"Crypto Without Privacy Isn't Crypto" - The Zcash Bull Case | Tushar Jain & Mert Mumtaz

0:00 Bankless Nation, we've got a pretty unique episode today. We are joined with Tushar Jane. He is the co-founder of Multicoin Capital Tushar. Welcome to the show. Hey, David. Thanks for having me. We're also joined with Mert Muntaz. Mert also, first time in the podcast. Welcome to the show. Thanks for having me, boss.

0:17 Interesting podcast. Interesting group of people we have. This is, I think, going to be pretty exciting. I got peaked by Zcash and I kind of went down the rabbit hole and I realized that there was just a lot more substance there. Mert, you have been talking a lot about Zcash for over a half of a year now, maybe even longer.

0:34 Tushar, Multicoin just publicly announced that you guys made a big, seemingly sizable investment into Zcash. Tushar, maybe we can start here. What got you over the hurdle? What was the moment? I was like, ah, maybe we should really consider this and come into Zcash in size. What did it for you? There were a combination of factors for us.

0:55 I want to acknowledge that, you know, Mert was earlier to this than I was and has been talking about it for much longer. And I was watching that and I was watching the entire narrative around Zcash last year, really start to build up. And this is an asset that, you know, I've seen since it started and paid attention to and mostly it was just left for dead.

1:18 People weren't really paying attention to it and so it kind of languished out there. And then I saw that there was this huge push for it. But when I see something like that, I always pause and wonder, is this some manufactured thing? Is it sustainable? Is there a real ground swell of support here? Or am I just seeing a handful of, you know, echo chambery things?

1:50 And when you see the price do what it did last year and then what we saw was it pulled back very significantly. And as I saw it pulled back, what I saw was one, the people who were talking about it were still excited about it. Two, the place where it pulled back on the chart actually demonstrated much better attention and strength than where the thing was trading for years and years before that.

2:21 So of course, like all things in the market, things get overheated, people get really excited, they price that in first, then that implied leverage in the market has to get wiped out. That's what we saw last year. We also had a bunch of macro crypto bear things basically happening with 10, 10 liquidations and so on and aftermath of that.

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5:11 Check out the new Metamask. It's already on your phone or in the link below. Mert, people will formally know you as the Salona guy, the guy that really educated and pushed and elevated Salona and and sold the asset respectively. I think now people in crypto Twitter and in the crypto community broadly know you as the ZCash guy.

5:28 Not to the exclusion of Salona, but it's just seemingly what you're focused on. Talk to me about that transition because as Tushar said, you were very early. I saw a tweet from you talking like doing a little bit of a victory lap when ZCash ran up to something like $80 and you're like, oh, I was told you guys and now we're at 500.

5:49 And so talk to me about what you saw in ZCash and why you decided to put so much time and energy into it. Sure. There's a quick lore here in that a few years ago, I would say or maybe two years exactly now, Sean Bow, who is, I call him the totally of ZCash, he's super gifted technical mind. And he and a few others reached out because since I was known as the Salona guy, they want some advice or a review, so to speak, on their upcoming scaling designs.

6:22 I hadn't, I thought ZCash was left for dead as well, this was about two years ago. And they wanted me to look and see if the scaling approach makes sense. And so I started looking into it and then obviously, somewhat of a try hard, so I had to look into it recursively, so to speak and look at all the little edges and whatnot.

6:40 And as I was doing that, it occurred to me that it actually does make a lot of sense and the tech is extremely interesting. And it works, however, they had many other problems, and we can talk about these in terms of the UX layer, the narrative, the hiring and the positioning in the market and all these different things.

7:00 And so that's when I first started getting more into it, this was sometime early 2024. And as I kept, and by the way, like obviously, I'm still Salona first in the sense that my company is a Salona only infrastructure provider and we're actually building a privacy layer on Salona now as well. And so that's always still, I'm not necessarily, you know, favoring one or the other, but I call this the obvious barbell, which is to say Bitcoin and ZCash on one end of the barbell and then maybe hyperliquid and Salona on the other for me.

7:38 So and then all this institutionalization of crypto started happening. I was a bit earlier to this than most people because obviously a lot of meetings with suits behind the scenes and that takes its time to propagate to Twitter. But I just, I got disillusioned when I saw everybody was working on some interesting stuff, like, you know, defense sac and drones and Frontier AI labs and I was like, okay, what are these athletes doing here?

8:03 The ZC is cool and all, but fundamentally it's an API for the dollar. I mean, that's mostly what it is. And it felt like I had kind of wasted my time to an extent in crypto and, you know, I have a lot of fun, but it just, the aesthetics and the ideals weren't necessarily what I imagined. And then, you know, through talking to a few other friends and really forming my opinions over the next few months, it occurred to me that privacy is this last kind of, I call the last PBE.

8:35 The major thing that crypto has forgotten and I think a lot of the institutionalization and whatnot stems from that. So like the way we described this is, at first, we had to prove that crypto worked, right? So that was Bitcoin and that it could be used in that cryptographic money was possible. Second was Vitalik was like, actually, this should be programmable.

8:57 You should be able to do things with this. And so then Ethereum came. And then, and it totally came and said, actually, that's good, but we also need to make it scale. And then kind of the final phase that everybody somewhat forgot about because they were too busy legitimizing that crypto is, you can be used for good and not necessarily for crime is that people slept on the privacy part.

