S15 E5: Reuben Yap on Firo & ZK Privacy

0:46Vlad CosteaHello there and welcome to the Bitcoin Takeover Podcast. This is season 16, episode 5. We are live with Reuben Yap, who is the project steward at Firo, which used to be called Zcoin, which is based on the Zerocash paper. And also Zerocoin. There are two papers that came out in 2013 and right now are materialized into Zcash and Zcoin, which now has rebranded as Firo. And also this episode is sponsored by SideShift.ai, Citrea, LayerTwo Labs, NoOnes and Hodling.ch. It's good to have you, Reuben. Welcome to the show.

1:24Reuben YapThank you so much. It's like super late there. And yeah, I think we've been trying to get this set up for quite a while, so it's good to finally be on.

1:33Vlad CosteaIt's good to have you on. And I got to give you credit because there's this Privacy magazine, which I also have here in the background, but I have one in my hands. At page... What page is this? I messed up. It's 66. At page 66. No, because not all the pages have numbers due to graphic design and arrangement. But at page 66, there's your article right here. It's called Moving Past Tribalism, Embracing Diverse Approaches to Privacy in Cryptocurrency. It's very inspiring what you're describing here. It's four pages long.

2:16And it has some of my favorite Pepe's by my girlfriend. Like it's very nice. I like the background. I like everything about it. You should get one of these magazines. If you don't have a copy, you can order one. I think just DM me and I'll send you one or download the free open source version of it. I love this. I think it's my favorite work so far. And I'm proud that you, Reuben, also have an article here. So short summary, can you mention what you wrote about?

2:47Reuben YapOh, basically, I mean, especially in the privacy space, I wrote about, you know, how like tribalism was actually, you know, there's pros and cons to tribalism. You know, it builds a really strong community and people defend you. But at the same time, I think I feel like crypto has kind of gone in the more of like a toxic tribalism direction. And, you know, there's benefits to both tribalism. But I think it has to be measured and we shouldn't be like, oh, everything's shit. You know, everything's bad because even if you don't agree with something, that's the whole point.

3:24If you don't agree, people are free to spin up their stuff. And if something is really good, it can be incorporated back into your project if you want it or not. And I feel that especially in the privacy space where we are already a niche, it's kind of pointless to be like, you know, hating on each other and just just yeah, just shitting. And at the end of the day, there are ways that we can still collaborate despite being, you know, competitors. Because while we are competitors, the main thing is that the goal is the same, you know, to build real privacy crypto that, you know, we want free money, freedom money.

4:00And if we are sharing that same goal, how we get there shouldn't be, you know, too controversial. But somehow everything's like, yeah, we are the best and we have all this echo chambers. And honestly, when you get into echo chamber, that's when your stagnation of your project happens. I mean, I guess you can say that's maybe what happened to Bitcoin. But yeah, I know that's very controversial.

4:27Vlad CosteaWell, I think a good way to explain this is that we are in a space of open source software and people build off of each other's efforts. And maybe sometimes there is no consensus for stuff to come into Bitcoin. The case of Zerocoin and Zerocash is that these were papers to add privacy to Bitcoin. Back in 2013, when a bunch of academics and researchers discovered Bitcoin and saw that there is market, there is a larger market for it because that year the price went to $1000. And there was this enthusiasm coming from these people, cryptographers who said, yeah, we need to help Bitcoin become a much better form of currency to have fungibility.

5:11And for that, I think or we think these people thought that zero knowledge proofs were the future in terms of bringing privacy. So they wrote these papers. They proposed them as soft forks. So they're not very contentious. But I guess at the time, the core developers believe that the cryptography is a bit too ahead of its time to avant garde and experimental. And it was premature to add this to Bitcoin, which is why we had Zcoin, which was the first zero knowledge proof cryptocurrency to launch in 2016. And I think a week later or something, Zcash was also launched.

5:50Reuben YapThat's right. Yeah. I think it was like two weeks around there. But yeah, that's kind of quibbling. But yeah, Zerocoin and Zcash, obviously, although they have a lot of shared authors, they have completely different, I would say, cryptographic constructions. So yeah, I mean, we continue with the Zerocoin path, which led to a lot of really interesting developments down that path. Not all of them good, but it was definitely, I think, an experiment that I'm glad that we took.

6:23Vlad CosteaRight. So what would you say is the difference right now between Firo, which is the modern day version of Zcoin, which is based on the Zerocoin paper and what we have today is Zcash? Because it seems like a lot of people agree that Zcash is great, but there is not too much talk about Firo or Zcoin.

6:47Reuben YapYeah. So well, actually, like the current protocol that we have, which is called Lelantus Spark, bears, I guess, very little resemblance to the original Zerocoin because a bit of history. Right. So, yes, you know, Zcoin started as the first coin that implemented Zerocoin. From Zerocoin, we then moved to Sigma, which was basically a version of Zerocoin that didn't require a trusted setup. And then from Sigma, we went to Lelantus, which allowed people to basically, because the original Zerocoin required you to burn in fixed denominations. You had to like burn 10 and redeem 10, burn one and redeem one.

7:38So if you wanted to do something like 15, you had to do like a fixed denomination of 10 and five, you know, mints of ones. Right. And that gives a lot of like pattern analysis. So I guess very similar to like early CoinJoins. Right. So Sigma removed the trusted setup and then Lelantus removed this requirement for fixed denominations because you could do a mint of like, you know, let's say 176.3 and redeem, do a partial redeem of 50 coins or 13 coins or whatnot, which was a great privacy improvement.

8:18But even then, there's still that transparent layer where you have to redeem it because, you know, this whole system was designed originally for Bitcoin. And now Lelantus Spark does this, you know, it has its own stealth address system, amounts are hidden. It basically gets like, you know, what we want from a privacy protocol, which is hidden sender, hidden receiver and hidden amounts. And we do this in a very different construction because like right now Zcash users, I mean, obviously they've done a few, you know, from settling from Sprout settling to like now Orchard.

8:57Right. But they are using like very complicated ZK circuits that prove like a bunch of things. While for us, we're using like specialized zero knowledge proofs that are not in a circuit format. So that means we have a proof that proves membership, you know, that whether you are one of these people that burn coins, then you have, you know, a balance proof you have and make sure both sides of the stuff equal up and there is a range proof. So all these are like, I would say much simpler components that are combined together to make a good privacy protocol, which allows a lot easier security analysis.

9:39And it's actually just a lot simpler to deal with. I mean, it was simple enough that Monero people were actually, you know, happy to consider something like this because so there's something called Seraphis that is based, I would say, largely off our work. At the end, I think it's still under development and there's still some thought that whether Monero would still eventually move to Seraphis because of some benefits there. But because of this modular approach where we do things, there's no trusted setup as well. Monero is comfortable with that compared to going down the Zcash route, though there's probably like, you know, some social and cultural reasons why Monero doesn't want to use Zcash tech.

10:25But yeah, that's it in a nutshell. We are a totally different cryptographic construction with much simpler ZK and which also makes it easier to upgrade. So that means we can take up a membership proof, replace it with a more efficient membership proof. So there's a degree of, I guess, future proofing there.

10:47Vlad CosteaThere's a lot to unpack there, but I think the first question that I have is what is the Lelantus protocol and why is it such a big deal? I've heard people from what's it called, Beam, which is a Mimblewimble smart contract platform. And they say they don't just use Mimblewimble, which right now is considered much better for scalability than it is for privacy. They also use Lelantus and that also enables them to receive, for example, transactions when the party is not online and there's like a time lock during which they can claim it. So what is this Lelantus and how does it work?

11:27Reuben YapRight, so to be clear, we have the original Lelantus and then now what we're using is called Lelantus Spark because it kind of builds off the Lelantus work. So when we say Lelantus, we usually refer to the older version. And Lelantus, so just going back again, because it helps to understand what Lelantus is. Zerocoin, you know, everyone knows what it is. It's an RSA accumulator. You burn coins, you get new ones with no previous transaction history. Sigma again, as I repeated, it's a version of Zerocoin without trusted setup.

12:05And in particular, it used a particular ZK proof called one-out-of-many proofs, which was done by Jens Groth and Jonathan Bootle. So it's often called Groth-Bootle proofs. But again, it was still the problem of fixed denomination. There were no hidden amounts. Lelantus was our first iteration where we were kind of using, still using one-out-of-many proofs, but we were doing it in a way where you could partially hide amounts because now there's no requirement to do fixed denomination burns. So Lelantus was a big thing because we were reviving the use of one-out-of-many proofs, which was at one time considered like, why are you using this?

12:56This is quite an old ZK proof, but at the same time, it had quite good scalability benefits and it was really, really simple. There was no fancy cryptography. It still used basic elliptic curve cryptographic assumptions as well. That was something that was a big thing. When Zcash first came out, it was called moon math exotic cryptography because it used new cryptographic assumptions that hasn't really stood the test of time. Maybe it has now. But everyone knows how ECC, discrete logarithm, the hardness, so everyone kind of understands that.

13:44So Lelantus was, I guess, getting closer to a modern privacy protocol without trusted setup and getting pretty decent performance characteristics, but it still lacked like a stealth addressing system. It still didn't fully hide amounts and that's why we developed a Lelantus Spark. But to also clarify, to Beam's credit, they didn't just use Lelantus. They used something called Lelantus-MW, which to be fair is more like inspired by Lelantus and it created something that fits the Mimblewimble protocol because as we know, Mimblewimble doesn't hide the transaction graph really well.

14:29It's not horrible, but a really determined attacker could undo a lot of it. Of course Beam has other mitigations. But I guess my point is that they saw this Lelantus and they were like, this is really cool. This is nice and elegant and simple and they just modified it to fit within the Mimblewimble protocol. And solved one of the problems of Mimblewimble, which is the transaction graph leakage. But yeah, so that's why Lelantus is important because it also opened up, Monero also started looking at stuff that used one of many proofs for, I think they did develop some protocols called Triptych and something like that.

15:16So that discussion really kind of opened a new family of privacy protocols that were looking at these type of constructions and that eventually led to the Lelantus Spark and Seraphis.

15:30Vlad CosteaThat's really interesting and once again, I think I heard this story from someone who used to work on Linux before he worked on Bitcoin and he said that he was working for Red Hat and there was another enterprise Linux company that was building. I don't remember exactly the name. Maybe I should look into it later. But the point is that both of these companies were working on the same protocol and even though they seemed like their rivals and of course they were competing for users and they were competing for enterprise clients, they were still building off of each other's efforts.

16:11So if one of them made a major breakthrough, the other one could just take the code and use it and try to build something even better on top of that. And the fact that you get these protocols being used across multiple networks and multiple platforms is beneficial for battle testing how this works. Because once again, this all started in 2013 with two papers that were published for improving Bitcoin's privacy. And at the time, as you agreed, it was still a bit too early for this. It was not well tested enough.

16:47Now I think there is a lot of testing that's happening and many of the concerns that were expressed back in the day were proved to be untrue. Some of them were exploited. We can go back and talk about what happened to Zcoin and why it needed the rebranding and why it was technologically improved. And I think there was also early on in Zcash there was some sort of inflation bug. But the question that I want to formulate right now is when do you think the testing has come to the point where you can say it's enough and it's battle tested and it's ready for writing production code in Bitcoin?

17:32Reuben YapThat is a tough question. Something like confidential transactions where you just hide amounts I think that's pretty much ready to go into Bitcoin and that would be a huge privacy improvement. Just hiding amounts would already be a huge improvement to Bitcoin's privacy especially when you're using a UTXO model and not an account-based model like Ethereum. So I think that was really simple and stuff like that. Even if we talk about, is the original Zcash sapling protocol good enough to go into Bitcoin now? This is just like a ballpark but I would feel like maybe another five to ten years of better testing of that protocol.

18:24But at the same time, the technology isn't at the standstill. We know that Zerocoin would have been a total disaster if it was implemented in Bitcoin but now we've already moved past that. We've got the new technology. I understand your point of view. When is this going to get integrated into Bitcoin?

18:49I don't know how long has confidential transactions been around. Maybe more than ten years. So I would say something like that until people are very confident. Oh yeah, this stuff is easy. Not just a select group of researchers understand this. This becomes just a basic building block and then it can go into Bitcoin. I would say confidential transactions would be something that would be almost ready to get into Bitcoin. So I would say about ten years or so.

19:21Vlad CosteaBut at the same time, confidential transactions are not happening. Yeah. Because first of all, there's opposition to any privacy coming from wealthy individuals who invested a lot of money in Bitcoin. Secondly, it's not the best way to go. It's not scalable. It makes transactions much larger in size. If you're going to get a bunch of confidential transactions, they're going to fill the Bitcoin blocks pretty fast. They're going to be pretty expensive. So obviously it's not the most elegant design for hiding amounts. I think something like Mimblewimble on an extension block can be slightly better even though it's not on the base layer.

20:09Reuben YapI'm not sure about how much confidential transactions has evolved since I think it was G. Maxwell that proposed it, if I'm not mistaken. Yeah, he's the co-author with Adam Back. Yeah, and I mean there's something like Mimblewimble, as you said, it has to be through something like extension blocks. Litecoin has done a great job there. And now his name just eludes me. But the guy that did the integration for Litecoin, Mimblewimble extension blocks, actually he's a bit of an unsung hero. I think he was even vilified by the Grin people.

20:52And it was really unfortunate because he solved a lot of the issues of Mimblewimble. Having to have parties online, which to me was one of the worst things about the original Mimblewimble protocol, and he did this with very little fanfare. And actually I would say, although this might sound a bit disingenuous, I actually think Mimblewimble's privacy is probably good enough for most people. For anyone that's looking at the blockchain explorer, it's quite tough to tell, especially if you have the amount of transactions that Bitcoin has. If you're on a smaller altcoin with not many people using it, your crowd, your anonymity set is a bit small.

21:40But I say Mimblewimble is pretty good, but at the same time, I'm not a maxi in the sense that I don't believe that one coin can do everything and it shouldn't do everything. And that's why you need alternate coins with different feature sets. It's not like in the fiat world where, okay, what's the difference between the US dollar and the pound and the yen and the renminbi? They all kind of do the same thing. There's no different features. It's not like, oh yeah, I use the renminbi, I get faster transaction time or improve privacy.

22:20It's a bit different. But with cryptocurrencies, you can actually have those features. As you said, when you add privacy to something, you are sacrificing scalability, transaction throughput and all of that. But that doesn't mean, shouldn't we have a coin that does these things? They have a more private version because Bitcoin can't do it all. Bitcoin is this thing that's meant to be stable, that's meant to be there, but that doesn't mean that there aren't other use cases. I think Ethereum has a use case. I think Solana has a use case as well.

