chain likewise I could be using you know Z cash but if I'm transacting with the zcash wallet and I'm not using a VPN or tour and then mix that the full node has my IP address and that can be used to de-anonymize me same with peer-to-peer transactions any blockchain so I think the key is you want privacy on all levels and the more people that use the same technology the more private everyone is it's the anonymity loves company slogan so you know and what frustrates me personally is that there's a lot of interest for example in ZK EVMS uh ZK roll-offs but none of these really rely on the Zero knowledge part they all rely on the same think this part they're all about scaling they don't actually provide minus the work of Aztec to be honest any privacy for end users and people just get confused because they see the term zero knowledge but the part is your knowledge they're relying on the part of Starks or Starks that relying on us that basically roll up a blockchain to proof not to provide privacy so that's why we recommend people work with actual teams which are confident in ZK technology of which there's not that many Aztec is one electric Coin Company there's only a few to be honest um yeah certainly I think it's important to like read the label before you buy like you know and actually look at the trade-offs I I think you know for the many use cases shielding is absolutely fine you you know if you just want to sort of do it on a transactional basis but certainly I think once you're interacting on chain like there's so many vectors that you can be de-anonymized and it's important to be aware of that and most often times I think people make the trade-off for convenience but I think it's just important to make a knowing trade-off not an unknowing one and speaking about that uh you know sort of products and sort of systems act like you guys launch Aztec connect which is a way for people to use a lot of ethereum D5 anonymously and you know you also recently launched Noir which is the first step in your programming language towards a generalized privacy system can you maybe talk about like you know some of the work that you're doing with bringing privacy to a theater them and how you sort of see that longer term Vision as well I would love to yes so um I don't think we've had a big problem over like since the company was really founded in 2017 2018 which is that we had this vision of programmable privacy like basically built something like ethereum but where you can actually have private States and your transactions instead of actually sending to the blockchain like the actual instructions of what you want to do like I want you know I want to send to anything else to Bob you send a basically you you you send um a zero knows proof that proves that the arithmetic of your smart contract is correct and basically all you do is you just requested a bunch of updates into a database I made and you're like I'm not going to tell you what these updates are it's just a bunch of included data but I can prove to you that I know how did you get this data and if I were to decrypt it I can prove I could prove to you that uh I've I've followed the logic of a specific smart contract that exists on your blockchain but also I'm not going to tell you what that smart contract is basically like you you reveal as little information as possible but the technology has not really been there to build that full solution because ZK snacks they're slow they're hard to use they're fiddly the ux is bad and so a lot of what we've been doing is research and development to really push the state of the art and make that stuff practical and as a stepping stone to that we launched asset connect which is I believe like the world's first actual private ZK rollout where what you can do is you can Shield your phones on ethereum so basically you you deposit your tokens into the Aztec smart contract uh that's more contract access like a steady nuclear funds and in exchange you get what we call zero knowledge notes which are basically just in the encrypted Blobs of data that are stored on chain that um uh if you were to decrypt them basically prove that you have a claim to some of the some of that some of the tokens in the asset custody contract and the idea is you can send these claims around you can split them up you can merge them and you can also deploy them into D5 protocols so you can say you can take some of you can take some of your shielded funds and say actually I want to put this in view as well I want to swap it like I want to do an ease to the eye trade and what we do with our stickers because we're a layer two uh every transaction that goes to ethereum is actually um it represents an aggregated lump of transactions happening on the Aztec Network again um where the ethereum network doesn't have to do any computation to process those transactions because uh instead we serve a proof of knowledge proof that proves that that computation has been done already and that everything that we're showing is correct and what that means is we can aggregate transactions together so they'll have lots of people want to talk to the same default protocol from Aztec we we basically merge all their funds together and act on their behalf and so all you see on chain is instead of seeing you know Zach sent 10 East to the um to the Unison contract you see the Aztec smart contract sends 100 each to the Uso contracts we've got some die back and I'm going to take my die out of that pool but nobody knows that I was part of that trade or in transaction and so your privacy is completely respected and so this is the stepping stone that we've deployed on the way to a fully programmable Network very exciting and now Issa I mean silent Protocol New exciting kid on the blog building in stealth for a year we don't know too much about it online but can you share a little bit about you know some of your upcoming product launches and what you'll be showing soon uh yeah so in the early 2013 we will be mounting the ceremonies related with the compliance group and The Trusted setup as well and afterwards when it should be completed we will be deploying our system on the main Nets in the evm based chains starting from ethereum then minus smart chain and also Avalanche so that is the main goal for us so at the same time so we are in collaboration with the different decentralized applications so that the silent users can utilize these decentralized applications without moving different applications So within one application the users is able to interact with the same D5 protocols as they would have done without having any privacy so this is also we have been contacted with different applications we have already defined like some business collaborations with them and we are injecting these into our protocol as well so I hope we can manage it within the first half so that we can see our protocol in the mainnet that's the main goal here very cool so early 2023 we'll keep our eyes out um and I think we have a couple more minutes do we have any questions from the audience at all sure thank you so