9:16 But now, especially when Trump is president and let's say the regulatory apparatus is much more friendly, we have a shot here, you know, we call it a thousand days to win back freedom to legalize privacy again and bring crypto back and reorient it to be more of what it was supposed to be rather than what it's being co-opted to become.

9:36 So this is really just a pursuit of cypherpunk ideals and just kind of like a missing piece for Zcash. There are a bunch of, for you, for you, Murr, there are a bunch of arguments that I want to make with you guys on the show today about just like why now I want to go through them like one by one. There's like the institutionalization path that Zcash might have.

9:56 There's the value of privacy. There's the proof of work distribution period. There's a bunch of different things that we can talk about. But before we go into each of those, I would just want to zoom out and ask the question just why Zcash and why now? There are other privacy assets. There have also been other instances in which privacy has been valued by the market.

10:17 But now there seems to be a unique and idiosyncratic amount of attention on Zcash specifically. Why is that? Why are the stars aligning for Zcash? Murr, I'll throw this one back to you. Yes. Without this, because my style is, I pick one chain or project and then that's all my attention. So it's just a lot of Zcash I've been involved with since all my years in crypto.

10:41 When I looked into this, the YNAB part is probably slightly simpler. I think there's a convergence of things, institutionalization is obviously one. We saw this also. I don't know if you guys remember those posts about the BlackRock ETF and the derivatives of Bitcoin and Jane Street and all this stuff and that part clearly exists.

11:01 There's sailor being the entire face and it's just one guy buying the coin the whole time and perhaps as AI posts don't necessarily work well to spread the narrative from here. There's obviously AI, which at first I thought was extremely overrated, however, one way to frame AI is that it's an expert computer for unstructured data.

11:23 All the computers that you see on the internet or in reality today are designed with structured data, meaning you put in something and then you get out some spreadsheet and that spreadsheet is generally dynamic, which then gives you a website. But AI can actually understand unstructured data, right? We don't necessarily know how it does it, but the weighting of the trading data and the matrices allows us to do that.

11:47 So for example, AI has been shown to be able to de-anonymize, so to speak, pseudonymous forum identities from just messages across different social media networks, right? And so as you keep institutionalizing crypto, which means you have to, you're adding all these on ramps, which then, so the way this works is privacy is a network effect, but so is transparency, meaning for example, assume you've been perfect your whole life in terms of on-chain privacy.

12:16 Okay, well, the second that one of your counterparty slips up and identifies you or you leak something or you dox one of your wallets, what's now happened is there's that link and now it goes back exponentially backwards and forwards until you have just created a network effect of linkability. Okay. So AI makes this infinitely worse, obviously Trump is president and you've seen things like the wall seizure taxes in in California, the unrealized gains taxes in Netherlands, and there's just this general trend towards let's say extreme socialism and you kind of put all those things together and the timing kind of and then obviously the other thing here is ZK itself is everybody in crypto like every in this room knows what ZK is, but

13:06 it's been relatively unworkable for many years, right? The scale didn't necessarily work, the user experience, the signing SDKs, all these different things, never really worked at scale. And it's really been about two years, two and a half years, that ZK has been a functional technology that can actually be used at scale and ZK has pioneered ZK, right?

13:25 So it's suffered because it launched with it. It was the first production start system, but now that it's actually functional and there's a trustless shielded pool, which it doesn't require trusted ceremony, all the stars are somewhat aligned. And then obviously we have the Joshis team, Zodal team, which used to be called Zashi.

13:43 They started building the wallet and provided or show that you can actually have good user experience with a ZK protocol and then of course there's something like near protocol where you have intense and you're able to just swap in from any chain, swap out from any other chain, right? And then I listed it on Salana, I worked with Hyper Liquid, I listed on there.

14:02 And so now you also don't have the centralized exchange choke point. You can actually use decentralized finance for this. So that's the why now. In terms of why ZKash over, let's say, other privacy projects, well, again, I think the only other or the main other competitor sort of speak would be something like a Monero.

14:21 But if you are into cryptography at all, you'll know that ring signatures, which is what Monero uses, it's a decoy architecture, right? For every one real transaction, there's something like 16 fake transactions. And when you combine that with something like AI or a sufficiently powerful computer, you are able to reduce the anonymity set to an extent where you can start doing some real damage, right?

14:45 There's a lot of tracing companies oriented around this. And so if you just, you know, I'm a tech guy. So if you look, if you reason from the foundational basis, then ZKash did the very, very difficult and arduous work of productionizing the snarks, which hurt them for the first seven, eight years until Monero got network effects in certain niches, right?

15:07 You'll hear something like, well, ZKash is private, then why are criminals using Monero? And really it's similar to saying something like, well, if Salana is so fast, then why are Latam merchants using Tron? And it's like, okay, it was first a market, it has network effects within that niche, but it's not to do with attack, right?

15:26 And so I want to minimize my counterparty risk in terms of engineering basis. And then it's obviously a fork of Bitcoin, right? So it's very simple to meme this and reason about it and de-risk kind of the supplier and all the different things you already saw with Bitcoin because you can just say it's private coin, right?

15:47 It's a very easy sell. And there's a few other things in terms of, for example, the way the architecture is laid out is very conducive to quantum proofing, which it is already quantum recoverable now. And you know, the proof-of-work distribution, it was a dead project for many years, meaning most of the people who sold, sold, and then now, if you look at it, the distribution is sufficient such that it doesn't resemble anything in today's crypto, right?