22:59So I guess, yeah, I'm not in a maxi in that regard. So I would say, yeah, I've never really thought it as a real possibility that Bitcoin would incorporate any of these huge privacy improvements. I mean, maybe something small like Taproot, which to me is a very small privacy improvement. I mean, I'm pretty sure improved CoinJoin will come in at some point. But I don't know how it's going to go with all this like Samourai wallet heat, whether that would take a backseat with everyone being a bit scared.

23:36But yeah, I mean, even the stuff that Bitcoin Cash with CashFusion, I think that's a pretty interesting development as well.

23:47Vlad CosteaYeah, definitely. So in 2013, around the time when you had these two papers, Zerocoin and Zerocash, there was this thread by Greg Maxwell in which he proposed the bounty for anyone who is capable of building a wallet that performs a CoinJoin. And at the time it was so he basically coined, no pun intended, he coined the term CoinJoin. Before that, you wouldn't hear this anywhere. CoinJoin. It was just mixing. It was a mixer, but not CoinJoin. And the difference between CoinJoin and mixing is that mixers rely on a centralized entity.

24:26You put your coins there, they're going to get mixed. But CoinJoin is more peer to peer, is more decentralized.

24:34It relies on users who voluntarily participate. It doesn't have to be it doesn't require a trusted party that's going to do the mixing for you. And then you basically

24:46Reuben YapYou don't you don't give out custody. They can't steal your coins. That's the main thing. Although I wouldn't say it's totally decentralized. They do get certain information from the at least with the earlier versions of CoinJoin. I'm not so sure about the new versions of CoinJoin. I know there's a lot of work in making sure that the people that do the CoinJoin don't get much data about the about how it's being mixed. But I know for the original CoinJoins, you you probably had to do several rounds to kind of obfuscate that from any single CoinJoin operator. Right. Yeah.

25:23Vlad CosteaYeah. So CoinJoins are solving one problem, but they're still not hiding amounts and they're still not providing any I mean, they solve sort of sender privacy. Because Bitcoin has good receiver privacy if you generate a different address for every transaction that you receive. But it's not really privacy. It's more like deniability. And it's the same with CoinJoins. Because what you can say is that you don't know for sure which which one is the sender and which one is the receiver. But it doesn't mean that at some point in the future you're not going to be able to know.

26:05Because all it takes is just one mistake where you either publish your xpub, which is the sum of all of your transactions and addresses and everything that has been happening in your wallet. Or a large enough number of people will KYC and you are basically left out there as the only one who hasn't yet. So it's super obvious that you are the one who participated in that round because you withdrew from some KYC exchange or whatever.

26:35Reuben YapAnd it's not a good user experience. I mean, like, I played around with Darkcoin or Dash. I mean, Dash is now called Dash, and Darkcoin, I think, with Monero, it was kind of like the first privacy coins, right? Of course, loosely. But it was often called the privacy coin. Dash, Darkcoin and Monero. And the CoinJoin implementation, which I think is largely unchanged today. I think Dash still uses the original CoinJoin mechanism. I don't know if they made much strides in that area. It's a horrible user experience. You go into the CoinJoin, you have to wait for hours and sometimes days to find mixers.

27:27And I understand it's kind of the same thing when you use Samourai and stuff like that. There is a long waiting period. And it's just not like, ah, yeah, I just want to send now. I have to mix, I have to wait. And then if you still have to be careful after that, it's really not that elegant. And I know with the earlier CoinJoins, the number of participants that you could mix with was also limited. And I know that has been improved. But again, especially with this kind of, I would say, regulatory uncertainty as to...

28:11Well, I mean, people might say it's not uncertain. But I feel like people are a bit worried to run this mixer nodes or this CoinJoin nodes now with all this crackdown on privacy. Especially in the US. So I'm not so sure how viable it is. I mean, it really depends on the regulation there. Because it's not completely decentralized. It's decentralized in the sense that, yeah, they don't hold custody of your funds. They may not get any sort of information. But there is this other type of network that you have to maintain on top of Bitcoin to run this type of services.

28:53And if people aren't willing to run them, then there's the issue. Especially if you start earning money from mixing, then you're like, oh, you're facilitating money laundering. Because you're charging certain fees to do the mixing. So you would have to rely on volunteers that are willing to put their neck on the line for very little money. But yeah, maybe that is possible.

29:22Vlad CosteaYeah. And these coins that were offering quote unquote privacy back in the day, they didn't have this missing element, which was confidential transactions. CoinJoins are nice. But if you can track the amounts, you can still construct some data on the blockchain and figure out where it comes from and where it goes. I think Chainalysis and the way that they say they broke or they were able to see through CoinJoins was just look at the early inputs and the outputs after the CoinJoin. They just look at the CoinJoin like a black box and they're like, OK, the funds went in here.

29:57But let's see what happens after when they actually spend and when they actually go to an off ramp. Because that's what matters. That's where they can get the data. And based on the off ramp, it's basically just like one of those mazes that you were using as a kid. If you wanted to solve the maze, it was easier to actually go from the exit to the entrance to go backwards. And it was easier to solve it. And I think they followed through the same logic. And that's not ideal if you can't hide the amounts.

30:28And people are going to say, well, you know, Bitcoin is an open ledger. And if you can hide the amounts, there might be some hidden inflation. But I think that's just a different trust assumption. And, yeah, we can also get into issues that existed. But my point is that you can either trust high school. It's not even high school. It's like elementary school math where you add up inputs and outputs and see that they add up to the existing. Supply. Or you can trust cryptography, which is a bit more complicated. It's more like algebra or something which is different from basic arithmetic, but is still there and can still be audited.

31:15And maybe that we didn't have 10 years ago enough experts in the field of zero knowledge proofs. Right now I see a changing and I see a lot of proposals for layer twos that use zero knowledge proofs, ZK roll ups and all of that.

31:31And to me, it's fascinating that this ended up being the technology that succeeded because Monero is obviously more popular on dark markets and has more of a network effect with its technology. But there's also an acknowledgment that it just uses technology that's good enough for this purpose. It's not the one that should be used. It's not the model to follow because ring signatures don't really scale.

32:01Reuben YapYep, that's right. I think one thing that you also like reminded me was like, you know, with all the ZK stuff.

32:09Yeah, it may be actually good enough for today and running it, but you know, now we are approaching where there is a non zero chance that I mean, you're saying like, oh, yeah, you know, elementary math versus cryptography. We should be OK. You know, we should be more comfortable in trusting cryptography, but at the same time, all this cryptography has hardness assumptions, right? Like we assume a problem is hard and therefore the cryptography holds. And that's really may not be the case with the advent of, you know, quantum computing adversaries, right?

32:47Which, although I don't think that's a quantum computer now that's really close, I would say there's a non zero chance in the next 10 years there would be a quantum computer that is strong enough to break this type of cryptography. Right. So, yeah, maybe Bitcoin, you know, CoinJoin doesn't break through, you know, quantum computing because it's just so simple, right? Because like other stuff break like the signatures and all of that, which can be upgraded. But to upgrade the entire privacy protocol is a lot harder. Like, for example, if you could break the discrete log, which actually would be broken in the quantum adversary.

33:26Yeah, you could bring coins out of thin air. You could even see how Monero's ring signatures are, where the real transaction is. So, yeah, you know, it's to me using something like Monero or even Firo, right? You're buying yourself time for the privacy, right? Yeah, maybe buys you 15 years or 20 years of privacy. And after that, you know, who knows, right? Obviously, I guess once we have better quantum resistant privacy protocols, then that kind of problem goes away. But that I would say it's a further argument why these type of systems or even something like confidential transactions shouldn't go into Bitcoin and why we, you know, coins like ours should continue to exist and innovate.

34:20Because I think it's important we have these protocols out there and that there are people developing to build this stuff. But Bitcoin is Bitcoin and, you know, we still are trying to build like private money, but it's so difficult to do so, right? Because there's so much technological advancement. I mean, just imagine I've been doing this for nine years and we've gone through like four privacy protocols, right? And even Zcash has gone through at least three or four different privacy protocols, even though it's like, yeah, Zerocash, but there's a lot of changes in there.

34:59So, yeah, I don't think it's right to I think privacy is something that has to be always a bit with cryptography is always cat and mouse, right? You cannot just stay still and wait for think that something that will be good for the next 50 years. Yeah, maybe it'll be good for 20, 30 years. And that's really good. Like all our encryption, all our HTTPS, everything is built off encryption that we know may be eventually broken with a quantum computer and stuff like that. Does that mean we shouldn't have it?

35:30Does that mean we shouldn't have end-to-end encryption and all that? No, that doesn't mean that. It gives us a lot of time and for hopefully to build better systems when that if and when that time comes. Yeah.

35:46Vlad CosteaI think even Satoshi Nakamoto said something along these lines that I think this was in 2009 on one of the forums that this should buy us a few years. It was something along these lines that, of course, it's not perfect, but we should win the battle for a few years until something better comes along. And this used to be the mentality. I don't know how we got to the point where we oppose any change in principle as opposed to evaluating if it has any merits. And we say, oh, any change, any attempt to change Bitcoin is a scam.

36:24I don't really get that because obviously the regulators caught up. And by this time, it's old tech that can be improved. There's a lot of research that has been put into these protocols. We don't even have proper side chains. And it's been more than a decade since the paper came out. Like you can say, OK, you don't want to mess with the money layer. You want to put this somewhere else. We don't even have that somewhere else. And we have these altcoins and maybe that altcoins are the side chains.

36:58But instead of having this economy where everything is based on 21 million coins, we're going to have an economy where maybe it's 200 million coins, but they're all useful. I don't know.

37:11Reuben YapYeah. Yeah. I mean, like, you know, you just it's like, yeah, maybe because a really good hammer. Right. But it's totally useless as a screwdriver. Right. And I always always see that analogy. I mean, I'm not a maxi in any regard, even in in privacy coins. I mean, yeah, maybe it's harder to make the argument there. Like maybe there should be only one privacy coin, which I think it's a really bad idea. Just imagine if this everyone's using the same privacy protocol and that protocol breaks, that would be horrible.

37:39Right. But at the same time, especially for like the cryptocurrency space at large, I really find it hard to understand why there's this upset. Well, I think not so much now, but still within the Bitcoin maxi circles that, you know, there should be one coin to rule them all when it's really not possible because you want really fast throughput. You want all of this. Yeah. You have some you have some tradeoffs, right? You have more centralization, you have more system resources. You want to decentralize. Yeah. You're going to wait longer and all this type of things.

38:12And these are things that you can't really get rid of. They will always be tradeoffs. Like ZK will always be more computationally expensive than than a flat transaction that doesn't have any sort of like, you know, fancy cryptography in it. That will always be the case, no matter how good ZK gets. I guess it only maybe stops becoming a problem if computers get so unbelievably powerful that the difference between a Bitcoin transaction and the ZK transaction is, you know, negligible. But that's quite a tall order. So, I mean, I'm always of the thing that people should be building what they want, as long as they're honest about what they're building, how their funding is done and everything.

38:59That's not a scam. Right. But unfortunately, you know, there's this thing to say, oh, yeah, we must. I think I think one of the big things that people neglect to to understand is that if something kind of fair launch today, maybe even like a super great version of Bitcoin, it would probably fail. You know, like a lot of people say, oh, why don't you just like, you know, like do like a Monero and Monero had this early supply issues as well. And even another inflation bug that didn't wasn't exploited a bit later on.

39:38But I guess it's like, you know, there's this there's this thing to always say that, oh, you know, this there's no room for error. And Bitcoin had I think I know of at least one really big inflation bug, like a huge CVE that that could have really well, it definitely happened. It happened two times. One with the really early that was like creating some billions of coins. And then after that, there was a bug that was discovered by a Bitcoin cash developer that could have been exploited, but was thankfully secretly patched for all of that.

40:12So, yeah, you know, I mean, we have to realize that we should be more accepting of errors as long as they are owned up and we do things. And, you know, I mean, like when we was coming into this podcast, you know, someone like hated on Zcoin. Oh, you know, we had a vulnerability and all of that. And yeah, you know, that's not something that we hide. We have multiple articles and posts about this and we learn from it. Right. So so, yeah, I think people should be more accepting of of doing this experiments.

40:45You know, we don't get a lot of money like we get like 16,000 Firo a month to run our entire team. And it's like. What's that? Like, I don't know, 30,000? Less than, less than that. Twenty plus thousand US dollars. It's really nothing. And and and yet you get caught the scam right now. I'm like, wow, I'm I'm I'm doing such a poor scam. And I am only getting this amount of money to support like a group of developers and researchers. And thankfully, we have like very generous donators that have given us like, you know, a couple of hundred thousand US dollars here and there to keep developing.

41:20And I think that's what keeps me going. That people still think that it's important and that people believe that this sort of thing should should work. And honestly, I believe in it because I don't know if you know this, but, you know, I've been the target of of so many problems with the financial systems. And it actually scares me. Like one of my biggest bank accounts is frozen at the moment. It's been frozen for two and a half months now. And it's for the most ridiculous reason, because there was someone that scam like one level above me and then I somehow receive money from it.

42:01And it was like five hundred US dollars worth. And my entire bank account with all the money in there is totally frozen and locked out of it. Luckily, I have other bank accounts. But just imagine if, you know, I'm a you know, many people may may only have one major bank account and they're totally locked up their funds. And this may take months or years to to to to kind of resolve because it's up to the to the bank to the kind of move as fast as they want.

42:32And I find that really scary, you know, and I ran I started the VPN business in 2007. And that's how I got into cryptocurrency, because my bank my banks started saying, oh, we are not comfortable with VPN. You know, I know it's legal, but we're just not comfortable with your business. So we're cutting off credit card support. You can't accept payments into your bank account. And that's how I got into cryptocurrency, because I was like, wow, this is really rubbish because I'm not doing anything illegal. I'm paying my taxes.

43:08I'm doing all of that. But yet I am suffering because of the opinion of a bank. Right. And, you know, back then, VPNs were considered like, oh, you must be hiding something. Why would you want to use a VPN? And today it's part of your antivirus suite. It's part of your browser. Right. And I hope that privacy cryptocurrencies will one day hit that same thing, because people are now like, oh, why would you use Monero? Why would you use Firo or Zcash? You must be doing something bad.

43:38Right. And and generally, even when I tell people about what I do and say, oh, you're the money launderer. Right. And I'm like, dude, banks are the biggest money launderers. Right. So and they've gotten away scot-free. I mean, like these people have actively facilitated like HSBC. They were building, you know, custom custom things so that the drug dealers could fit their money, their cash inside. You know, that's how much they facilitated. And no one of significance went to jail. You know, they got like a little slap.

