Legendary cryptographer and digital money pioneer David Chaum explains to Bitcoinist why his newest project, Elixxir, is focusing on scalable privacy-focused digital cash and why Bitcoin is unlikely to provide similar privacy despite being “tremendously successful as a store of value.”
Bitcoinist: As a pioneer in anonymous communications and digital money, do you think privacy improved or worsened over the past decade since the invention of Bitcoin?
David Chaum: Privacy has dramatically decreased over the last decade. As machine learning algorithms continue to run in the background of our devices, homes, and workplaces, metadata capturing infiltrates every aspect of our lives, we have to make a decision: confidentiality or convenience.
2018 taught us that even privacy policies have fallen dramatically short of their promises, as metadata and even our private messages are fair game to giants promising convenience and connection. While Bitcoin is pseudonymous, and a step in the right direction toward legitimate privacy, it still doesn’t protect against metadata analysis — that is tracking the parties in a transaction via network monitoring, and given a person’s wallet you can easily view that person’s balance and track all payments in and out of it.
It is possible to reverse this trend, and that is exactly what we are trying to do with Elixxir. By giving individuals back control over their digital lives, we can regain confidentiality in our day-to-day lives.
Can technologies like Confidential Transactions, Bulletproofs, MimbleWimble etc. make Bitcoin transactions more private?
It is good to see the interest in privacy. There are tradeoffs for each approach, but we see these technologies as a step in the right direction. I am confident as the world begins to realize the value of privacy that we will continue to see breakthroughs in privacy and confidentiality.
Do you think Bitcoin has an advantage — not only as the first-mover — but also since the founder Satoshi Nakamoto is unknown and has disappeared likely forever?
Bitcoin has been tremendously successful as a store of value but it misses some key characteristics which would classify it as peer-to-peer digital cash: time-to-finality and unlinkability. Cash transactions reach finality almost instantaneously, once it’s in your hands you are in control. Bitcoin hasn’t and likely won’t be able to achieve this for some time, if ever. Additionally, a cash payment is a largely anonymous transaction when done in private and it’s infeasible to track individual bills across multiple transactions.
Do you see the cryptocurrency space as a winner takes all or can many coins coexist for different use-cases?
Bitcoin has proven itself as a store of value. We believe Elixxir solves the scalability and speed problems experienced by other platforms and would, therefore, enable dApps to be built at scale which can create their own tokens. Also, as we start to see the emergence of Security Tokens across asset classes from equity, to real estate, to art, and beyond, we will likely see continued growth in the existence of those coins and tokens.
Why did you decide to launch Elixxir? Does it give users more control over their privacy compared to Bitcoin?
The drive behind our team’s work with Elixxir is to give users complete control over their keys, transactions, and digital worlds. Elixxir also strives to maintain all the properties of cash: it is a bearer instrument and peer-to-peer exchange mechanism, as well as permissionless and confidential. Bitcoin has proven to be strong in the first three characteristics and Elixxir aims to also encompass the same type of confidentiality we have with paper money.
I believe there are four needs for consistency:
- Current blockchains are incapable of scaling as would be required for mass consumer adoption.
- They don’t have a level of privacy consumers would even minimally expect.
- They don’t have the transaction speed consumers need.
- Messaging & payment systems that are resistant to nation-state encroachment/surveillance. (Meaning one country is resistant to another country being able to read and analyze all of its own citizens’ activity)
Elixxir solves all that.
Why Elixxir? What inspired the name?
Elixxir has several meanings important to our company. I’m personally interested in the history and longevity of cryptography. Many alchemists used cryptography as a tool to communicate and were also in pursuit of longevity.
Commonly in myths, a hero comes back from a formational adventure with an elixir of knowledge, gained from trials along the way. We named it Elixxir because we’ve taken from the learnings of ourselves, and others, and we have intentionally built Elixxir to be the cure to issues which keep blockchain from becoming a mainstream technology.
What disadvantages does Elixxir have besides a late start (compared to Bitcoin)?
Elixxir’s late start may seem like a disadvantage, but it has enabled our team to solve real problems with today’s current blockchains. Before our cryptographic breakthroughs, we wouldn’t have been able to develop a platform which brings unparalleled speed and privacy to blockchain technology, and would be suffering from the same problems many of our peers are experiencing.
Learning from the difficulties others have experienced has been instrumental to us building a platform which solves for these issues at the start. We are thrilled to share this journey with the blockchain community and look forward to working to evolving the space together.
A fundamental issue across all of the current blockchain projects is they don’t functionally meet the 4 basic needs required for people to actually use them. A consumer adopted blockchain needs to be massively scalable. It needs to have a minimum level of privacy expected by consumers (namely that literally everything you do isn’t open for public analysis)
It needs to have transaction speeds similar to the apps they currently use. And, for international growth, it needs to be resistant to the encroachment and surveillance by one government against the citizens of another.
Because of our timing, we’ve been able to learn from other platforms missing these needs, and have built our platform to solve these issues from the ground up.
Right now you’re in Israel for the Israel Bitcoin Summit? What are your thoughts on the country as an apparent hotspot of Bitcoin activity?
For a truly distributed system to work, a truly global network of operators & developers is required to support it. This helps mitigate the risk that specific domestic issues such as energy supply, regional conflict, government censorship, etc can impact the global network. Israel has proven itself an innovator in the space, and with a handful of other nations provides a much-needed foundation for the support of a globally distributed network.
In many ways, Startup Nation embodies characteristics similar to the blockchain community. Very talented and driven entrepreneurs, with networks around the world, have been working together to bring blockchain technology to people in their day-to-day lives. I don’t see why Israel would not continue to be influential in the space as evident by the success of the Israeli Bitcoin Summit.
What’s next for Elixxir?
As we begin to roll out our platform to the public in 2019, we will be announcing when applications are open to become a node operator. We currently have an email group for potential operators to receive updates regarding node developments, which people can sign up for at https://www.elixxir.io/run-a-node, and will have more information soon about how alpha-net & beta-net operators will be selected.
For more information, please join our telegram and Twitter communities to find out more.
What do you think about David Chaum’s opinion on privacy and Elixxir? Share your thoughts below!
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