many yes I was wondering in terms of liking a world that would be more decentralized how would advertising occurs such as these days it's usually done through Google advertising's Facebook advertising in a more decentralized world where these things will be harder and harder how do you believe advertisers will play on these digitized with this web Tree World I mean I I'm personally kind of against advertising because it's sort of a form of mind control but if if you do need to do advertising you can do advertising perfectly privacy respecting and decentralized ways um you're not interested normally in individuals preferences you're not trying to make an individual buy something you are but what you're interested in is Aggregates you want to know the aggregate preferences and it gets aggregate individuals to buy things and I think that's kind of you can do that using techniques uh from privacy enhancing Technologies to basically serve people advertisements uh for products that they're interested without violating um their privacy this can be done in a decentralized way just involves extra computation so it's harder to build these kinds of networks that's why Google doesn't do it right now but it's definitely not uh impossible so I know like brave for example is looking at that I can add a small amount to that which is that like I think one of the ideal solutions to that question is basically yeah like you don't you create alternative monetization models for the internet even something as simple as imagine like okay so you go to a newspaper website New York Times and you know like if you want to read an article they ask you to subscribe well why don't they ask you for a purpose saying click here to pay like 10 cents to read this article why didn't they do that well one of the reasons is you can't um because the the payment network of that sufficient complexity doesn't exist if you use them with usual MasterCard then you you um like an enormous amount that gets I'm taken up as transaction fees uh you don't have a network that's what you really need is you need like a kind of like almost like Apple pay for the internet right you need a decentralized permission as payments Network that anybody can just perform micropayments on very very cheaply and efficiently and right now that doesn't exist but with the kind of technology that we're all building that kind of thing will be possible and by the way that's the original business model the web I used to work for Tim bernerslay uh the worldwide Web Consortium if you look at the early web dogs Advertising based on code cookies and user tracking was not part of the original side of the web the web was supposed to be State free on an anarchist way but in a What's called the rest of the design architecture and instead there was a imagine it was everyone thought there would be a micropayment system attached to the web more or less soon after launch it's just for some reason due to technology digicash blah blah blah didn't exist but now is our one time probably once in a lifetime chance to finally build it and also one more thing related to this so there are some incidents that are very specific to the individuals so in 2018 as far as I remember there was an op-ed published by a lady who were having a pregnancy and during the pregnancy since she was visiting different sites related with the newborn child and the education and items that may needed during the birth so because of this type of knowledge all the AIS all the advertising engines was just knowing that this lady is going to give a bird so afterwards they were showing all the related advertisements but unfortunately the process didn't go as expected and it is really one of the hardest thing for a person to face with yeah so in that case afterwards she was having an issue and depression and whenever she was open to her computer or her accounts or doing something she was just remembering the same situations so in a personal level with how people can get affected because of these kind of situations cannot be measurable yeah because it's really hard to handle this kind of processes and it also affects kind of I I can say this is my personal view that this type of business model starting to affect people's freedom as well so for instance you are going to buy something and you kind of look for around and try to re search the review and then decide and the same logic applies here so because of this type of thing all the false reviews will be there and you will be directed to somewhere and all the sellers need to do the same thing because they were trying to get much customers as possible as possible yeah so this we should give up right now because it really affects people in both on the individual level and in the community level as well so we need to change this type of logic into a better version all right and sorry just to close um where can people learn more about privacy in crypto why can you learn more a very good question um well you can go to our website uh so we've got some we've got some primer some tutorials aztec.network uh but I mean to answer that sincerely if you want to learn more about zero knowledge crypto I mean I would highly recommend the zero knowledge podcast by Anna Rose you know it's I think it's like the best resource out there um you know easily adjustable that's yeah if you don't want to get into the technical weeds of it you don't like learn go into GitHub documentations and eat from papers that's the place to go yeah we at Nim just launched something called Shipyard Academy so Shipyard is where developers go to build apps it's like our beta testing platform uh the academy part lets you get paid uh for learning about privacy so we have privacy content privacy lessons and tutorials you can sign up and yeah you know give it a shot we'd be happy to have we had about 6 000 people sign up last week but I think there'll be another round opening soon and you know there's not a good single textbook on privacy enhancing Technologies rather unfortunately but there's law material online and we've tried to consolidate some of that in one place yeah that's been said the important thing here is that so the key part here is people needs to learn how to manage their personal identifiable information so the basic definitions related to these should be on hand and easily accessible and because that is my right so knowing someone likes football or any other thing doesn't mean that he has the right to manage and store this type of data so people first should start from this point and start to manage their own data and most of the people do not like this but it is how it is and it should start from you otherwise learning something wouldn't be enough definitely and I mean I think there's a lot of history on like you know the crypto Wars back in the day that has very powerful analogies to our space and why we have to make very knowing design and consumer choices today before web3 gets built without privacy in mind so thank you everyone for listening and let's give the round of applause to our panelists here as well