44:13They still got their bonuses. And and right now, you know, we're seeing people like the guys from tornado cash, you know, like get vilified, you know, and it's crazy, like this war on privacy. And at the end of the day, it's not so much about it's not so much about fighting crime. You know, I feel that there are much more efficient ways to do money laundering. Right. But if you ban all these privacy cryptos from centralized exchanges, it's going to actually push it into the dark. Right.

44:47And that would be kind of unfortunate. But it would also actually make it harder for law enforcement. If like, you know, people start using DEXs and atomic swaps and all of that, too, because I don't think Monero is going to die, even if he loses a lot of his centralized exchange listings. I think it would definitely be hurt, but it just makes it then more to the hardcore users, more to the, I guess, like the criminal elements who who are willing to jump through all those hoops.

45:17Right. But I feel that it's important that people realize that, yeah, you know, people say, oh, yeah, Bitcoin, you know, it's about freedom, money and stuff like that. Well, right now you can get your stuff blacklisted. Right. That means now you can convert it to an exchange. It gets all this taint and all of that. And we it may seem far off, but in the just past 10 or 20 years, you know, our financial system has gotten a lot more surveilled, a lot more. It's now commonplace to have stuff frozen.

45:49It's now commonplace for your privacy to be given up. You know, very advanced, like, you know, in AML KYC checks. Now we have to like, you know, not just give a passport. We have to move our head here and there. It's become normalized. Right. And I really want to avoid the future where this surveillance and giving out data where we have to trust our governments and banks to keep our data safe. It's ridiculous because you shouldn't trust them like my government has taken so much of our personal data and leaked it like within a day of launch.

46:31They launched this new site that give us all your personal data, all your your like, you know, sensitive numbers. And then within a day, it was hacked. Right. And this has happened numerous times. So I guess like why I'm building what I'm building is I think it's really important, especially as someone that has lost financial access for not doing anything illegal. I'm just doing something that I guess may be a bit more new. Right. Like cryptocurrencies was new. I was, you know, doing VPNs was new. And why should we be punishing people that do new things that are still operating within the bounds of the law?

47:11Right. So so, yeah, sorry, that was a very long rant and a bit disjointed.

47:16Vlad CosteaYeah, it's funny. When I used Monero, I actually bought myself a Nintendo 64 on XMR Bazaar. Oh, nice. I posted about that and people were making fun of me being like, oh, I thought this was for drug deals only. And now you actually bought yourself. I mean, you can argue video games are a drug. I don't know. We can get into that. I just like collecting items I did not have in my childhood. So I never had a Nintendo 64. I bought one for Monero. I think that's pretty cool.

47:45But the tweets to which you are referring is by Wownero, which is a meme coin. That's a fork of Monero. And he said, hey, now Super Testnet might be a retard. And for context, Super Testnet is coming in the next episode in a couple of days. But at least he hasn't spent the better part of the last decade shilling a scam that got hacked so bad it had to change its name from Zcoin to Firo. We appreciate Vlad giving a voice to the retards and the scammers.

48:29Thankful emoji. So this guy is the one who insulted you and said that you're scamming and you're building something. I don't know what his point is, but I guess a good way to answer this is to tell us about the history of the Firo project, how you went from the Zerocoin paper to Zcoin to Firo. But before that, let me plug a couple of ads. SideShift.ai is the place where you can swap your coins. If you have a lot of stablecoins or you get paid and stablecoins, you can exchange that CBDC wannabe for free market money.

48:59You can get Bitcoin, you can get Litecoin, you can get Ethereum or whatever you want. And if you want to buy some of that TRUMP coin or a bunch of tokens that they listed, you can actually do the swap directly. So you don't have to KYC to some exchange register or whatever. So it's very simple. You just send the currency that you have and you put the address of the currency that you want or the token or whatever. And of course, there's a fee in the middle, but they have low fees and pretty good liquidity.

49:32So check out SideShift.ai. Even if you don't go to SideShift.ai, a bunch of wallets that do swapping already integrated SideShift into their back end and you're actually doing swaps with SideShift without even knowing. I think it happens in Edge Wallet and Cake Wallet. So check that out. It's pretty cool. And also, I have to give you some information about Citrea, which is a ZK roll up proposal. People compare it to optimism on Ethereum, which is a layer two that enables people to have different functions with lower fees and other features.

50:12What Citrea would do for Bitcoin is to enable what people refer to as Celsius, BlockFi, but on a protocol level, not some company that can rug you, but actually code that you can audit and you can have advanced financial services like lending on Bitcoin using BTC and with the privacy of these ZK proofs. I think that can be an interesting use case. Check them out. Right now, they have their protocol on a test net. You can actually run the code if you're into that and you want to understand what a future of Bitcoin can look like because another future of Bitcoin is represented by LayerTwo Labs and they have their side chains.

50:54They are called drivechains because they are minor controlled and they also have their own software that you can test. It's on layer2labs.com/download and from there you get, I think it's called Thunder, which is a big block version of Bitcoin that you can run for scalability and low fees. And you have a Zcash sidechain that you can run for fungibility and also an Ethereum sidechain and the prediction market and the an asset slash name coin sidechain. So basically everything that is interesting in the altcoin space can become a sidechain of Bitcoins and you can see the future basically by running the code.

51:39It's not merged into Bitcoin Core. I hope it will be in the future. But if you want to see what the future reserves for Bitcoin development, you can check out LayerTwo Labs and also Citrea. Thank you for sitting through the ads, Reuben. Now let's talk about the history of Firo. Sure.

52:00Reuben YapSo although I'm listed as a co-founder, the original founder, and I guess two of them, was this guy called Poramin Insom. He's a Thai fellow and he was doing his masters in some computer thing under Matthew Green, who was one of the original authors of the Zerocoin and Zerocash paper. So while he was doing his masters, he came across this Zerocoin paper and Poramin actually founded an earlier coin, which I don't know if you know about, but it's called Vertcoin. It's one of the very few altcoins that have a Trezor native integration, like when you come out there's Vertcoin, even though they're really small.

52:50I don't know what's the history on that, but I was like, oh, it's really interesting to see Vertcoin support in a Trezor. So Poramin started Vertcoin and his aim was to get, I think it was like ASIC resistance. I think that was the main thing. And what actually then was he then came across the Zerocoin paper and he was like, this looks really interesting and he really wants to do it. And he actually tried to propose to say, why don't we do something called Zerovert, to build Zerocoin on Vertcoin.

53:29But the community didn't like it. They said it was too experimental and stuff like that. And so Poramin was like, well, okay, I really want to try this out. I'm going to try to make a new coin. So he, I think, expressed his interest somewhere. I don't really know the exact history, but there's this other guy that came in called Gary Le, who was a Thiel fellow, Peter Thiel fellow. I think he got paid money to drop out. And he raised a small amount of money in Bitcoin.

54:02I think it was 100,000 or 200,000 US dollars. This was like back in 2014, maybe even from Roger Ver and a couple of other people who still choose to remain anonymous. But I think there were two major funders and there was some small little grants from like, I can't really remember the name, but they were not very significant. And it was then, and you had to realize that the landscape, obviously it sounds like, oh my gosh, this is such a hobby project. But the altcoin scene back in 2014 was really nothing.

54:41It was all this box of Bitcoin with a faster block time. Amazing. It's the future, right? Or bigger block size or the most innovative altcoins were ones that have a different mining algorithm and maybe some proof of stake stuff. I think that was all the innovation that was happening in 2014, 2015. There was nothing really much going on. Maybe there was like name coin, maybe counterparty, maybe that's even after that. So Poramin set out to build this Zerocoin thing, but he's just one guy, but I think he vastly underestimated the amount of work that was required to do this.

55:28And this other Gary guy was like, oh, look, you handled the coding and I handled the fundraising with Roger and do the marketing. I'm the public facing guy because Poramin's a bit, I would say, well, first of all, he's Thai. English isn't his first language and it's kind of like someone that prefers to be in the background. So after I guess about maybe two years, Poramin managed to get some sort of working implementation out and Zcoin was launched in September 2016. And obviously, I mean, can't blame him, but it was way above his pay grade, I guess, because he was just a lone developer working on this, dealing with really advanced cryptography.

56:25And there was a very, very basic bug because we didn't have auditors, we didn't have a lot of funding. But there were two really bad things that happened to Zcoin on its inception. The first thing was our co-founder, Gary, basically. So the agreement was actually was like, hey, you know everything we divide 50%, but I'll only give you your share when you deliver Mainnet, basically when the coin was lost. So Poramin was like, hey, OK, you look, I deliver Mainnet, where's my money? Right. And Gary was like, oh, now you need to continue.

57:07I will release it to you over 12 months. But you have continued developing. And Poramin was like, no, this is not what we agreed. I delivered Mainnet, where's my 50%? And he said, no, I don't want you to just abandon the project, Gary, or something around like that. And Poramin said, OK, actually, I'm OK with being paid over 12 months. But could you show me where are my funds that was raised? Is it still there? Right. And Gary was like, I can't show you that. And that's basically when the split happened.

57:46And Poramin was like, well, you know, if you don't have the money, I'm not going to continue developing. So we found new investors who gave us like, you know, another 100K or so. And Gary was pushed out of the project along with his founder's wallet, because like, well, you know, he didn't have the money. I don't know what happened to it. He said he spent it all. So that was a very big blow. Right. Very early on. And back then, I was a community manager. I had volunteered my time.

58:27I was still a full time lawyer, but I saw Zcoin as something that was really exciting because, you know, I was actually really involved in the in the Darkcoin Dash community. And when they kind of deprioritize privacy, I was looking for a new project to dedicate my time on. And I was like, hey, you know, you guys have look looks to be great tag, but, you know, it's only two people. Why don't I come in and be like this kind of like liaison with the with the community and explain it in simple terms.

58:45Right. So that's where I came in. But when all this kind of shit show was happening with with Gary and Poramin, then suddenly my legal skills came in and I was like, you know, trying to to figure out how to navigate this and and I guess my negotiation skills and bringing on the new new investor. So that's how I kind of like I was still like the community manager, but then I started taking on bigger roles. But the the second really big problem happened just in December, which is just like a few months after his launch, where a very simple bug that Poramin had done and then had overlooked, allowed the creation of additional 400,000 coins out of thin air.

59:35And it was like a really, really basic bug. I think it's like it's like he was missing some equal sign or something like that. And because, you know, we didn't have money for audits, we didn't we only had a single developer. And that was a really embarrassing bug that almost you know, should have been the death blow to Zcoin. Right. Because we just launched and straight away we have a 400,000 coins out of thin air. Right. You take a look at our supply. It's like twenty one point four million.

1:00:05That's 400,000 is why. So, so yeah, that was the history of that. Obviously, as we got better, I mean, we had some exploits after that. You know, it was actually discovered. We got a lot better in the sense that there were no more simple, like small coding errors anymore. When the Zerocoin flaw happened, it was actually a cryptographic, like there was a problem with the protocol, which we managed to, it was exploited. By some, I don't know, black hat. He called himself Pink Panther.

1:00:43And he had like probed our system a lot. And in the end, we had, we found the issue with the protocol itself. We disclosed it. And we had to imagine at that time, Zerocoin was probably like the second most used privacy protocol, mainly because PIVX used Zerocoin and then all these masternode coins also used Zerocoin. There were so many projects using the Zerocoin protocol. And we did a responsible disclosure. We informed everyone about it. And we were actually already in the point of sunsetting Zerocoin because we were already moving the Sigma.

1:01:23So yeah, we navigated there. We moved the Sigma. And you know, I've already shared, like we went to Lelantus and now Lelantus Spark. Right. But it was, I guess, quite like a tumultuous history. In the sense that we had such a really tough start and we could have given up, but we continued pushing on and developing really, really cool tech. And some of the people that, you know, they were behind our privacy protocols, like, you know, Aram Jivanyan, he was a Armenian cryptographer, that we are originally engaged to find a way to do the Zerocash protocol with bulletproofs, because we really didn't want trusted setup. We hit our heads on that for a couple of months and realized that bulletproofs was just not, was just not performant enough to get the kind of performance.

1:02:19It took like several seconds to verify a single transaction, which was ridiculous. Right. And that's how we came up with Sigma. That's how we came up with Lelantus and all of that. So I guess that's, you know, we had a really tough history. But, you know, the, we rebranded, I can't exactly remember, was it like 2020 or something like that?

1:02:40Mainly because, I mean, you know, some people say, oh, you had to rebrand because you wanted to hide the history. No, that wasn't the, the main idea behind it. The main idea was, first of all, it was very frustrating that we were always confused with Zcash. You know, people were like, oh, Zcoin is a Zcash fork when it's not. Like we have no like cryptography. The coding is totally different. Like Zerocoin and Zerocash are totally different protocols. Now we've moved on. We're not using the Zerocoin protocol anymore.

1:03:15Why should we still be called Zcoin? And you know, Zerocoin, the name has already been tainted because of that huge vulnerability that we discovered. Right. And the other thing is that we were saying that, look, you know, we want to stop getting confused by Zcash. And we wanted something that sounded like money. Right. And we were like saying, okay, Firo is four letters. It's easy to say, you know, it sounds like Euro. It's, it's, it's, we want to be like money. Right. And that's how, why we rebranded.

1:03:45I mean, in retrospect, it probably wasn't a good idea. There's still a lot of brand recognition of the Zcoin name, but at the time it was, it seemed like a good idea and it wasn't because to hide our history or anything like that. It's more of like, Hey, we are no longer using the Zerocoin protocol. Why should we be called Zcoin? We want to stand on our own benefits because we're coming up with really cutting edge privacy protocols. And we want to be like money.

1:04:13Like if we could just start from scratch, like the brand again, this is how we went and we always talked about, you know, burning and redeeming coins. We like the red, the fire, Firo, fire, that sort of thing. So that was the reason of the rebrand. So I guess since then, you know, we had like several interesting milestones, like I think in 2018, we actually dabbled a bit, into, election, stuff on the blockchain where we actually conducted, I guess at that time was the world's largest actual political election on the blockchain, which was with the Thai Democrat party.

1:04:53And they were choosing who should be the leader of the democratic, Democrat party. And it was like 127,000 votes, nationwide that were cast, on our blockchain. And that was because Poramin had, he was actually like, he used to serve in the Thai cyber warfare department. So he had connections in the government and in the, in the place where a bunch of people couldn't agree to come to do sort of like e-voting. And he was like, well, why don't we use our blockchain that's neutral and stuff like that?

1:05:30So he kind of made that happen. So I think that was a really interesting use case. We actually even develop a whole entire, election protocol that's inspired by Lelantus, which is actually really cool, but we don't have the resources or bandwidth to take on that task, even though we tried raising money for it. And that's called Aura. I mean, it's on our website. So, so yeah, there was a kind of like slight diversion, but I think at the end of the day, right now, you know, Firo is, you know, with one of, with a pretty good privacy protocol, and now we are, transitioning into, creating, allowing, you know, Spark assets basically.