16:15 It's from a buy-gone era, so to speak. I want to talk about something that I don't know. I want you guys to validate for me because I'm just kind of getting into the Zcash narrative and understanding it for like my first week here. But as I understand it, the Zcash has a path forward to it to be legitimized and underscited and accepted by institutions, which is why it's TAM potential is potentially large.

16:38 This is a quote from Matt Hogan from Bitwise who tweeted out, as suit-coiners, suit-coiners, drag Bitcoin into the mainstream, it makes space for things like Zcash. I think this is just a commentary on Bitcoin kind of losing its cipher-punk edge, because it's doing its job, it's becoming, you know, inside of central banks, it's in, it has things like micro-strategy, it's just in and accepted by and legitimized by the world's largest institutions.

17:05 But also, I think that same institutional legitimacy is available to Zcash. It's not there yet, but that path forward is possible to share. Maybe you can talk to us a little bit about this possible path that Zcash can take and why institutions might like Zcash and use Zcash and adopt Zcash. So I think Zcash has a brand that is more conducive to institutional adoption or is just more attractive to a wider set of people, right?

17:38 There's other privacy coins out there, like Mert said, Monero is probably the main one to compare it to. And when you look at Monero, it has a very specific brand. And you get the sense, like, you know, you've seen a lot of tweets of, well, if Zcash has such good privacy, why are all the criminals using Monero, well, that's the brand that Monero is going for.

18:01 And Zcash is not for that. Zcash is for the regular person who says, no, I care about my privacy, not because I'm doing anything illegal or I have anything to hide, but because I don't need to reveal all of my financial transaction history to every single person with whom I interact. And I want to be able to transact privately on blockchains.

18:23 I don't want to have to use, you know, a bank transaction in order to transact privately. And so I think it's a brand question. And for a lot of these assets, but, you know, it's very path dependent, right? Like their outcome is path dependent. It's not a foregone conclusion when the projects were started, how the brands were going to evolve or what their use cases were going to evolve to be, but what we see here is the evolution of a, like, privacy for the normal person brand.

19:01 And that is jelling together with this desire to return to Cypher punk roots that got us all started, right? And I think Zcash is emblematic of those Cypher punk roots while still being accessible and legible to a significant group of people. A lot of people are like, well, yeah, Monero's for criminals, I don't want it.

19:24 That's not me, right? But Zcash benefits from its positioning. Going a bit further along that train of thought, for privacy to actually be useful for people it needs to actually scale beyond the niche, right? That is to say, you need some sort of a Trojan horse for adoption and the fact that Zcash has both a transparent mode, which is just Bitcoin, and a private mode means that you can get institutional to want exposure to the asset, but then obviously there is a non-zero conversion rate of either that attention or that reflectivity back into the shielded pool.

20:07 And so you can kind of, and those people will kind of do the bidding for helping legalize privacy sort of speak, right? I mean, Roman is still being pursued by America for writing privacy code, and obviously there's some other factors to that. But unless you are able to scale and get enough momentum, such that you can get all sorts of different actors and message it in more as an individual right type of thing as opposed to I'm just trying to hide my interference activity thing, then you're never going to get the escape velocity required to actually normalize privacy, right?

20:44 Privacy for it's a basic human right, and especially in this new age of, you know, connected systems, if you don't have a very strong base in a Trojan horse to get adoption and you're kind of just trying to brag about it to random edge lords on the internet, it's never going to get the scale required for it to actually become anything more than a niche.

21:07 And the argument here about like the upside for Zcash is that there's going to be some amount of people who adopt privacy organically, and that's what grows the supply, the percentage supply of Zcash in the shielded pool. And because there's some amount of that organic demand for privacy, strong privacy, you know, cryptographic privacy, like the good kind, not the ring signatures of, of Monero, but the cryptographic cryptographically provable privacy.

21:35 And as a result of that, and because as you're saying this, this the Trojan horse model, you have the unshielded Bitcoin version of Zcash, institutions can adopt it. And between organic adoption and institutional legitimacy, the market captures goes up because I don't know, mate, there's an ETF about it.

21:53 Organic users are buying and holding it, and then like crypto Twitter gets in on it. And these all these things kind of coalesced together to rewrite Zcash to a higher price. Is that more or less the simple bull case here? I think that's a good articulation of the bull case, but there's more to it. It's important to remember, like the market that Zcash is competing for is the store of value market.

22:19 Like, that's the job that it does is it's for storing value, and it is far more scalable than Bitcoin, and so enables, you know, more transactions and such. But the core value prop is store of value, right? This is not going to be necessarily the payments chain where, you know, Stripe or Visa or whoever else is settling their transactions.

22:42 And something that's important about store of value is human group psychology and the shelling point that leads to people all agreeing that one asset is that store of value. You know, the classic historical example is gold. Why did people like gold because they were shiny and it had a bunch of other metal properties that were, you know, very helpful and then everyone kind of just like came to that same conclusion.

23:10 Bitcoin, why is that a good store of value? Well, it was first. It was the first thing to solve double spend problem. It has this like virgin birth narrative and that's really powerful. And then the question is, well, what does the next one look like? What does it, what does it take to compete now? I think Zcash serves as a shelling point and it's doing that already.

