On The Other Side ep 58 - Zero-knowledge proofs + the power of encryption w/ Jon Wu
Primer: What are zero knowledge proofs? How do they relate to privacy and encryption? What are some of its use cases? In this episode of On The Other Side, Jon Wu of Aztec Network breaks down this complex topic for us.
Background
Was from consulting and private equity
Fell into the crypto rabbit hole through Twitter
Started by tweeting about real estate, but no one cared
Came across Uniswap in late 2020 and was mindblown by it
Started writing his thoughts on DeFi protocols and it became popular
His Privacy Journey
His privacy journey is related to his crypto journey
Got interested in encryption and privacy because of zero knowledge proofs
Zero Knowledge Proof
A way to prove something without revealing it
Classic example:
When someone goes to a bar, they hand their driver’s license to the bouncer
The bouncer will have access to every piece of information about the person
Instead, a zero knowledge proof will just prove that you are above the age limit without revealing any information about the person
On Privacy
What Is Privacy To Him
It’s a core component of freedom, self-sovereignty, and individual rights
Privacy is a basic right in society
Will The Internet Devolve Into Something Privacyless?
In the middle ground between trusted intermediaries that custody all our information and situations where the data is violated and exposed to state actors
Could see the US becoming like China if trusted intermediaries take a wrong turn
Do People Need To Be Motivated About Privacy?
30% of internet traffic goes through a VPN, so there’s a desire for privacy
He thinks that privacy positioning is wrong. At Aztec, they think of it more as encryption
“But it's [privacy] not really a technology, right? Encryption is the technology, and it enables privacy and verifiability together.”
- Jon Wu
Getting people to care about privacy is partly a branding problem
It’s just a matter of waiting for people to get phished enough for their information to be exposed
On Encryption
Defining Encryption
Think of zero knowledge as a bunch of squiggly lines (polynomials) with special characteristics that are hard to replicate
They use encryption to do 2 things:
Compression — Verifying off-chain computation on-chain. The off-chain compute is much more succinct than the raw computational data
Privacy — Wrap something that you want to do on-chain and obfuscate it from other people while also proving that your computation was correct
Encryption, Application Layers, And Privacy
Need base layer privacy on a network such that users are defaulting to privacy
Aztec’s goal has always been generalizable privacy
In the history of privacy on blockchains, it started with simple mixers which are costly and not generalizable
If blockchains had started with base layer privacy, we probably would not have a problem with it
Why Did Blockchains Not Default To Privacy?
Did not have the technology to build zero knowledge proofs back then
The priority back then was trustlessness and verifiability
What Does A World With Widespread ZK Proofs Look Like?
Blockchains are not fully private and anonymized
Aztec’s next-generation encrypted blockchain will be a public-private blockchain
Some things need to be public (e.g. everyone needs to be able to see the clearing price on an AMM)
Blockchains need to have the ability to dial privacy up or down
What Type Of Information Would Optimally Be Private/Public?
Right now, DAO governance is public, but there are private machinations happening in the background (e.g. texting friends to vote)
The person you text may feel obligated to vote in your way
With privacy, you just know that the person voted, not what they voted for
In DAO governance, there’s an 11 hour problem where people garner their votes in private and blast it out at the 11th hour
Use Cases For Encryption Technology
Gaming — Having a privacy component of game mechanics
Contracts or agreements in business — Discreet but provable as to whether an action was committed
DeFi — Dark pools and encrypted exchanges
DeFi And Identity
Needs to have some centralization trade-offs when it comes to compliance
Zero knowledge, privacy, and encryption have the potential to create more compliant blockchains without violating user privacy
Centralized service providers could issue ZK NFTs for KYC pools
Privacy And Government
It’s difficult to get governments to transition from full visibility to privacy
Believes that ZK encryption is a pathway to being both private and compliant
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