1:06:13You know, now, you know, because now Lelantus Spark hides sender, receiver and amount, right? We also want to hide asset type, right? And we realized that, you know, if we are just going to be just a privacy cryptocurrency, it is a tough battle, you know, especially with a crowded space. And we want to be saying like, look, you know, if our usage is low, anonymity set is low, but if we have all this type of tokens being created on our chain and all these tokens share in that same anonymity set.

1:06:47So that means when I make a transaction or Firo in the future, I don't know whether your transaction Firo, maybe some stablecoin, maybe it's some dot coin or meme coin, but all of it share that same anonymity set. And we want to kind of be like, Hey, you know, we are that specialized chain where you can get really good privacy and create your tokens. And yeah, that's, I guess is where we are moving towards without forgetting our roots that, yeah, you know, we still want Firo to be used as currency, but we also realize that we want to be just more, more than that, but more like a privacy ecosystem.

1:07:24So I guess like, you know, I think you've interviewed the Zano people, so I guess we are moving down that path though. We think, I mean, this is a bit bias. I do think our tech is a bit better, especially with using Spark and, the way that we're doing our Spark assets has, we think it's more scalable. It also supports like NFTs that are private as well. So, there are some differentiators, but I have great respect, for the guys at Zano and, you know, hanging out with them, in Dubai was quite a nice experience. I have immense respect for the Zano people. Yeah.

1:08:00Vlad CosteaI was going to say that you're moving in the direction where Zano and DarkFi and also Beam, which is the Mimblewimble project, not the Ethereum token. They're also doing that right now. So I guess the main differentiator is that Zano is using Monero technology with ring signatures, and I guess they're looking into full chain membership proofs.

1:08:25Whereas Beam is using Mimblewimble with Lelantus, and I think DarkFi is going to use Zcash technology.

1:08:35Reuben YapYeah. Halo, basically some sort of a Halo 2 set up, not, I'm not sure whether, I mean, I know Halo 2 as the proving system is from Zcash, but I'm not exactly sure if DarkFi is actually using the Orchard protocol. Maybe I'm not so sure on that yet.

1:08:54Vlad CosteaI'm not sure either because I did that seven hour interview with Amir, but there are still parts about DarkFi that are not clear to me. And maybe that they're not final either because until the moment when he launches, maybe that there will be some last moment changes. He already started out with Mimblewimble and then he went into ring signatures and he realized that they're just not good enough. And then he got into Lelantus and then he moved into the new Halo 2 cryptography from Zcash. So it was a journey for his project. I wish all of these projects good luck. I think that this is the way to scale and make Bitcoin private, honestly.

1:09:39It's going to be on these layers. If we don't get proper side chains and we don't get anything significant, that's going to improve the functionality.

1:09:49You're going to basically lock the Bitcoins in a contract and then issue them as tokens on another chain. And it's pretty cool if you have some privacy to transact and you can participate in much more advanced contracts and interact with other stuff that maybe the base layer does not include. Right now, I don't just think it's a fact that WBTC, which has wrapped Bitcoin, is so much bigger than Lightning Network, than Liquid. And I haven't seen any advertising for it. There is no fanfare.

1:10:31I haven't seen anyone praise it too much. I haven't seen anyone brag about using it and saying, look at me, I'm so advanced and blah, blah, blah. People just use it because they want to put their Bitcoin in smart contracts. And I think that if you're going to be able to do that and also have privacy, that's a big win for a cypherpunk future.

1:10:54Reuben YapYeah, I mean, I really believe in that. I mean, I don't know why people I mean, I guess it's tough to be sexy about like, yeah, I'm using Bitcoin, which is custody by someone else. I guess maybe that's the thing. But to me, there's no shade on that because it's a simple solution that has not technical challenges, I would say, regulatory and risk management challenges. But it's a product that people want. And I feel that I don't know why there's so much hate on DeFi and stuff like that. I mean, to me, that's perhaps one of the biggest innovations of blockchain to have all these DeFi primitives and things like that.

1:11:42But what is your I mean, I know I'm the one being interviewed here, but I'm really interested to know about your thoughts on doing something like Mimblewimble extension blocks that what Litecoin has on Bitcoin. Right. Why do you think that may not be a good idea or stuff like that? Yeah.

1:12:02Vlad CosteaOh, I was one of the first people to try that. I was beta testing it before it got launched. I reported on it back when Litecoin actually wanted to work with Beam to implement this. And then they found this developer from the Grin community. I wrote that article in 2018. I remember very clearly. I remember when Mimblewimble was sexy and everyone was talking about it. Like it was the best thing in blockchains because it scales so well and that pruning is very important. I don't know if it's going to be big in the future, but so far.

1:12:42So I've even interviewed Andrew Poelstra, who is the person who came up with this idea of putting Mimblewimble on an extension block. He was an advocate of this idea in 2016. And I asked him, you know, now there is actually someone who put this in code, into real production code. You can just copy and paste that into Bitcoin and make it work. And his answer was that is just not good enough. It's like old tech. But, you know, my question is, would you rather have something that is perfect and wait for that, even if it takes 20 years?

1:13:21Or would you have something that works for now and is just much better than what we have? And of course, there is this elitism in Bitcoin. And we say, yeah, we just take the best of what's happening in altcoins and we're going to just use that or something entirely different, which is more elegant or adapted to the Bitcoin script. But my point is that why not use something that is out there that has been battle tested? Yeah, I think it's been on mainnet for almost three years now on Litecoin.

1:13:55When it was the case of SegWit for that to get tested and there was a lot of thought about SegWit that they generate these, anyone can spend transactions, coins are going to get stolen. It only took about three months from the moment when Litecoin activated until the moment when Bitcoin activated. And that was just good enough for testing. They proved what they wanted to prove. And then it happened. I guess what's missing in Bitcoin now is just this adversarial environment. At the time, it was the block size worse, right?

1:14:33Bigger blocks was the name of the game. They just wanted to make that happen somehow. And if they could make it happen with SegWit, they made it happen. Right now, I think we need a situation of crisis to get people to say, OK, let's use something that has been proven to work and has the smallest amount of issues and provides the greatest functionality. What's really cool about MWEB, which is Mimblewimble extension blocks, is that you can basically increase the block size on the extension block and make that more scalable for users.

1:15:09It's completely optional for node operators to validate that. And it's also prunable. So if you want to onboard more users and you want to have, say, 20 megabyte blocks or something, you can do that. And you don't have to hard fork the base layer. And you can onboard people directly on the extension block. I don't know. For me, it's mind blowing. Also with drivechains, like, why would you not want, I understand that you don't want to use that yourself. But why would you not want other people to onboard Bitcoin using these layers that provide features that the base layer doesn't have or else the kind of scalability?

1:15:49Because right now, the option or the alternative is that people keep their coins on exchanges. And this is the only way that it's been scaling. Exactly. People say, well, there's not enough demand for block space. Well, it's because most transactions happen at the exchange level. It's custodied.

1:16:09Reuben YapYeah, and I find it a bit weird, like, you know, like some people say, oh, why don't we use liquid? Like a lot of these maxis, like liquid is federated as far as I know. And I remember there was this discovery that it was actually like, it wasn't actually like a true federation. It actually would revert to a smaller set of people that was like, I think two or three. I can't don't quote me on this, but I remember that liquid isn't as decentralized and all these maxis are like, yeah, liquid is great.

1:16:39Why don't you use liquid? I'm like, you have all this, you know, criticisms about other people like drivechains or RSK and all these other things. But then somehow liquid is above that. Like, I don't I don't get it.

1:16:54Vlad CosteaIt just comes from the right people. Yeah, it comes from Blockstream and whatever they build is somehow holy.

1:17:03Reuben YapBut I mean, like, you know, I would say the commercial failures. I mean, not to say that we are a success, but I would say, like, you know, for something that so much. Well, you have Bitcoin, you have Blockstream name, you have all these things. Like it's still...

1:17:16Vlad CosteaYou have all this money. Like, yeah. Imagine your project if it had the same funding that Liquid has.

1:17:22Reuben YapCorrect. Exactly. And who's using it? And do you know, like, I mean, you're more in the Bitcoin space.

1:17:30Vlad CosteaThe name of their game right now with Liquid is to tokenize Wall Street. And they say, you know, we're going to provide all of the compliance and all of the legal stuff that you need to create tokens and be able to trade and engage in whatever. And the funny part is that Wall Street doesn't like that regulated part. Of course, they're going to use Ethereum or Solana or whatever gives them just a little bit more freedom to do what they want. And it's funny, it is very funny because they built around the use case that does not exist.

1:18:08But right now, they're just I think they're trying to tokenize USDT and provide possibly the only private way to send USDT around. They got bailed out by Bitfinex a few years ago, and part of their narrative is that they're going to provide USDT tether to the world in a more private way. I mean, good luck to them, but it's very funny because they spent so many years saying, you know, Ethereum is going to zero. Ethereum is not decentralized. Even if liquid is a federation, it's still more decentralized than Ethereum and blah, blah, blah.

1:18:49But the market disagrees. What do you do when the market disagrees? Like you can argue that the market is wrong, but for how long do you think it's going to be wrong? Because eventually the fundamental value of something is going to pop out and you're going to see if there is any merit in that or it's just hype. For the longest time, Blockstream has been FUDding Ethereum and has been FUDding everything proof of stake. But it got so big. And it makes you wonder, like people, do they really care about these values that they're trying to push?

1:19:24Or is it just a matter of using something that is useful for you right now? For example, my girlfriend, she can't have a bank account. Oh, because she's from Iran, right? So the only way that she can receive money from her parents, you know, because she's still a student, is via USDT. Yeah. And that was sort of mind-blowing for me when I figured out that it's not just her, it's an entire continent, or entire continent, because there's also Africa, there's also South America, there's also Asia that are using these tools, not because they believe in them, not because they care whether or not they're decentralized, but because the financial institutions don't work for them, and they don't enable them to do what they need to do. So they're going to use whatever is at their disposal.

1:20:21Reuben YapYeah, and actually, I think it was a couple of years back, but our coin, I think it was then called Zcoin, was actually used by people who wanted to donate to the Iran floods. I think it was like a couple of years back, it was like really bad for floods in Iran, but you couldn't really do that using traditional methods because they were sanctioned and all of that. And there was this, I think it was raised like a decent amount of money, and they were using Zcoin then to get that money to Iranians.

1:20:56And even just recently, one of our community managers, he's based in Syria, and he was without running water. He had to buy a lot of calcified water from some crappy vendor, and he used the Firo that he got and earned to actually convert it and build a whole solar system to extract water from the well. And even like a couple of years ago, I was listening to some Venezuela, having a couple of GPU rigs mining Firo to support their family. And to me, that's why I do what I do, because obviously I have been through something similar, but it was not as bad as them.

1:21:48But when you see people needing this type of things, and maybe it's not profitable. I mean, these people that you're helping, they're not super rich, they're okay with a couple of hundred dollars, but that to me is important to serve them. It may not be super profitable, but they are a class of people that need to be served. And that's why I feel that it's important to do what we do.

1:22:20It's tough, but when you hear stories like this, it really warms the heart and makes you believe, why have I dedicated nine years to this? So there's some comfort in that. But I do want to actually talk about some of the regulatory challenges of privacy coins. I'm not sure how familiar you are with that, but it's something that I guess when anyone talks about privacy coins, besides the, oh, it's useful illegal activity. They're like, oh yeah, governments and centralized exchanges are going to ban it. And even within the privacy community, there's a huge kind of divide as to how to deal with these challenges.

1:23:10It's like a whole spectrum of things. But I guess to me, I think the first question to ask is, what is a privacy coin? We can say, Monero is definitely a privacy coin, but is Grin a privacy coin if the transaction graph can be open? It becomes a bit like, is Dash a privacy coin?

1:23:33Vlad CosteaOr is Bitcoin a privacy coin? Because you can CoinJoin it, right?

1:23:37Reuben YapAnd the weird thing is that it's like coin, especially now with its Mimblewimble extension blocks. Because if you take a look at the new MiCA regulations, there's this targeting of coins with anonymity enhancing features. And the way that they define it is to say, oh, coins or projects that have inbuilt privacy features, that's a privacy coin. If it's not inbuilt, I don't know what this inbuilt means. So I guess to them, if it's at the protocol layer, it's inbuilt. But if it's not at the protocol layer, it's not inbuilt.

1:24:18And I feel like that's a very arbitrary distinction. Why? The utility is the same, so is it just about marketing? So I saw the way that Secret deals with it, like Secret Network. And Secret Network is all about privacy and all of that. But their argument is to say that, oh, our privacy is provided through a smart contract, and therefore it's not inbuilt. And some of the regulators are buying that. But it's kind of frustrating, because although there's this definition of privacy coin, why is Firo a privacy coin and Litecoin is not?

1:25:01And when I was asking the exchange, they couldn't really give me an answer to that, basically saying that, oh, regulators asked us to do this action on you guys because you're called a privacy coin. And we've seen even fake privacy coins like Verge, who have no on-chain privacy. It's all you just turn on Tor, which you can do on Bitcoin. And that's also classified as a privacy coin, mainly because, I don't know, it's on CoinGecko list or CoinMarketCap list as a privacy coin, and they used to call themselves a privacy coin.

1:25:36Dash still gets this, you know, they're a privacy coin, they get banned and stuff like that. So I find it really frustrating that the distinction between a privacy coin or not is whether you have that tag in CoinMarketCap or whether you call yourself a privacy coin, and not so much on the actual fact and utility of it, right? So, I mean, our focus is privacy tech. That's what we're doing in Litecoin. You know, I guess that's not their focus. But what's the difference about using Lelantus Spark?

1:26:09Obviously, you know, there is difference in the sense of anonymity set and the level of privacy. But, you know, realistically, Mimblewimble extension blocks, you know, why is it treated differently from a regulatory standpoint? Is that not at the protocol level? You know, I guess, you know, you can argue maybe it's not inbuilt, right? And I was just like curious, like, you know, what your thoughts were on that. And I mean, I don't know if you want to get into that, but it was this huge hoo-ha about Binance delisting.

1:26:41And we actually did a whole lot of work to stay listed. And we got a lot of hate from some of the privacy maxis. And I don't know, that may be something interesting to talk about because I think it's an interesting approach to things.

1:26:58Vlad CosteaI don't know, regulations are very messed up these days. I got my Kraken account frozen. Basically because, so I used Kraken to sell some Bitcoin to buy my car in December. And then they sent me an email and they said, we want you to send us proofs about the origins of funds and also payment proofs for the last two years to prove what kind of activity you're having to make money or whatever. So basically we give them information about my income for the past two years. And I was like, fuck that. I've had a bank account since I was 16 years old. So that's about 16 years by now.