23:36 And as it, you know, is now the biggest privacy asset, not only by market gap, but by volume, by attention, by basically any metric to look at, then there's just a runaway compounding effect because why would you want to use the second best store of value, private store value asset? Everyone's going to want to be in the same top one.

23:58 And so my theory here is that just like Bitcoin was in the 2017 era or the 2013 era, I think both have good comparisons to Zcash now. Zcash is going to benefit from the reflexivity of, oh, more people are using it to store value. Therefore, it is now a better store of value. And so more people choose to use it to store value.

24:26 I think that's an articulation that the second money to come after Bitcoin, there's always been this fight to be like, what's the silver to Bitcoin's gold? You know, Litecoin wanted to be this, but turns out when you just chop the block times and buy a quarter, then you don't really do much, but privacy is actually like unique and differentiated.

24:44 And so like maybe, maybe whatever asset takes the second place to Bitcoin, which is a very valuable place to be, maybe it's privacy that is the thing that differentiates it for all the things that Mert said in the world of AI and the world of just like hyper data, maybe privacy is the thing. Also, not to cut you off, but there's also like, we say the word privacy, but like privacy is more memeable, for example, let's say than decentralization, but privacy is important or those decentralization is important in so far as at least to some tangible property of the product.

25:21 And so that is to say, when you have a private store of value, then what you get that you don't get anywhere else is true fungibility, right? Money, like cash money, is useful to the extent that it has no history attached to it. It's completely liquid. All information is devoid. You don't know where it came from, nothing like this.

25:41 You can just swap it. You can use it for any transaction. Gold, for example, that's, it's been used for centuries for this purpose. It's truly fungible for other pieces of gold. But as soon as you have a digital asset, the digital asset has a history attached to it, and you can use that history to delegitimize, let's say, its value and then put, like maybe you can't seize it entirely, or even though trillion candy you can, but you can blacklist it such that now the history of the asset has tainted it.

26:11 And so it's not truly fungible, right? It was a first principles correct derivation or property, the true fungibility aspect, is something that a story value must have. I take that point. There's been this long conversation around Bitcoin around just like tainted coins, coins that people might want less.

26:29 I've never actually seen that really impact things, and this was kind of going to get to the question that I was going to ask, which is like, I don't know, guys, if we, if we fast forward like a year or something and Zcash is back at like $40, everyone's going to look back at this, be like, privacy, like why did so many people fall for privacy?

26:49 No one cares about privacy in the same way that no one cares about decentralization, like it's noble, and we should have it, but ultimately at the end of the day, like it'll be just another instance of when investors tried to invest in privacy and ended up with another tombstone, because, because like no one really cares about privacy.

27:06 And so like, well, I take the point that like Zcash is more fungible than Bitcoin. I don't see that really getting in Bitcoin's way. And so I just want to kind of elevate the bear case, the contra case that like, guys, we're dozens of people have tried this before us, and we're about to join them. And like, why is now any different than all the times that came before?

27:29 What would you say to that? If you look at the early Bitcoin posts, because you were talking about the first principles correctness of it, Satoshi actually wanted to, I mean, solid, solid, howl and land and Andre, Andrea, all these guys wanted to actually add privacy, and there's a famous block platform post where Satoshi says, if I knew how to add a ZK, then we would, but I don't know how to solve a double spend problem with this, right?

27:53 So one thing to consider is that the lack of privacy in Bitcoin today is actually a technical limitation, because you needed to be able to audit the state such that you can prove there was no double spend. And so the tech literally didn't exist for it. Anyway, in terms of the bear case, I mean, of course, it's a bear case, right?

28:11 Like, this is a risky, everything in crypto is fundamentally risky, but especially, you know, let's say, neuro narratives are always risky. I would say a few things. So one is that just from a risk-adjusted perspective, I just don't think there's anything better in the entire industry today in terms of risk-adjusted, right?

28:32 So like, if you look at ZKash, it is below, way below XRP, right? And like, you know, what is XRP really doing? I mean, it's even below BNB and all sorts of different coins. And you know, the target that people will give you for ZKash is something like, well, 10% of Bitcoin's market cap or something, right?

28:53 So some people are more delusional, such as myself, but I think most people are sane enough, such to say something like, it'll be some percent of Bitcoin's market cap. And look, I mean, I think to try, I will obviously have a different answer for this, but like, I am actually building things on top of ZKash, so I'm helping with, you know, hiring, wallet infrastructure, partnerships, integrations, and, you know, talking to VPNs to accept your payments.

29:17 On my end, it's, okay, look, even if it does fail, then it was certainly something worth trying to push and it's like, I'm not going to stop doing it. It needs to exist, prices will go up and down as interests in crypto, because most assets are correlated. But if you look at where the world is heading, if you look at the limitations of the biggest SOV asset today, or the two biggest, really, including gold, then this is the first principle's correct version of the solution.

29:46 And the rest of it becomes something in our control to be able to like, okay, just how do we tell the story better? How do we understand the weaknesses, take that feedback, and keep improving the project because it's a dynamic effort? I don't think that we should think about the market as a monolith, and say, oh, the bear case is that people don't care about privacy.

30:07 Well, yeah, possible, but people are not a monolith, and what we need is some percentage of people to care about private store value. And that clearly exists, and I like that is what the last 18 months of data really proves to me, and that's one of the main reasons why we put on the position more recently is because you can have all the great high-minded ideals in the world, but if no one cares, then it's not going to succeed, right?

