Cryptocurrencies, smart contracts, etc.: revolutionary tech? Talk by Zooko Wilcox on 34c3

I want to introduce you to a talk given by the founder of Zcash Zooko Wilcox. At the 34c3, the annual hacker conference, taking place in Leipzig, Germany, right now, Zooko spoke about the future of cryptocurrencies.

Therefore he concentrated not so much on Zcash or Bitcoin, but on cryptocurrencies in general.

Here is the link to the video.

I summarized the speech for you via its slides:

It's the financial institution's job to spy on and report on their customers on behalf of their local governments.

This talk is a survey of 50 different weird things that I learned in the last couple years.

His main questions are, if crypto currency technology, block chain and Ethereum and all are just a hype or a real thing. Is it really revolutionary or what? Is it revolutionary for good or for evil?

Later he also adresses the question whether governments will outlaw crypto currencies and if decentralized protocols systems have sufficient advantages in comparison to centralized ones and could take them over.

Basic tech

• Bitcoin (2008),
• Ethereum (2013)
• blockchain (~2014?)
• cryptography (1970's)
• Lightning Network (2015)

What has this been used for so far?

• Speculation - $500 bn at stake, 30$ bn/day traded
• ICOs - $5 bn in 2017
• Retail (e.g. buying games on Steam) - $1 bn/year
• CryptoKitties-~$20 M so far
• “dark markets” (drugs)-~$100M/year (out of ~$700 bn/year offline)

future tech

not gonna go there

current problems

• scale
• safety (!!!)
• applications (more CryptoKitties!)

coins coins coins

These are the five currencies Zooko is most interested in:

• Bitcoin (2008) ~$300bn
• Ethereum (2013) ~$100 bn
• Bitcoin-Cash (2017) ~$50 bn
• Monero (2012) ~$6-8 bn
• Zcash (2014) ~$1-10 bn

They have in common that they have really active and impassioned users, communities and developers that are improving them.

About the Lightning Network

Lightning is supposed to be a scaling solution. But maybe Lightning isn't the perfect solution (yet). Since it costs at least 10 - 20 $ to do that stuff the Lightning network does, it's not a solution for everyone. Anyway the Lightning people have done a lot of really solid engineering.

The Bitcoin-Cash approach on the other hand was: Make the blocks bigger, tune up the parameters and increase the capacity of the network. Yet there is no scure evidence that it’s gonna result in a whole lot more scaling.

About charting

The founder of Ethereum are taking Ethereum and parallize the computations of its single world computers to thousands of subnetworks and then mix the computations back together again in time.

With Lightning and charting and turning up the parameters we will learn a lot in the next year.

around the world around the world

Currency	24h trading vol	Government	Public	Industry
Japan (Yen)	US$ 2.6 bn	✔	✔	✔
US (Dollar)	US$ 1.7 bn	…	✔	✔
South Korea (Won)	US$ 0.4 billion	?	✔	✔
China	?	✕	✔	✔
Venezuela	?	✕!?😒	?😒	✕😒
Estonia	?	!?😊

questions questions and more questions

• Is this technology and market real or just hype?
• Is it going to be used for good or ill?

In Zookos view it's not just hype, since now we a have technologies in our hands that we previously thought weren't possible and now are possible and demonstrated to be valuable for people.

In his view this kind of technology is inherently empowering and very good, powerful and disruptive for mankind.

When asked, whether governments will outlaw crypto currencies he indicates that there is empirical evidence for that, since China has outlawed verious uses of crypto currencies aswell as South Korea. Venezuela is going after people who are mining and Russia is not decided yet whether they are going to outlaw them. But he also indicates, that there are a lot of other countries with completely different policies like the United States. He predicts, that they will not outlaw crypto currencies. As one of the biggest countries where crypto currencies are already running, it even starts to legetimate them.

He also adresses the question, if decentralized protocols systems have sufficient advantages in comparison to centralized ones (i.e. Facebook) and could take them over. He says, that the centralized ones are more attractive to the average user and have the great advantage of beeing able to scale up. But on the other hand, they have this self limiting factor. Potentially, decentralized protocol systems can break that ceiling, since everyone can be willing to rely on a decentralized network, even when they're unwilling to share a nation or a religion or a language or a social network.