1:27:46I've had the same bank account and the bank never came to me and said, hey, what do you do for a living? Where does your money come from?

1:27:56Who's this person who sent you money? Can you please send us, I don't know, some sort of information about him? They don't care. So why does Kraken have to demand all of that data from me? Of course, it's the new European Union regulations or the FATF, which is the new travel rules. It's really annoying and it makes me realize that the only way to go really is peer to peer. We have to build these peer to peer economies because otherwise it's never going to work. For now in my country, there are still some non-KYC ATMs, but with MiCA, they have to do full KYC in a few months.

1:28:40So it feels a bit hopeless. I hope some people are going to wake up and realize that this doesn't really provide any protections. If anything, it puts some very sensitive data out there about yourself. Is my government suspicious about me in any way? They can just ask me if there's anything. But it's really messed up that these businesses, in order to be able to function, they have to ask all of this information.

1:29:13Reuben YapIt's a huge compliance cost.

1:29:15Vlad CosteaThey already have your KYC AML data. If you do anything stupid, they know how to get to you. So why the hell do they have to comply with all of this?

1:29:27Reuben YapThat's the problem, right? Because a lot of this anti-money laundering, it's like, oh, there are guidelines. And then like, oh, when something bad happens, then the banks are responsible. Then they have to prove that they did the necessary checks. So it's a natural way for banks to, or even exchanges, to be overcautious. Because they don't want to be... ...caught when something bad happens, right? And like, you know, I told you that my bank account got frozen, right? And I had to give a description of almost every single transaction since April.

1:30:03And some of them were like, oh gosh, I can't really remember what this was about, right? And they were like, you have to explain this and dig this. I had to explain to them why I was spending so much money on Magic the Gathering cards. I was telling them, no, it's a game. I just really like the game. It's not a money laundering application. I can show you the cards that I have. It's so ridiculous that I have to expose that amount of data to a bank, right?

1:30:30Like, why? And they went over really, really large amounts. It's like a couple hundred US dollars here and there. So I know exactly what you're facing. But at the same time, it's like... There's this approach that like this, like DarkFi and Monero are going, which is like, screw all regulations. We don't care because compliant regulations is totally useless, right? And they are... I would say I definitely respect them for it. And I do think that they need to be in the privacy space. People that do that, because they need, they need to be that extreme, right?

1:31:11Because they are going to be fighting for that and creating this network, especially Monero, which has that already kind of like... Some network effect, right? But for projects like ours, like actually, if not for... I can say this, I think, you know, with... I would say a degree of pride, but not at the same time. Not so proud of it at the same time. If not for my work with speaking to Binance and stuff like that, all privacy coins would have been delisted from Binance because they had certain concerns about MiCA, about certain they also was brought up by the U.S.

1:31:53Department of Justice as part of their settlement, and they were about to delist all privacy coins. And one of the things that they required, which is interesting, was first of all, they said that, okay, yeah, you're a privacy coin. Are you planning to remove your privacy? And I'm like, no, right? And they say, okay, no, thanks. And I was like, oh, gosh, you know, that means we're going to get delisted, right? Because there's nothing to talk about. And I say like, hey, look, wait a minute, you know, why are you asking this?

1:32:28Is there some regulation? I do come from a legal background. You know, if there's certain concerns that you have, let's see how we can go about addressing it, right? And I was also kind of like nominally in touch with the Zcash guys, because I said, hey, look, if they're going to delist us, they're going to delist Zcash as well, right? So I reached out to them and said, like, what are your efforts there? And they said, oh, they're going down the view keys, like, you know, going to give view keys to the exchange and stuff like that, just use view keys, which I felt was kind of, first of all, I don't think it would satisfy what Binance requires, mainly because it's a lot of work to implement view keys, right?

1:33:15And there's a lot of computational things that you have to do as well. And I actually argue to say that in the way that view keys are commonly implemented, which is at the wallet level, not at the address level, that will probably be even worse for privacy, because just imagine, oh, yeah, give the view key. Then now the exchange has all the, like, full view of every single transaction I made with that wallet. That means now I have to have an exchange wallet and then another wallet where I do my real transactions.

1:33:49And when I want to interact with the exchange, I have to go and send money into this wallet and then go into the exchange, right, which I thought that was, first of all, really bad UX and also worse for privacy, even though it's more palatable for those people who feel like, oh, yeah, transparent addresses are bad. I feel that realistically that was bad and it was just too much work because Binance is not going to lose a lot of revenue for delisting privacy coins. Let's face it.

1:34:20We are such a small thing and Monero is definitely getting delisted. So we worked out a way and they said they needed a way to also let's say if there's a transaction that comes in that they're not comfortable with, they need to be able to refund to the same address that sent it. Right. And you can't really do that with like a stealth address or privacy coin. Let's say I do like a Monero send into an exchange. There's no way for the exchange to send it back to the sender with certainty.

1:34:54Right. Yeah. So they needed a way to do that, which I guess makes sense. Right. Like if I'm not comfortable with the source of funds, I should be able to return it to where I came from. And that's why transparent address are great for that. Right. Because I don't need any additional information. I see it comes from this transparent address. I'm not comfortable with it. I return it back to that same transparent address. Right. Great and easy. And it's already a lot of work already to do this, but it just doesn't add any additional overweight.

1:35:25So we actually came up with this thing called exchange addresses, which allow basically created a new type of address, which is basically a transparent address, but it could not directly accept funds from a shielded source. So that means anything that the exchange address needs to receive has to come from a transparent address. And that actually satisfied certain things from the MiCA regulations, because it said that exchanges should not allow all these privacy coins unless they can identify the users and its transaction history of that. And that that was the exception.

1:36:13Right. So they already first of all, they already do KYC, so they already have identified the user. But the transaction history, if you you know, you can't do that from from from a shielded address unless you give the whole view key, which is, you know, as we know, it's already difficult. So instead, if it came from a transparent address, at least they can show the regulator. Yeah, it came from this transparent address. That's that transaction history. Whether that actually is a meaningful transaction history is a separate question.

1:36:44Right. Because, I mean, like I feel like the regulations were kind of designed for like Ethereum based stuff where, you know, you have this one account which has all the transaction history and not so much on the UTXO basis. But you want to go and try and fight against the regulators and explain the difference in the UTXO and account and have that law change to factor that in is like to me is is too difficult. Right. So we came up with this exchange address to say, like, all right, we have this exchange addresses only that accepts transparent inputs, but it doesn't actually compromise your privacy more than existing your existing system, because if I have a shielded fund source, I just create a new transparent address, I unshield to that has no previous transaction history, and it then goes into the exchange and it's accepted.

1:37:41Right. And I felt that that was a reasonable trade off that satisfied the word of the law. And after all, again, the exchange has your KYC, if millions of dollars come in and they are not comfortable with it, they can ask where do you get this from or return it. Right. So I don't see how it's different than any bank or like for someone depositing cash in the bank. So this is how we kind of navigated that. And when we proposed that, Binance was like, yeah, you know, that seems to satisfy our requirements.

1:38:15And then they said that they told Zcash to implement it and a bunch of other privacy coins to implement something similar. So Zcash has implemented something called TEX addresses, which are basically exchange addresses, but done through a different way. So I thought that was quite interesting. And obviously, you know, some Monero people are like, well, why are you giving into regulation and stuff like that? And I guess my argument is that, you know, I again, I'm trying to buy time. I don't know whether privacy coins would be eventually delisted from exchanges, but if this buys us a few years and this doesn't really compromise on privacy, like if you actually look at it doesn't really compromise, especially where we already have some sort of transparent address.

1:39:00Then, you know, why not do it? Because I feel that if we push all privacy coins into the dark, right, to say it's not available on any centralized exchange, you got to use some DEX or stuff like that. And let's face it, the DEX infrastructure for Monero and all that is still, I would say, in its infancy. Right. You know, that would actually be a disservice to privacy, because then we get kind of. You know, sideline into this weird little niche of very hardcore people. You don't have access to the mainstream who still use exchanges and stuff like that.

1:39:42And if no one is and if we are no longer part of the centralized exchange system, we also lose our collective bargaining power. Right. Which is already not very strong to begin with. So on the one hand, I would I'm saying what Monero and what, you know, the more maxi privacy are doing, it's not wrong. They are doing what is best for their project. But don't hate on us who are also trying to find, I would say, a decent compromise that at the end of the day is good for privacy coins.

1:40:11And if not for us, you know, we would have lost one of the largest exchanges in the world, if not the largest exchanges in the world. And many other exchanges just follow what Binance does. All this, you know, another exchange just sees, oh, yeah, Binance does it. I'm going to do it, too. Right. So, yeah, I mean, I think this is just something to you know, I just wanted something I want to talk about because I feel that this whole kind of like maxi attitude to every single thing is not very helpful.

1:40:40And they are there's value to different approaches. And I have respect for their approach. You know, I think our approach also has some merit as well. It doesn't mean that we are selling our privacy. We are trying to keep privacy relevant and not push into the the the little corners or niche people. Yeah.

1:41:00Vlad CosteaYeah, I think all of this story just strengthens the case for decentralized exchanges and peer to peer marketplaces and situations where you have to deal with. I think exchanges have become gatekeepers and tyrants at this point. And I do understand their position. They're middlemen between governments and regulators on one hand and on the other hand, the user. Most users just want a simple experience. Maybe it's better for them to just buy Bitcoin or Litecoin and then swap that into a privacy coin using other services. Maybe that's the way to go and that's the way it's going to be in the future.

1:41:43Unfortunately, you have these CoinMarketCap type of websites. CoinGecko and whatever. And for those services, it's important to have some volume recorded on exchanges. And that's the way in which they determine the price, the volume and everything else. I'm not sure if these decentralized protocols are mature enough at this point to handle everything I wish it was. I wish we had a completely decentralized economy. It's not there yet. It's still a bit intimidating to use, but hopefully in five, 10 years, we're going to have that.

1:42:23And we're not going to have to beg exchanges for listing or not delisting. And we're going to have something that's truly based on genuine demand, because maybe you want to buy something. You're not going to find it on exchanges. You're going to settle for what you can find on exchanges. And that's not the way it should be. If it's a free market and it's really decentralized, you should have the option to get what you want. And you should have the means to get there. Right now, I think Cake Wallet is the only way for US residents to get Monero, which is interesting.

1:43:04And the only way they can do that is to buy Bitcoin and swap that into Monero. Yeah, it's a pretty good way. It's a costly way because you're paying a middleman to do the swap for you. And it's not the most private way because I think they hold some of the view keys.

1:43:21Reuben YapAnd on top of that, I mean, like HitWallet, the backend for all these swaps happens through centralized swap providers who use centralized exchanges for the liquidity, right? So I always say that, you know, all you guys cheering for the delisting of the centralized exchanges, they will hit a point where there will be all these swap services and whatnot. Like, oh no, there's no liquidity to do it. I'm going to close down. And obviously, I mean, there are some interesting developments, like, for example, the guys like Serai, you know, that kayabaNerve, Luke Parker is doing, who's actually also going to be helping us do FCMP version for Lelantus Spark.

1:44:03So we would also have, you know, full chain membership proofs. It's actually a bit simpler than it needs to be done on Monero because of the way our setup is. So, you know, the modular setup makes it really easy to do FCMPs on Spark. But back to his point, it's like, well, you know, he's developing Serai, which I have to remind people, and he has never said that it was a private swap. It's totally transparent. All the swaps that happen on Serai are totally transparent. It goes into their own blockchain, which, you know, does AMMs, which are totally transparent, and you can see all the swaps.

1:44:44So that can still be reported to CoinGecko or CoinMarketCap, which is great, right? Then you also have the other kind of approaches, which are like atomic swap based stuff, like BasicSwap DEX. There's also like Komodo Wallet, which has gone a really weird route, which I probably won't cover here because it's still ongoing. And there's this something, but again, atomic swaps sound great in theory, and you hear all these Monero guys, yeah, atomic swaps, atomic swaps, but as a user perspective, it's quite a bad experience. You have to stay online and all these things.

1:45:20You can't do multi-hop and all of this. It's just, and especially if I want to switch to like the stablecoin or something like that, I need to have like, you know, some Ethereum or some some of the base chain gas token to be even able to initiate that kind of atomic swap. So, you know, atomic swaps don't solve everything, though we are actually looking at something that is a new type of atomic swaps that's being done by Layerswap version 8. And they have something called pre-HTLCs, which I'm not I'm not an expert on, but it does solve it does solve the issue of multi-hops.

1:46:00It allows multi-hops. It also doesn't require both users to stay online. So I thought that was really interesting. And we are in talks with them to see how we could integrate something like that, because if something like that is possible, that would be like really great for for, you know, I would say atomic swap cross-chain DEXes. Right. And I think that's really cool. But I think we also have to realize that for all the challenges that AMMs pose, one of the biggest benefits of AMMs is that it allows community people to provide liquidity pretty easily with very little kind of like, oh, you know, I need like, for example, if I want to have an order book base, even I have atomic swap, I need to have some sort of order book and I need to have some sort of bot that is constantly posting the orders, the buy and sell orders.

1:46:56So I need to have something that's on 24-7 or some VPS that is on 24-7 that is also managing all these orders and sales. And that in itself is already like, wow, you know, is the average user going to do that? Well, with an AMM, yes, maybe not everyone does it, but it's just like, oh, yeah, you know, I put my liquidity there. I lock it there and I close my day and call it a day and I see my my profit and I manage it from time to time.

1:47:23So I do think there are some benefits to like the Serai AMM approach. And also I do think there's also like, you know, really interesting stuff in atomic swap based, which is, I guess, more private but has some usability drawbacks. But I do hopefully stuff like Layerswap kind of bridges that gap a little bit where, you know, you can have multi-hop, you can have multiple pools of liquidity that links to each other and you can just remain offline when all these swaps happen. And I think that would be a big game changer because, you know, I do think that eventually all this non-KYC swap providers would eventually be regulated out of privacy coins. I mean, that's just my my my own take.

1:48:01Vlad CosteaNow, let me ask the lowest hanging fruit of questions. The price of Zcoin at the all time high in December of 2017 was $139.77. And now it's 90 percent down. It's like $1.47. And it's even down compared to last month, like 43% and 8% compared to last year.

1:48:34It doesn't seem to be in a bull market. It's ranked 1,227 on CoinGecko. I'm looking at it now. People are going to look at this and they say, well, of course, it went down against the U.S. Dollar, it went down against Bitcoin. It's a textbook shitcoin. This is what it looks like. Minus 99% down. And how do you answer to that question? And while you think. About it, let me present the last two ads for the show. I'll just I'll give you some time to think.