30:40 You have to show some early traction of, oh, people actually care, and that showed up here. But that's what I saw, that's what got me really excited. But there's a couple of other components as well, right? Like, now with the Zashi, now Zodol wallet, enabling near-intense and creating the ability to trade in a decentralized way, previously, if you want to buy Zcash, you have to go to a centralized exchange with KYC in order to do that, I've got to defeat some of the purpose that you're aiming for here.

31:13 And so there are technological reasons why people who did care about privacy in the past may not have been excited about Zcash, because it wasn't usable for what they needed yet. But now, I think we have evidence that at least some side of people do really care, and we have evidence for why adoption can increase now, when it previously was stagnant.

31:40 I'll also add, I think, to Charmere, a good point there about, clearly, there's some percent of people who care about this particular niche in the market, right? So one way to think about this is, you know, I mean, the show's name is Banclist, right? And like, you can certainly become Banclist, so to speak, on Ethereum or Salana, but just having cryptographic key pair, right?

32:00 You don't need anything else, you just hold ether stall and you're your own bank. But there is this other niche that isn't super talked about, which is like the offshore wealth folks, right? Like, the people who store money all across the world for fear of seizures or just to be able to decentralize the, or reduce the counterparty risk, right?

32:20 One thing like analogy I use here is like, it's a Swiss vault for in your pocket, right? Obama has this famous quote where he's like, oh, we can't let people have privacy because then everybody's walking around with a Swiss vault in their pocket. And it's like, yeah, that's exactly right. There's a certain set of people, and like Switzerland, for example, just, I think they were under the, they came under some heat for working against a few individuals and actually turning against them, so to speak.

32:45 And so there is actually this niche where you can have a bank, you can be Banclists with with just Ethereum and Salana, but if you want like that Swiss vault protection, so to speak, like where nobody knows what you're doing and it's just completely private, there's a lot of people, you know, like you'll see people like Shamath and Radalio, et cetera, kind of hint at this, biology, et cetera.

33:07 And that niche is such that you just need to close, let's say, a few of them, right? And that niche specifically needs to exist for to have a much higher floor than it did before. I think when something that we did a podcast with lately that is alluding to the same point that you are, is we did an episode with Ari Redboard from TRM Labs, and one of the questions I asked him, we talked about Lazarus Group, we talked about the IRGC's use of crypto, we talked about the Cambodian pig butchering scams that happen, and they're able to like track all of that stuff on chain, and that's what TRM Labs does, that's what she analysis does, and the feds love it, and I asked Ari, he's like, hey, do you think

33:51 the feds, like the CIA, the FBI, OFACFIN, said, do they like on-chain finance? So like, do they want finance to move on chain? And Ari was like, yeah, it's really helpful for them to do their jobs. And to some degree, that's great because they're going after this gamus, like to some degree, they're the good guys, and so I'm happy about that.

34:11 But like the net effect of that is a little bit chilling in the sense that like if finance is all on chain, and there is only very small islands of privacy, those islands become pretty crowded places to be, that was kind of like my reaction to that. Yeah, so David, I want to chime in there because look, it's easy to fall into the trap of, well, those are the good guys, but you have to remember any power you give to the government, you have to imagine it being used not by your political allies, but your worst political enemy.

34:50 Because that is the level of protection that people need from their government, is you have to imagine your political enemy is in office and is able to take advantage of all of the powers of the government, try and go after you. And so, yeah, having all of your transaction history easily visible on chain where a hostile regime can then use that to track everything you've ever done using AI tools and understand your entire financial history and then maybe be able to use that against you without having to go through the proper warrant process, without having to issue subpoenas in order to get the information that they need, like our, the protections that we have are very much built around a economy with intermediaries who need to be subpoenaed, right?

35:45 If you want to see all my transaction history, well, as a prosecutor, you're going to need to go get a subpoena and get the bank to give that to you. But if it was all on chain, well, then there's no warrant needed, there's nothing, you can just go see it. And you have to imagine that power being abused by your political enemies.

36:05 And that's why privacy is so critically important and that's why I agree with Mertz, like we have a thousand days for freedom, right? Like right now, we know we have a friendly administration and a friendly Congress in place. And so we have a limited amount of guaranteed time, basically, in order to enshrine privacy as a normal thing that regular law abiding people want.

36:32 And then that will protect us from potential abuses of power by others in the future. The way I summarize this is just, you know, when cops arrest you in America, they say, you know, anything you say can and will be used against you in a court of law. And it's the same thing as just anything you do on chain can and will be used against you anywhere, right?

36:53 Because now all that information is free-floating forever and it's exponentially compounding. And there's a good interview with Peter Teal about this by Sorkin in Aspen Institute, where he asked him about his Bitcoin position and he says something like, well, when I talk to my friends at the FBI and they tell me that they'd rather people use Bitcoin than anything resembling the traditional finance system, then that's when I wonder, you know, like what exactly has crypto turned into?

37:20 And so he like basically just positioned. And you know, obviously the crime stuff is a real problem. However, I would argue that the TAM for individual dignity and sovereignty and choice is several orders of magnitude larger than criminals using it to do nefarious things because again, cash already exists.

37:41 I want to talk about the shelling point that Tushar was bringing up earlier in the pot. I want to go back to that and touch on that. And this has to also do with ZCAS, it's just distribution, schedule of supply schedule. And it's kind of it's history up till now. I'm actually kind of wondering if you can kind of just download us on ZCAS's distribution so far.