1:49:05So NoOnes is actually a peer to peer marketplace that lets you interact with citizens from Africa. Recently, they had an issue and they lost some Solana from their bridge. And Ray Youssef apologizes for that. He's the CEO of that business. He previously was the main man behind Paxful. And he said to me personally and also in public that he's going to return the funds to the people and also the advice generally. And you can't go wrong with this when you're using exchanges. Don't store your money there.

1:49:40Don't don't keep anything that you're not willing to exchange, because that's the whole point. You exchange and then you withdraw to self custody. And what they do on NoOnes is that they enable these peer to peer markets where you're selling gift cards to people in the third world, in the global south. And the concept is that everyone gets a cut in this. And it's built in a way that incentivizes people to participate and provide liquidity and help these markets get access to what they want. So check out noones.com if you're interested in this.

1:50:22And there is also Hodling.ch, which is a business from Switzerland that's going to help people with self custody. If you don't know how to take care of your Bitcoin because you have a lot of it or you're part of a company that's going to buy Bitcoin in the future and you don't know how to set up the key management and everything, you can go to these guys. They're based in Switzerland. You benefit from some privacy because they're based in Switzerland, so they don't have to reveal everything about it.

1:50:54And they're going to tell you if you need hardware wallets, if you should set up multi-sigs, how you should handle your keys and all of this advice that is useful, especially to companies that want to start buying Bitcoin. Because you don't want the keys to be in the hands of one CEO or someone who can make mistakes, but you don't want everyone to have a key to the point where the threshold cannot be reached and it takes too much of an argument to spend even a small amount.

1:51:23And if you don't want to hold your keys outside your house, I've actually done an interview with them. Check it out. It's part of season 15, which is the previous one. I think it was posted in November. Look for it. Listen to it. You get some free advice in there. So thank you for sitting through the ads. Now, let's get to the difficult situation, at least from a price point of view, in which Firo finds itself. It used to be at one hundred, how much was it? $139. And now it's $1.46.

1:52:00Reuben YapYep. All right. So I mean, that to me, that one time was a one off thing. And that was an interesting narrative that had nothing to do with privacy. It was when we were implementing the masternode systems. And back then, you know, masternodes were really hot. And, you know, there was all that hype. You know, there was this I think 2017 was like the masternode era where every coin was launching with a masternode. So when we were implementing masternodes, there was this huge search in price.

1:52:34And obviously, you know, there was a lot less emission in the hands of people. So it was also a lot easier to push up. And actually, you know, since then, we had a lot of challenges. We had one of our seed investors who actually wanted to kind of take control of the project and the community fought back. And at that point, he and his friends had amassed not through any sort of like, you know, he had bought from the market. You know, it's not like he had like he had some allocation from us, but most of the supply that he got was bought from the market.

1:53:12And when he failed in his kind of takeover attempt, because he was saying like, you know, I want the masternodes to be only in the hands of the whales. You know, I want it to be five times the price, 10 times the price of today so that only the whales are in control of the supply, because only if that's the case, then the price can move. You know, I mean, in a way, he's correct. You know, many of the current coins that are doing when I say heavily centralized token issuance and when they are in the hands of a few like large whales, they are then confident to push it up or down because they know there's not many other people to dump with them.

1:53:52Right. But, you know, although that would have been great for us, you know, I think the community and me just found it that it was not in line with our goals and principles. And I guess after when that happened, you know, there was a two year period where he was just constantly dumping our coins at very strategic moments as a way to say fuck you to us, basically like, oh, you don't want to listen to me. I'm going to make you pay, even though he's going to lose money doing it.

1:54:26So he did that for an entire two years. So even when we rebranded from Zcoin to Firo, he dumped on us. When we released our new privacy protocol, he dumped on us. So it was a very painful thing. Right now, despite that, you know, we have been constantly putting out really good technical developments. Right. And even as the price fluctuates up and down, we are seeing increased volumes. You know, we recently got like a new perpetual maxi. We are seeing our masternode numbers increase despite the price discrete.

1:55:00And usually like the masternode holders are like your long term holders because they're really willing to, you know, host a masternode and do all of this. So I think all of those are like good stuff. But I mean, like, I don't control the price. It's the market that controls the price. We don't have any sort of large supply that the core team doesn't have any large supply that we can dump. You know, we only get 16,000 Firo a month and you calculate it's really not a lot.

1:55:26And we are really dependent at the moment on very generous donations. So if people are willing to donate, you know, a couple of hundred thousand dollars to us and believe in our mission. We have all these really exciting new developments that make Firo more private and more easy to use. I don't I don't pretend to know, you know, what's the price effect on all of this. But to me, it's like, yeah, I'm still sticking to my goal. I've been here for nine years. You know, a lot of people call me a scammer and I'm like, I must be a really bad scammer. It takes me nine years and I'm still here.

1:56:04Vlad CosteaAnd you're still not rich, right?

1:56:06Reuben YapYeah, I'm still not rich. You know, my car is like more than more than 10 years old. I haven't gotten a Bitcoin break like you and gotten a fancy new car. I think it's worth like recently I think they told me that my car is only worth $2,500 US dollars or less. I was like, OK, yeah, I'm going to ride it until it's dead. But I guess it's like, you know, to me, yes, price is important and of course it's important.

1:56:37But that's not my primary goal. And if it was my primary goal, then I'm like, well, I'm doing a really bad job, I guess. But I know I have stuck to my principles, you know, even when it was easy to give in. I have continued to develop in really, really harsh conditions, even when, you know, there were years where I did not even receive any pay for two years. Right. So when people say that we are scammer and stuff like that, I'm like, come on, you know, what are you guys talking about?

1:57:07Just because we have some allocation to keep our research going and all of that. And now we are still, you know, we are now primarily relying on donations. How is this a scam? Right. And we are putting out some of the, you know, for such a small project, we have influenced big projects like Monero, like Beam and all this thing with much greater resources than us. I feel that we are tremendously undervalued for what we are doing. And, you know, you take a look at Zano, right.

1:57:40They were like floundering for so many years and you just took that, like, you know, huge realization and everything just started pumping and they went in and out into, I guess, into the 100 million to 200 million market cap. And now everyone's like, oh yeah, it's amazing. It's great and stuff like that. Right. I don't know if that will happen. Hopefully it will one day, but hey, look, you know, if you believe in Zano, if you think it is, we are doing a lot of similar things in a unique way.

1:58:10And we have, I would say one of the best, you know, teams that are doing this and we have, we have shown that we have persevered rain or shine. Right. And if you want to support like a project like us, then yeah. But you know, I'm not telling anyone, I'm not shilling and telling anyone to buy or anything. That's your decision, but I don't care if people think, you know, say, yeah, you know, people say you're a shit coin and whatnot, you know, to me, yeah.

1:58:39Trump is a shit coin, you know, like Melania is a shit coin. Right. What is the benefit that it has given to society? At least I can say I've run elections in Thailand, you know, real elections. I've developed important privacy protocols. I've developed developed like, you know, election protocols. And today, you know, it's being used by marginalized people, in countries that don't have access to other stuff. And I would say that's a win. And I would say that that means, you know, we are tremendously undervalued for the value proposition that we, that we produce. And I guess that's all I would say on that.

1:59:18Vlad CosteaI mean, I think the ultimate test for any altcoin out there is to survive through at least two bear markets and still have people working on it. It's so easy to get excited about something else that's out there. New technology, new brand, new name, new hype train. You know, right now I think AI tokens, AI meme coins or whatever, they seem to get a lot of attention. But I do have some respect for people who keep building even when the project is obviously not in large demand on the market.

1:59:57It means that there's something out there. There's some technological breakthrough that is just waiting to find its moment. It's unfortunate that we have these hype cycles, right? We had the ICOs in 2017. And before that, we had, what did we have? We had a bunch of altcoins that were trying to improve Bitcoin and say we have faster blocks, we have bigger blocks, we have Tor. And that used to be considered privacy. And then we had the ICO cycle and then we had the DeFi moment and the NFT mania.

2:00:37And then we have the meme coin situation. Of course, it's easy to make those. I mean, at least in the case of ICOs, you actually needed a programmer to be able to write the smart contract and do the token allocation and stuff. Now, it's so dumb. You can just deploy the token on pump.fun or what's it called? Yeah, pump.fun, that's right. And you just put it out there and there's a DEX where people can buy it and you don't need to know anything about how anything works.

2:01:10And on one hand, it's nice because the technology was commodified. On the other hand, it doesn't really build anything interesting.

2:01:23Reuben YapWell, I would say pump.fun is interesting in the sense, like, you know, socially and the way that it has created such an ecosystem around it. And I guess it kind of solidified that, oh, yeah, you know, crypto is a shitcoin casino, right? But I mean, I guess I'm one of the old school people that still believe that, yeah, you know, cryptocurrencies, was this supposed to be this alternative financial system? And one of the things I say, especially with privacy coins, we're building for a future that we don't want to see, which is a bit, you know, unlike AI coins and all this bright future.

2:02:02Privacy coins are building something that, you know, we don't want the surveillance economy. And the reason why we are building is so that we maintain some degree of privacy and freedom. And I feel that as the world gets more totalitarian, as the world starts moving away from cash and all these banks start going, you know, more, you know, even like, you know, now with exchanges, they're going much more crazy. With MiCA coming into play, you might say that, well, then the time for privacy coins is more important than ever, right?

2:02:37So that's how I feel about things, right? And I see this as, I don't see myself as an anarchist or anything like that, you know, I just see myself that there needs to be checks and balances against the financial system, against governments. Because if there's no check and balance, we're just going to get run over, you know, as we have seen many, many times over the years. And, you know, we might think that, oh, yeah, we're losing the war, but there still needs to be someone fighting.

2:03:09And that's what we are doing, really. I mean, like all the people who are genuinely building privacy tech, I think, you know, we are the kind of like, I guess, like a bit of an unsung hero. And I just hope people recognize that. And once that time comes, you know, hopefully we and Firo, you know, just the time in the summer. And I'm very happy to see Zano's success. I remember talking to them before they were big and they were struggling and everything. And then they had like an amazing year and they just kept it at guns.

2:03:44Right. So, so I hopefully will have that day. But, you know, we have all, I guess, a very similar kind of DNA and goals and stuff like that. But at the same time, even if it doesn't happen, we'll still be here as long as we can. But I think it says a lot that, you know, people are willing to give us like, you know, a couple of hundred thousand dollars to build this stuff with no like token allocations or anything like that. And it's just like, go and do it.

2:04:15I believe what you're doing. And that's really comforting to me. And if that continues to happen, then, you know, we will continue building. We'll be here for as long as we can. And I think we've been around for, I would say nine years is an eternity in crypto times.

2:04:33Vlad CosteaYeah. Yeah. By this point, most people just abandon the project and start something new with entirely new primitives and new technology. It's interesting what you said that basically privacy is a hedge. It's something that you build for something that you don't want to happen. And when you think about it, I think one moment when privacy was really needed was during the Canadian trucker protests. Yes. That was a big moment in January of 2022, if I'm not mistaken. It was very, very important. And it was a big failure for Bitcoin because people were distributing wallets and private keys for people to claim that and make payments.

2:05:20And those payments were tracked and the people associated with the movement, they were investigated. Some of them were prosecuted. It was not a nice situation at all. And it was just further proof that this technology, even if it's nice and it's, as we say, permissionless, because you can send money to anyone around the world without asking for a bank's permission or a government's permission. Yes, that's nice. But just because the transaction cannot be stopped, it doesn't mean that you cannot be stopped in meatspace. The cyberspace transaction is going to go through. But what happens to you after you send it?

2:06:00Reuben YapI think one of the biggest wake up calls from that Canada trucker thing was a lot of, especially people in first world countries were thinking like, I'm not in Iran. I'm not in Syria. I'm not in Venezuela. I'm not in these issues. Privacy is not a problem because, you know, we have good governments. And I feel that what's been happening in the UK, in Canada and even in the US, in many cases, has kind of gone to show that, well, you know, even if you're in the first world country, you can get cut off from the financial system in a heartbeat.

2:06:41Right. I mean, everyone's talking about China is a totalitarian communist country and the people have no freedom. And I'm like, yeah, you know, if you go on the wrong side of stuff in the US, it's the same thing. Right. And I look at what's happening to to Roman Storm and Peter, what's, what's, forgot his name, the guys from Tornado Cash, the Samourai Wallet people. Right. And I mean, I guess that, you know, even things like Roger Ver, I mean, that may be a bit more nuanced and and controversial.

2:07:17But at the same time, we we have seen how first world countries can crack down on narratives that they don't like. Crypto had, you know, was also almost like no really, really hurt in the last administration. Right. And we'll see about this one. This one is a bit, I guess, different. I still not sure whether it's a good thing yet. But but yeah, you know. Yeah. Not much to say more than than like, you know, this is it's I think being in the privacy space is one of those things.

2:07:52It's like, hey, you know, we are literally by developing it, we are risking ourselves, you know, with potential jail time. Right. And it's a constant worry for me, like, but there's something that I still keep keep at. Right. Like, you know, I'm not doing anything illegal, but what is illegal seems to change very quickly as well.

2:08:18Vlad CosteaSo, yeah, you touched on some very important points there. And I want to bring this conversation back to the technology. Right. Because there's this meme that I'm in this for the technology, the gold chain guy. Right. Exactly. But not too many people actually understand how any of this works. I'm one of them. I don't like to pretend that I understand too much. It's just that I'm curious about stuff and I'm trying to understand what every episode. There is this protocol that's being used in Firo and that's called Dandelion++.

2:08:55The purpose of it is to dissociate the nodes from the IP address. So you cannot actually. Link a specific node on the network with the corresponding IP address.

2:09:08Reuben YapIt's more accurate to say that it prevents the correlation of a transaction to a particular IP address, not a node. The nodes are still, you know, you can see the nodes are nodes, but so Dandelion++ is not a Firo innovation. It was proposed for Bitcoin.

2:09:30Vlad CosteaYes, it was proposed for Bitcoin. That's what makes me angry about it, that we can't even have this. It's not even a soft fork requirement. You just put that in the client.

2:09:41Reuben YapSo the idea of Dandelion is that with Bitcoin's gossip protocol, so what the gossip protocol is that when Bitcoin nodes receive a transaction, they see the transaction and then immediately broadcast it to all the nodes that it's connecting to, like I think it's eight nodes or something like that. I forgot the exact number, right? So if you are someone that can monitor the network, especially if you're like a nation state or ISP and stuff like that, and you are monitoring the network or you're controlling a lot of the nodes with this gossip protocol, you can with a high degree of certainty.

2:10:24And there's a whole paper on this. I think it's almost like 50 percent or even less than that certainty of saying that I can take a look at the transaction and see the way it has propagated through the network and make a reasonable guess as to the node that started that transaction. And that's really important because that means that let's say if I'm running a full chain wallet or not a full chain wallet, like I can tie an IP address to a particular transaction. So even if you have all these on-chain protections of sender, receiver and amount, if I attach an IP address to it and that's somehow linked to you in some way, a lot of that privacy goes away, right?

2:11:05And so basically the way this attack works is basically looking, monitoring the network and seeing how the transaction travels through the network and is broadcast. It's kind of like the way that I like to explain it is that when I drop a stone into the water and I see the ripples, just even though I'm out there and I look at the ripples, I can have a guess as to where that stone was dropped in just from the ripples, right? Because I know that that thing started it and that's the similar kind of, that's a way to kind of visualize how this attack happens on Bitcoin.

2:11:44Dandelion introduces this kind of interesting thing to say that when you first broadcast a transaction, you actually roll a kind of like a random dice and there is a 90% chance that I will only broadcast it to one other node, right? So that means instead of gossip broadcasting to all other nodes, I'm broadcasting to one other node. So right now only two nodes see it. Then that second node says, I've received this transaction, I'm going to roll a dice now and if it's like, you know, nine, then I'm just going to broadcast it to one other node again.

2:12:23Eventually, it will hit that 10% chance that you will broadcast to every other node that's connected, but now you're not sure as to which was the originating node for that transaction because it might have gone through several hops before it was broadcasted and then you can start seeing the ripples. Another thing about the Dandelion++ protocol is that once the node sees another node doing a broadcast like oh it's now telling everybody, all the other nodes that may have participated in that sort of stealth one node, one node, one node, also start broadcasting to all other nodes.

2:13:01So it's just like, you know, you see this thing going one and then suddenly there's a burst there and then everyone starts bursting and broadcasting that transaction everywhere else. So that's why it's called Dandelion because there's like the stem phase where it is going from one to one to one and then it goes into the fluff phase where it's just like spreading out and then it looks like it's exploding. It looks like the transaction is coming from several nodes all around. So I would say this adds a little bit of latency towards a transaction.

2:13:34Of course, with Bitcoin, like with a 10 -minute block time, it hardly makes a difference. But like for us, you know, I think it adds maybe like 20-30 seconds of delay, but it gives that much greater sort of network privacy that you cannot tie a particular transaction to the IP address For not a lot of costs, just a little bit of latency and there's no need to rely on something like Tor or, you know, some other network and things like that and you can still use Tor with it.

2:14:07You can still turn on Tor and still have Dandelion on top of it. So I really think it's a great proposal. Obviously, it may not stand up to nation states who may be able to see everything, right? They are, you know, like if you are a nation state, Dandelion may not have a great, you know, it's not for that level or threat level but it provides a very good base level of privacy for very, very little cost. I guess it's similar to like Mimblewimble, right? It provides a very, very good base level of privacy for not a lot of costs but again, it's a very targeted and, you know, sophisticated attacker.

2:14:44It may not hold up. Obviously, we are looking into other stuff like mix nets, you know, such as developed by Nym and all these type of things, which actually like in this default configuration doesn't add that much privacy. Because the more privacy you want, the more delays you have to add, the more you know, holding and all of this. Because mix nets, you need to add certain delays to prevent timing analysis. So I do think that Dandelion, even though it may be seen as not the best privacy thing, it's pretty good for network privacy. And you can always layer up, you can always use a mix net on top of it. You always can use a VPN all at all on top of it.

2:15:25And yeah, I hope that's a decent explanation of Dandelion and its pros and cons.

2:15:31Vlad CosteaYeah, it's another one of those proposals alongside Zerocoin and Zerocash and ring signatures. They were also proposed for Bitcoin initially. Yeah, but for this one, I just don't see the justification because it doesn't require consensus. It just requires core developers putting this into the client.

2:15:55Reuben YapYes, that's right. Oh, the thing is that it does, if not a lot of people use Dandelion, it does affect its privacy quite a bit. Like, for example, if only like 20% of nodes or 30% of nodes use it because you want to be able to, you know, bounce it as many as possible. And for Firo, I mean, we have that option for people who want to turn it off, but because we keep it on by default, most of our nodes are running Dandelion++ and propagating transactions in that way. So yeah.

2:16:29Vlad CosteaYeah, it does have its limitations, but once again, it's better than what we currently have, which is nothing. You can run Tor, you can run a mix net on top of it, but it's up to the user to activate this. I wish there was something much better at the protocol level.

2:16:52Reuben YapYeah, I mean, I think, yes, mostly if you want to do that, you start going into like mix net because, you know, at the protocol layer, because it's the networking layer, right, which is a bit separate than the blockchain and stuff like that. It's at the networking layer. So it has to be something like mix nets or Dandelion or stuff like that.

2:17:19Vlad CosteaI also want to ask you, because you got this question in the chat from Cameron Ruggles. Oh, yes. He wants to know your opinion on ZK-STARKs. Because ZK-STARKs, they were developed for Zcash. I'm not sure if Zcoin also had them. No. And they required this trusted setup, this ceremony. I actually have Peter Todd's laptop that was used during the original Zcash ceremony. I think it's a pretty cool artifact. Nice.

2:17:54Reuben YapSo, first of all, you know, Lelantus Spark doesn't have trusted setup. We specifically designed all these things without trusted setup. Obviously, Halo 2 doesn't have a trusted setup. So Zcash doesn't have a trusted setup now. But my opinion on ZK-STARKs. So this is something actually we've done some research on. Aram has actually also done research on ZK-STARKs as well. And when we looked at it had some really interesting properties, being that it was high performance.

2:18:27Because it's based on hashes, it had quantum resistance. But the transaction sizes were really, really large. When they were first looking at it was something like 200 kilobytes or something like that. And then they brought it down to like 25 kilobytes or something like that. So I think even with the most efficient, it's still a magnitude or two larger than even our existing transactions. So it is definitely interesting. But I, at the moment... I just feel that, yeah, you know, it may be something that we look at in the future, but I think there's a reason why it hasn't really been used in any sort of privacy protocol because of its very, very large proof sizes.

2:19:19So yeah, I think that's my opinion on it. And again, you know, I'm not a cryptographer. I rely on my cryptographers feedback and people talking about it. But the last time that we look at ZK-STARKs, even though we are still kind of, you know, we have it on the periphery and have looked at it several times since then, the way that you construct those circuits and the proof sizes were just too prohibitive to make it feasible. Yeah.

2:19:50Vlad CosteaThere's also someone named Chai C, I think, Chi C, Chai C in the chat. Okay. And he has a question. It's Did you work at Bittrex?

2:20:01Reuben YapNo, I did not work with I did not work at Bittrex. We had Zcoin's first listing was on Bittrex. And that was done. That was done even before I joined the project. And I think like there was Richie and somebody inside, but no, I have no connection to Bittrex whatsoever, even though it was an exchange that I used and it was Zcoin's first listing. But no, I did not work at Bittrex. Yeah.

2:20:33Vlad CosteaMaybe you remind him of someone.

2:20:36Reuben YapBecause I think there is a Chinese guy in Bittrex. We all look the same. Maybe. I don't know.

2:20:42Vlad CosteaBy the way, you're wearing a red shirt and I made my background red because it's Chinese New Year and this is supposed to bring us good luck. Hopefully.

2:20:52Reuben YapIt's the year of the snake.

2:20:55Vlad CosteaWhat does that mean? Should I buy a snake meme coin?

2:21:00Reuben YapMaybe, but I mean, I'm not very into like Chinese astrology, but I mean, like the snake has certain meaning. I'm not exactly sure on that. But yeah, it's the year of the snake. I'm actually born in the year of the dog, so I don't know what does that mean. But there are certain traits which I'm not too familiar with and probably would swot up after this call.

2:21:26Vlad CosteaAlso, the logo of Firo is red.

2:21:29Reuben YapYes, that's right. Maybe there's something to it. I was meaning to tell you that, you know, in China, when the price goes up, the rate is so significant to them that rate is when the bar goes up and green is when the thing goes down. So it's inverted for Chinese markets.

2:21:49Vlad CosteaSo the Chinese should love Firo because it's red all the time.

2:21:54Reuben YapThe Chinese investor that bumped dumped on us was Chinese. So, yeah, he was the one that wanted to centralize holdings into a bunch of wells.

2:22:06Vlad CosteaThat's such a recurring theme. I heard some stories from the Ethereum classic guys, and they were telling me that they got basically not scammed, but sort of pulled back a few years by Charles Hoskinson who wanted so he was going to provide some development for the protocol, which is nice. He was going to bring a team of his own from IOHK. Yep. And he was demanding for a part of the block reward to go to his team. So basically to have like a dev allocation and that community, you know, they're the ones that rejected the DAO and they didn't want to hard fork to basically bail out the investors.

2:22:56So they are based on this idea of code is law and they wanted to have everything fair. They also kept the supply and they took a more Bitcoin like approach. And for someone to come in and say, you know, we should get this percentage of the block reward for all eternity. And it was hard even to quantify the amount of value that this team is going to bring into the project. They're going to say, yeah, we're going to maintain it. We're going to add these features and blah, blah, blah. But is that really going to help the project at all? Or is it going to make people who already support it go away? And it was also a case, I think it was ETC dev that was the team that was working on it.

2:23:46And that got displaced by another one that was called ETC Labs. And I think it was also Chinese. They basically tried to take over the GitHub repo and replace the maintainers and stuff like this. This space is very hostile and it's like open warfare all the time.

2:24:05Reuben YapYeah. I mean, like, I don't know if this is a thing that's particular to the Chinese.

2:24:12Vlad CosteaI didn't mean to generalize about the Chinese. I'm just saying that this sort of takeovers and attempts to control the projects are happening all across the board. It might be decentralized, but there are actors out there that are trying to gain control.

2:24:31Reuben YapBut that's good, right? Like if we survive, you know, I mean, you know, of course we're going to have some battle scars for it. It kind of shows I think every sort of challenge that you face reinforces this resilience. Right. Like any sort of things, because you don't really know how strong your thing is until you're under attack. And we've been under attack from, you know, we've been the 51 percent attack. We've had like investor attacks.

2:24:55We had cryptographic attacks. And yeah, you know, I mean, of course, yeah, we've suffered, of course. But, you know, we're still here. We're still running. You know, we we haven't given up. And I think that that that should say a lot about the kind of people that we are, I guess. Yeah. Even the community, not just the core team. It's like there are people that have been holding since, you know, 150 dollars. Right. And they're still active in the community. And these are like the people I'm like, wow, you know, thanks so much.

2:25:24Like they are like, you know, the people that I get up to my day for. And I'm like, you know, there are times that I've received very, very lucrative offers to say, you know, if you join our team, you know, you give you a really fancy pay, a nice job, travel here and there and whatnot. And I'm thinking of like, you know, as someone that has led this project, you know, although even though it's like, you know, eventually I don't want to, you know, I want to leave this, you know, let my my dream is that this thing be community run and it doesn't need to be a project.

2:25:58They were very like centralized core team. You know, I still would still consider it my baby. Right. And it's something that I, you know, despite the price, it's something I'm extremely proud of. And, you know, no one can kind of change my mind on that besides the mishaps and and all the mistakes that I've done. I think we've grown so much. And, you know, it's not an experience that I would ever regret. You know, despite me may not be being the most profitable event expenditure for me, I don't think I would have had it any other way. Yeah.

2:26:37Vlad CosteaI got to ask you this because Amir at one point, while explaining how DarkFi is going to work, he said he's open to the idea of having DarkFi turn into a ZK roll up on Bitcoin. And I was wondering, do you see Firo becoming something like this at any time in the future or some people taking the code and turning it into a roll up for Bitcoin?

2:27:04Reuben YapI wouldn't be against that. I would actually be supportive of something like that, provided that is run by, you know, a good team, you know, that has the right intentions in place. I think, you know, one of the things, although it's not the most bullish thing to say, but this was like at the depths of despair, you know, when we were, I was like, you know, really questioning myself, like, you know, why am I doing this? Right. It's been some days have been really tough. And, and, you know, I said that, you know, even if, even if Firo dies, you know, I don't think it'll die.

2:27:41But even if Firo dies, our work, our privacy protocols, I think will live on. And if he has lived on in some way, if it's, you know, influenced Monero, you know, there was this point that, you know, maybe Monero would even use our privacy protocol, you know, then I would consider that a success. Right. And, and that means like me, you know, or not me, but my team has like made our project has made an impact that has, you know, given some good to the world.

2:28:10And that's how I see it. Right. So, so I'm not against that. It was actually, you know, some people that were proposing that, you know, we build a Lelantus Spark layer 2 and stuff like that. And it's something that, you know, we did consider, but it would require such a change in team and new sources of funding, a new race. That would mean that effectively, like we would have to abandon Firo, right. Unless we're like, oh yeah, there's some token allocation and all of that. And that's not really something I want to do, which is why, you know, I decided, well, let's go down this.

2:28:50You know, tokenization path, we have like partnerships where confidentially we're looking at other protocols where you can bridge other tokens from other chains into Firo and have them represented as a Spark asset. So I guess it's like wrap Bitcoin, but on Firo, but you get all the privacy features. Right. And I would say that, you know. To me, that would be a great use case, you know, for the project. And I really hope to see that future happen in the next couple of years. Yeah.

2:29:24Vlad CosteaI think Firo, I've seen this somewhere that you're working with the guys from, what's it called, Privacy Layer? Confidential Layer. Confidential Layer. And you are the first coin that they supported.

2:29:39Reuben YapZano. Zano is the first coin that supported and Firo is the second coin that they announced support for.

2:29:49Vlad CosteaSo what is Confidential Layer and why is that required?

2:29:53Reuben YapSo because we don't have any sort of advanced smart contract capabilities, there isn't a way, not like in Cosmos ecosystems where you can bridge tokens and have this cross-chain communication very easily. It's not something that we're totally closed off to. But with Layer 2s, you can easily bridge one asset to another. But for bridging from an Ethereum smart contract chain or Solana chain into a UTXO chain like Spark is kind of non-trivial. And Confidential Layer is offering this layer. They have their own blockchain, but it does all this bridging where it can get coins into this blockchain and it's in some sort of decentralized custody.

2:30:47It's held by a number of nodes. And then it would actually then mint an asset on the Spark layer. So that means they act kind of like a bridge and communication layer where you can put assets into their blockchain that is secured by their network and their validators. And then that will be minted into the Spark asset layer and you can then reverse it back out. So that means you can get Bitcoin, you can get all these other chains and EVM chains like USDT, USDC right into Spark and have it transacted here and there in a private way.

2:31:27But if you ever want to redeem it, you can always do that and reverse it.