38:00 Like the whole monetary policy, the supply schedule, how it got distributed, the whole proof of work phase, and then culminating in why that actually adds to the strength of the shelling point around ZCAS. Yeah. So I mean, it was released later than Bitcoin. So it is mimicking Bitcoin's tokenomics in a way that's slightly behind it.

38:17 So there's still other things coming up. The one notable difference, I would say, is there is a set of fees taken. And the way it works is token holders get to vote retroactively on how those funds should be allocated. So for example, Sean Boeste, which is doing project hacky on, which will not only help improve the scale of ZCAS by our magnitude, but also lead its way to quantum proving it entirely.

38:49 For example, he's an independent core contributor. And so if the token holders of ZCAS think that he did a good job, then they will basically reward him by voting on chain. And so that's like the notable difference. But I would probably say just emphasize what you said, it's a fork of Bitcoin. So 21 million hardcap proof of work, supply-havening all for you every four years.

39:15 I think for the ZCAS, it was released in 2013. So Bitcoin released 2009. I could be wrong about that. Bitcoin released in 2009, ZCAS released four years later, five years later, something like that. And so what you're saying, it's a carbon copy of Bitcoin's monetary policy moving forward except for this one nuance that you just highlighted.

39:33 Correct. So I would bet that Tushar probably knows the, as he's a liquid investor, he probably knows the token stuff a bit better than me. Sure. Yeah. Tushar, what I really want to get at is like, you know, despite Bitcoin has its monetary policy and ZCAS has a clone of that. Also, the price action and price history and market structure history around ZCAS has just been different because ZCAS just was laughed at in terms of its price action basically every single cycle up until right now.

40:00 So this is actually like the only moment in my entire history of being in crypto that ZCAS is viewed with prestige and not with just like, it was kind of perceived as like this sandbox for cryptographers to tinker with but not by anything serious. So just talk about the history of ZCAS and its price action in the market and its position in the market and why that actually is conducive to what it is now.

40:20 Yeah. Look, I was ZCAS hater for a while, or I don't know if I'd call it hater, but I wasn't a fan. Disregarder. Yeah. And, you know, in fact, in the past, we had even had a short position on at some point on ZCAS which I talked about on Twitter and people brought that up recently and said, yeah, well, not dogmatic, not as dogmatic as some others and I got some new information that changed my mind.

40:49 The main thing that I was thinking about as catalysts now that I think are really, really different are that you are seeing this macro trend that is more exciting here for privacy which is around this wealth tax in California or the wealth tax or unrealized gains tax in the Netherlands. You're seeing more of a push for that and I actually do think that like as AI increases wealth inequality, you're going to see even more of a push for wealth taxes and private stores of value are going to gain even more attention.

41:32 So if you look back at the history of it, like it was not really paid attention to, it was left for dead and quite honestly, it was for good reason. It was a hugely inflationary coin that didn't really work, right? Like if you wanted to buy this privacy coin, you have to do it on a centralized exchange.

41:50 It didn't really scale. The wallet infrastructure was awful. Like, you know, you try to use it and it's just like this miserable thing to work with and a regular person would just not even think about it. And it did not have any sort of like marketing or it didn't have any sort of attention grabbing like apparatus at all.

42:11 It just didn't exist. So it was just like bad on so many different levels. But what we've seen is over the past 18 months or so, it's turned around on all of those, right? It is able to get attention. The wallet infrastructure is better. The chain does support being able to buy it privately. And then you have these macro tailwinds of things that are happening in the world, which I think are good for private store value.

42:38 So look, don't overindex on the past, don't look at like, oh, well, this is going to be exactly like Bitcoin in 2013, like, you know, I'm not a guy who's drunk triangles on charts and then, you know, counterpacing them on top of like other charts with triangles on them. You have to look forward, not backward.

42:57 And you have to be willing to change your mind, right? And I think that there's a lot of people like me who forgot about this thing or left it for dead and are now thinking, huh, should I think about it again? There's in crypto lore, there's like the Bitcoin immaculate conception. People will talk about Ethereum had the immaculate ICO, it was like the first meaningful ICO.

43:20 All further ICOs after Ethereum were adulterated because of how the success of Ethereum's Uniswap had the immaculate airdrop all, all airdrops after Uniswap's were all kind of adulterated and messed up and the incentives were bad. Uniswap really had the one good one. Zcash kind of has something like this, the immaculate forgotten coin that people just abandoned for like five plus years and like slowly allowed the price to just approach zero.

43:51 And then it stayed there for a very long time. And like, so there's like a lesson that I think we can all I feel when I like get on the Zcash hype train and I invite like Martin Tushar to people who I've never invited on to the podcast before is like, oh, there is some level of like everyone in crypto can get behind this thing.

44:11 And in fact, the only people really in crypto who might feel offended by the Zcash pump or the Bitcoiners because they're the they're always offended by everything that's outside of Bitcoin. The PVE branding that Zcash has where like everyone in crypto who's just not a laser I Bitcoin maxi can kind of get on the Zcash train without having to feel some sort of like tribal warfare about it is like I feel I feel that presence and I think a lot of people kind of just like the guard is down around Zcash like maybe maybe we can disregard it in the past, but also no one really hates Zcash like how can you hate it is like cryptographically pure Zucco is just a friendly guy and it's it's background is like relatively unadulterated

44:58 I didn't there's no real question there, but I'll let you guys refer on that if you like yeah I wrote maybe was a year ago now the you know, this is the last PVE in crypto and you know that's obviously a little dogmatic, but I think one thing I noticed as I as I started talking about it was that I had guys from Celestia from Ethereum from Solana from even Cardano and all these different types of dudes even like certain OG Bitcoiners right start basically agreeing with me and I was like I never had this happen before right usually I'll say something good about Solana and then I'll get all sorts of shit for it, but with Zcash yeah that also exists especially from like Manero people, but it is it is certainly something where if you are

45:43 if you got into crypto for like the ideals of it then you can almost certainly resonate with what it's trying to do and and also the other thing I like about it is that privacy as an entire sector is so I want to say the word oppressed because it's like a little woke but like so let's say forgotten about and so so underappreciated that people from other privacy projects that aren't even necessarily crypto can also get behind it right and it benefits every other privacy project on all other chains right I think the railgun guys started doing well as well on Ethereum I funded like five different privacy projects that were new on Solana even like Charles started building some privacy stuff onto Cardano and so you started having all these

46:31 different privacy projects and most of them will fail of course but the net results will be that there will be more privacy and more privacy oriented solutions today and in the future then there was in the past and that was just a net good for anybody who really is an individual when the market pulls back most people just wait they hold cash hoping things stabilize but there's another move and that's where Nexo comes in Nexo is a platform built to help keep your digital assets productive you can earn daily interest on supported crypto assets through their yield product or get funds through a crypto back credit line without having to sell any of your assets so if you want optionality Nexo gives you both sides of the equation you can put your assets to work or borrow against them

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48:30 knows it's understood that Bitcoin is not going to elegantly make it over the quantum hurdle it's going to get there it's going to be in some sort of rough shape just because of the Satoshi coins there are other things other challenges that Bitcoin needs to achieve to more smoothly get over the hurdle but I think everyone in the industry understands that like something not amazing is going to happen with Bitcoin and and quantum how is Zcash positioned with regards to quantum versus Bitcoin and the broader rest of the market I think this is a question for you I would say Zcash will almost certainly be the first quantum proof chain and one thing I'll note is that it's already quantum recoverable now there might be maybe in the next week another update to the wall

49:11 to make that fully the case but by quantum recover will be just mean as long as your coins are shielded you can have any sort of quantum attack and be fine right you can just weather it out there which I think is actually it will be you know if quantum timelines are if they accelerate I think that will actually be underrated move for adoption and getting people to shield their coins and so here here's like an interesting way to think about this which is that in in in most privacy protocols I mean certainly for a Bitcoin right like if you have the public key of somebody with short algorithm you can derive the private key meaning if you know somebody's address you can literally take their money and and then the most nefarious part of this of course is that you won't

49:54 actually be able to detect it right there's not any infrastructure that's possible where you can say oh you're being quantum attack and I don't know it'll just be like if you had just randomly lost your seed phrase and somebody exposed you you don't even know it's happening right so unlike like let's say the nuclear arms race the quantum arms race is such that you don't want anybody to know about it and so you won't be able to even detect that there's an issue for a long time okay so how zcash differs here is that once you have encrypted all your information there is no additional information that's exposed on zcash right when you look at a block explorer on zcash and you send somebody money you don't know who received it you don't know

50:36 who sent it and you also don't know the amounts you know absolutely nothing and so assuming like if you are just even using zcash regularly you won't be able to for example retroactively trace anything right that you'll you'll hear about these things called the harvest now decrypt later attacks meaning if you have the information today you can decrypt it going to the future this is also another knock on Monero wishes to say that with decoys you'll be able to retroactively trace every amount of crime that has ever happened there right you'll be able to see exactly what happened when where it went all these different things with zcash that is not possible because the information physically does not exist however there's of course a ecc base so elliptical

51:21 cryptography based things that govern the zk proofs and and and and so usually zcash is vulnerable to things like being able to mint different coins for example now they have these things called turn styles to defend against those anyways so you will actually be able to detect them however with Sean and devs new work of project tachyon the the the communication for the key exchanges will be out of band meaning so once it's quantum recoverable which is like this week you're already fine but after that the entire chain will be quantum proof we're really estimating by mid to late summer right and so this is also i mean you you you briefly mentioned that actually about well zcash used to be this sand sandbox for like niche cryptographers well it turns out

52:13 that having super talented niche cryptographers is uniquely advantageous to a cryptographic attack right and so it just turned out like i don't think this was planned or anything but such that it will be the best prepared for when that time comes and if you want more information on this shonbo i'd i'd recommend following them on twitter i think is at is like ebf eb ebf you ll or something and then there's dev and i think is at a zk dragon or something and they have whiteboard sessions on this they have blog posts they have papers and everything so you can get more into it my understanding here is i'm in the ethereum camp the ethereum community is pretty stoked about the quantum challenge because i think is in ethereum is kind of branded as like the quantum

52:57 opportunity nonetheless ethereum getting over the quantum hurdle is very ambitious there are the ethereum is ahead of the curve has like people do like Justin Drake and they're doing all the right things but there's so much to do in ethereum land with regards to quantum and when i look at zcash and i see the same kind of situation where we got to get over the quantum hurdle zcash is so much more simple it's simple like bitcoin it gets this simplicity points that bitcoin has but then it also kind of gets the cryptographers like prowess it has all this smart brains working on it and so it kind of has this it's positioned i would say even better than ethereum in that sense that it has the right minds doing an easier job that's my read on the situation

53:39 murt would you agree yeah i mean certainly just by the virtue of it not being a smart contract platform yeah and it being singly focused even if i mean ethereum i think has actually a really good privacy roadmap and cryptographic focus zcash's hurdle is just much lesser because it just doesn't have to do as many things and by the way this also goes back to the store of value property thing like some people might scoff at quantum and be like oh like you know they're 10 years away they're 20 they're 50 years away now okay i personally think they're actually much closer but that's not even relevant but the the point that that that i'm trying to make is that quantum proofing isn't necessarily about quantum proofing but it's more so the the the minimization of

54:25 surprises for serious investors right one of the reasons why gold is seen as like the premier store value is that it's a low entropy it's a low entropy carrier in a high entropy world meaning if there's a lot of surprises and uncertainty in the world you know for a fact that gold is just still gold there is nothing that can necessarily happen to do fundamentally alter it and so as a store of value you need to have that mindset of like this needs to be extremely low entropy right there can't be a surprise that causes people who trusted the asset to re-question anything on any dimension right and so even if it is far away just minimizing that potential for a surprise sometime into the future goes a long way for giving confidence to especially like the

55:15 older type of investors who seem to be much more quantum pill ironically yeah i want to add something there on that quantum timeline point we don't know when it's going to happen obviously we have companies like google saying we want to be post quantum ready by 2029 you have microsoft talking about all of their work on quantum and how they want to be quantum ready everyone you know should be more cautious you shouldn't be like well you know that bad thing that will not happen to me right and if you are safeguarding a lot of value you have to think about all of the edge cases and all of those various risks out there but to bring that to the present think about the uncertainty that quantum creates if you don't have an answer to it right and then markets hate uncertainty

56:10 that's the one thing that markets abhor is not knowing what might happen could there be a quantum attack who knows i won't even know if i saw it unless you move something you know i want to sito she's coins but you know you you just have this like fear in the back of your head and look one of my favorite means in all of crypto is that IQ chart meme right and i think both on the left side and on the right side of the IQ chart is oh quantum is scary and we should solve that and then in the middle is like oh well it's at least 10 years out and you know there's you know this excuse and that excuse and we're going to think about you know every last thing that we can do versus just like simply oh well i want to be long the thing that's quantum resistant guys we've

56:56 done a pretty thorough job here we talked about quantum we talked about the supply schedule we talked about the buy value of privacy the institutionalization path is there any stone that i haven't turned over or we haven't turned over yet on this podcast is there any angle of privacy that you guys want to bring up before we wrap this thing up like there's a lot of upcoming callists for z cash there's a low hanging fruit so like one obvious one is that ledger actually does not support shielded zek today it's actually only transparent zek and so i made like a little website called zek price dot com is totally wide coded it where it shows you the shielded value over time and i would imagine today it's about 31 to 32 percent and you can see it's been going up the whole time

57:36 and i expect that number to just kind of continue to increase in in shielded pool and what's interesting about something like z cash is that the reflexivity in yep that's the one that the reflexivity in crypto generally is just used as a pvp game but in the case of z cash the reflexivity on-board people into the shielded pool which then increases the anonymity set which then increases the privacy properties which then is this feedback loop that you know the more activity happens whether even if it's just speculation the privacy benefits of the chain keep increasing over time so like ledger will soon add this there is you know the newly funded and by the way this zoda wallet it was co led by paradigm in and recent which by the list it's

58:22 like not a usual pairing of of leads these guys don't necessarily work with each other like to our pve point they they kind of made up their differences and and and and so that project is about to receive a much more traction and core development we are also going to reduce block times from 75 to 25 seconds so that's going to make things like near intense feel much faster but also ptp transactions will be much smoother and then there's also all sorts of different application teams starting to slowly build on z cash it's a little hard to work with due to the bespoke cryptography curves but i i would say that you know there is no way in which i think crypto succeeds but privacy doesn't right like i always say that crypto without privacy is necessarily

59:13 crypto right like the entire vision of the cipher punks is using cryptography for privacy to give individuals a choice and we have slept on that and we are going to bring back with immense force to summarize the the case here right and i think you know we've talked about how broadly accessible and legible z caches or that private bitcoin is as a story it has this complete simplicity it is a brand that a wide variety of market participants both within crypto and outside crypto connects out that's i love the pve branding for it because that's what it really feels like it has this strong like intellectual backbone and also a moral backbone around you know privacy as a human right and as a core aspect of human dignity and protecting our rights against

1:00:10 overreaches of governments and you know other forces out there so it has all of these components coming together at a moment where a lot of people are paying attention to this right and so that's what i really love about this moment in time for z caches is it's a confluence of very powerful factors that are very easy to understand and they all happen to be occurring at the same exact time Tushar Merck thank you guys so much for giving me some of your time in exploring this thesis with me i i like it there's not really that many times where i see such a good story to tell with z caches so thank you guys for coming on and help me tell the story thanks for absolutely great here bankless station you guys know the deal crypto is risky you can lose what you put in if you

1:00:59 put it in z caches you can make it private though it's not for everyone but we're glad you're with us on the bankless journey thanks a lot