2:31:39Vlad CosteaThere's also someone in the chat named Nathan and he's a big fan of yours. He said I only see Nathan in this chat. But he says I own almost 50 masternodes across the world and get enough Firo for another node almost every few weeks. We eat the cost because we believe in the mission. I hope at some point that my income from them can pay for development. It's the dream, the perfect feedback loop. And he also said heading out for the night. Great chat. Thanks for hosting, Vlad. Good night.

2:32:15This was nine minutes ago. I hope that. No, I guess he hasn't heard this, but maybe if he listens later, he's going to discover that he got a shout out.

2:32:27Reuben YapYeah, I think also one of the things that we just posted like just a couple of hours ago was that we were releasing something called Spark names, which I don't know, I guess you're familiar with Ethereum name service and Zano aliases. And we were thinking of ways to like, you know, obviously a block reward for the development team is not sustainable in the long term. Right. Even with a tail emission or whatnot. And we were thinking of ways for, you know, Firo to kind of self-sustain itself, you know, once it has tail emission or some sort of development.

2:33:05Right. And and Spark names, I guess, is our first kind of experiment in that regard where you can register aliases and or even like, you know, you can attach certain sort of metadata to it to serve as like some sort of digital identity. And I guess the good thing is that because it's always tied to Spark address, which is a stealth address, you know, you're not unlike an Ethereum name service. No one can take that alias or take that address and look up your entire transaction history.

2:33:35It's registered directly on the block chain. There is a registration fee and currently that registration fee. And there's also a renewal fee. It's not like you buy one and then it's there for perpetuity, which I think is really bad for squatting. There's always going to be ongoing costs. Obviously, if you want to say, I want to register 100 years upfront and pay upfront, great, you can do that. But otherwise, you know, you have to keep paying year by year by year. That would create, I would say, like a continuing source of revenue and income that can be channeled to the masternodes, the miners or even the the the development fund or community fund.

2:33:59And I think that was one of those things that we're thinking about, like, hey, one of the steps that we're moving towards, I guess, the project kind of funding itself rather than just using a block reward.

2:34:29Vlad CosteaSo let's think about the future of Firo. Where do you see this project going in, let's say, five to 10 years? Do you think you're going to materialize this vision of tokenizing Bitcoin or Ethereum or other assets or maybe Tether, who knows? Or do you think it's going to take another path and it's going to serve the ecosystem in some other way?

2:34:57Reuben YapI honestly, you know, the way I do see it is I do think we will get there not even in five years. I do think, you know, in the next two years, we could already see all this because all the building blocks are there. Right. And I'm pretty sure we can do, you know, I never want to build my own stablecoin because it's just too much work and too much regulatory risk. It's easier to bridge other assets inside. Right. I don't pretend to know whether privacy would be a huge thing in five years.

2:35:29I mean, I guess even though I'm all for it, I'm also like realistic that it may take longer for privacy to take off. But I do think that, you know, all the building blocks, all the tech, all the use cases will be there. It's just a matter whether there will be a product market fit when that time comes. So all the time will be there and ready. You know, I would say it would take another one to two years for all these things to come up. But I think by that time, even if we don't have received any more funding, Firo would be in a very good state.

2:36:04We probably would have full chain membership proofs. That means that we have, you know, global anonymity sets in the billions or so. We would have all sorts of tokens that are sharing in this anonymity set and all this bridging stuff. I would say the only question mark would be, I guess, the sustainability of the tail emission, which we are looking into. And the other thing, which is whether there are better bridging protocols besides confidential layer, which, you know, doesn't rely on validators holding this. It's not actually, I guess it's custody of bridged assets, because I guess people are always a bit worried that, oh yeah, you know, if there's only a small set of validators, then a regulator can come and like seize and like, you know, go and find all these validators and seize the funds and force them to unlock something.

2:37:01Obviously, we haven't seen that yet in any sort of chain yet, unless it was like super centralized. But, you know, I would like to see like better developments in that path. And maybe it may not be even a, may not be confidential layer, right? It may be some sort of communication layer with other chains. That is, I would say, an open question. And I guess the only other really big threat to me in terms of tech is the quantum computing, if and when it comes. So that's, I guess, one of our big approaches.

2:37:40But I do hope to see, and this is something that I do see for the future in the next two or three years, we are seeing Firo moving just past just being a privacy coin that's used in niche. I mean, you can use, I use Firo a lot for my travels and stuff like that. There's a lot of nice integrations there. But, you know, it would be nice to see like a vibrant token ecosystem for whatever. And look, you know, if meme coins are what people want and they want privacy meme coins, that's great.

2:38:09You know, I actually, there was an April Fools joke that we actually rebranded to SHHH, Shiba, like Shiba. I thought that was, you know, sometimes I feel like that was a missed opportunity. Maybe I should have rebranded from Zcoin to Shiba and that might have done better. But yeah, that's how I see things. I am pretty clear what I need to do for the next couple of years. But, you know, the space changes so fast that we have to be nimble and not just like commit to one path.

2:38:43The goal is always unchanging, but the way to get there is changing, I guess.

2:38:50Vlad CosteaI definitely think there's something there because last year there was a meme coin called dogwifhat that was super popular. And there were a bunch of these animal coins that for some reason were super successful on the markets. And I think I tweeted this, you can look it up. I think that I said I think Litecoin would be much more successful if it was rebranded as Dogecoin Dad or something. And Monero could be private DOGE and magically there would be much more interest in this just because it's related to this DOGE meme which is so big right now there's a department of the United States that is called DOGE.

2:39:35Reuben YapI know it's yeah you know sometimes you know when they say it's a simulation I'm like oh my gosh you know sometimes I feel like Elon does things to just like create chaos and and ridiculousness. Just like you know just because he finds it funny right.

2:39:50Vlad CosteaI think it was the same one. He accepted Bitcoin in 2021. He was very much aware of the criticism surrounding it and then he pulled out this card from his hat and he said you know mining is not green enough. And then it was so embarrassing to watch people trying to please him saying oh what can we do can you provide some guidance and then you had Michael Saylor set up the North American Mining Council. And then they they got together and they said look we need to do this and we need to do that to make it more green and blah blah blah and they had a call with Elon Musk and they settled.

2:40:30You know I'm not sure if you can see this right now but part of the show is graphics and I'm going to have to move some stuff around for it to be visible is Elon Musk and Michael Saylor and there is also Donald Trump here. And they're just watching and we're there on stage playing our guitars and being rock stars and they're just watching there awkwardly that that's all they can do because we're the builders were the main characters of the story. They're just passengers. They're just here to observe.

2:41:02They don't have any influence. We should not look at them like they're gods or something.

2:41:07Reuben YapI know, it's so horrible. Everyone's like, oh, you know, Elon, just imagine the Elon tweets, us Elon, this, Elon, that, like, come rocket that, you know, and I'm like, these people did not have any, you know, even Saylor was anti-Bitcoin And I honestly, I feel like Saylor is going to be one of the biggest threats to Bitcoin. The way that he's you know using his company as leverage to just keep on buying Bitcoin without rhyme or reason. Right, I mean, I think that's gonna be the next FTX. Yeah, he's over leveraged. And I think the worst thing is that he doesn't represent any of the values of Bitcoin.

2:41:51You know he's he's like oh yeah you know I'm all for custody I'm all for anti-privacy anti all of this you know and and yet you know people care what he says right and it's just kind of unfortunate that this is kind of what we have devolved into.

2:42:10Vlad CosteaI can go on a rant for like one hour about this but when he says digital gold it's not what people think it is. When Satoshi said it's like gold mining what he was referring to is that you can use your computer to mine. And it's like discovering a block and then you get the reward which is like gold this this is what digital gold used to be like because you mine it right. There is a process which is energy intensive that generates blocks and you get a reward but then it became difficult for people to mine.

2:42:48And for some reason the narrative was moved to have basically the disadvantages of gold as money as features of Bitcoin. So it's expensive to transact and therefore you're going to have custodians and you're going to have banks and you're going to have no privacy because when you move gold around in large amounts of course it's very obvious it's physical.

2:43:16Reuben YapYeah. And yeah, like, what, can't even access their own gold reserves because UK say no you're a dictator you don't you don't deserve your country's gold like what the heck right.

2:43:29Vlad CosteaYeah that's really messed up but what I'm trying to say is that what Michael Saylor is pushing is these values that put his company in a position where it's one of the largest custodians and one of the largest banks. And people invest into that they buy MSTR thinking that they're also entitled to a chunk of the company's Bitcoin. He was trying I think he was trying to be a Bitcoin ETF before the ETFs got approved. That's right and right now he's just like in the middle ground between just a stock and being an ETF.

2:44:07He's over leveraged he's playing a game that's very dangerous because at one point he's gonna run out of money to borrow or he's gonna run out of investors and he's gonna have to pay back that debt somehow. He's either gonna sell Bitcoin or he's gonna sell stock either way it's bad.

2:44:30Reuben YapI don't know what's gonna happen that to me is it worries me because you know even though that has nothing to do with Firo it would affect all of us you know like. It's so ridiculous that this one guy has so much leverage over over Bitcoin right and I feel like that's a huge failure point.

2:44:49Vlad CosteaAnd there's more to it there's allegedly that situation where he blocked an ETF from giving money to Bitcoin core developers. And that was an allegation started by Matt Odell. I don't have any primary sources for this but oh it's really messed up if it happened. It goes all the way back and we spoke about this like three hours ago when we were getting ready for this call with John Dillon. On the Bitcointalk forums when he became the largest donor to the CoinJoin fund. To the point where Greg Maxwell at first he said this is going to be like a council of three people deciding who gets the bounty right.

2:45:28You have these three technocrats you have Greg Maxwell you have Pieter Wuille and the third one is theymos. These three guys are gonna decide who's gonna get the bounty for building a CoinJoin wallet. But then you have this guy who shows up and he donates like 10 Bitcoin or whatever. And then he says you know I should also be consulted because I put some money. So because I put money into this bounty I should also be able to say no you should not give money to Amir Taaki's dark wallet.

2:46:01Yeah I think based on so I really recommend you it's gonna take you a couple of hours to go through these emails. They're published online you can find them the John Dillon exchange with Peter Todd.

2:46:15Reuben YapYeah, I did, I did browse through it, but yeah I should dive into it more.

2:46:20Vlad CosteaIt reveals some I wrote a Twitter thread about that so if you want to find the short version of it. You can just search at t-h-e-v-l-a-d-c-o-s-t-e-a which is my Twitter account just search for John Dillon. I think right now the search function is even easier you just go to someone's profile and you hit the magnifying glass and search for a keyword. So it's much more simple than it used to be just search for John Dillon.

2:46:48It was groundbreaking because the reason why John Dillon did not like dark wallet had nothing to do with dark wallet itself or the CoinJoin idea. It had everything to do with the fact that it was using libbitcoin which is an alternative client written in C++. It was created by Amir Taaki. It was his way of fighting against what he believed to be a dictatorship by Gavin Andresen at the time. He wanted to have his own client that runs in consensus with Bitcoin Core. And the problem with Dark Wallet was not the privacy that it provided, or...

2:47:28Reuben YapBecause he used libbitcoin.

2:47:31Vlad CosteaExactly. It was using libbitcoin, and that's what he didn't like. And you can read this in the the exchange between Peter Todd and John Dillon. Some people like you can even see in their exchange that they expressed this idea that they might be the same person. They actually talked about this and Gavin Andresen and Greg Maxwell expressed this Suspicion that they might be the same person. They were talking about 51% attacking various networks which is interesting. There's actually a quote I think it's by Peter Todd. He says you know everything except for Bitcoin and Litecoin is a scam and deserves to die. There's also Warren Togami who somehow was involved in this at the time he was lead developer.

2:48:22Maybe not lead developer but one of the main developers of the Lightning, not Lightning, Litecoin project. And he was able to basically and this is the value of open source software you know.

2:48:36You can say oh Litecoin is a scam it's not too much different from Bitcoin and blah blah blah. But back in the day in 2013 they were able to find some bugs in the Bitcoin client and actually fix some stuff. They were able to prevent some attacks that were considered dangerous at the time. Just by forking the code and running it and you have different pairs of eyes looking at that protocol. And they said you know this is wrong and we should tell the other developers too. Just like Bitcoin Cash actually helped Bitcoin in 2018 with the inflation bug.

2:49:11Reuben YapIt actually saved them it would have been disastrous. And I remember reading that he actually considered using the bug to exploit it. But then he changed his mind. So I thought that was really interesting because even when we like I mean I know this is not on the same magnitude but back when we found the Zerocoin bug you know there was a part of me saying like you know Firo or Zcoin needs funds maybe we should use this exploit and use exploit all the other Zerocoin projects and get the funds for ourselves right I mean that that thought did cross my mind, but at the end of the day, we decided to do responsible disclosure.

2:50:00And actually got burned for it, by the way, because one of the other projects, because we told them like, look, can you please keep quiet, don't go out with this, because we found the bug, we're telling you about it, let's all agree to fix all our shit before anyone goes public about this bug, right? And then one of the projects went public about it before us. And and that was really it was really an asshole move. There's no other way to to to say that, but it really kind of shook my it shook my moral values because I was like, man, I should have just freaking exploited everyone and got rich and instead of doing the right thing, which was doing the responsible disclosure and then getting shit on and and backstabbed by the people you just saved right

2:50:53Vlad CosteaI've actually interviewed Amaury Séchet who is one of the first three people he was the lead developer of Bitcoin Cash who was not the person who found the bug in Bitcoin but he was one of the first three people in the world who knew about the exploit and he said it never crossed his mind to steal by creating inflation in Bitcoin, because he describes himself as a security expert. Yeah And he said that in the long run, even though he could get some financial benefits from it and become famous for breaking Bitcoin. And this was also in the middle of this fight between the communities yes to get more market traction and more users. He said that this could follow him for the rest of his life and he just wants to be known as a good expert in his field so he did the right thing. He actually helped the Bitcoin Core developers fix it.

2:51:51Reuben YapEven now he's vilified by the Bitcoin Cash developers and now he's with eCash or something. Yeah.

2:51:56Vlad CosteaHe created his own fork.

2:51:58Reuben YapYeah yeah yeah I mean I've met him and hung out with him a few times so I like him I know Roger has some issues here if I'm not mistaken but yeah you know I consider him one of the good guys and I think what they're doing with eCash is pretty interesting as well yeah.

2:52:18Vlad CosteaYeah, he found some. So of course, when you're part of a minority chain with a minority hash rate fewer users, fewer miners, you're more vulnerable. And he did understand this, and he did see that Bitcoin cash is not happening. It's not going to be the majority hash rate chain. Yeah. So he did foresee a situation where it's going to get attacked or left behind. So he looked into other protocols. And for what he did with eCash, I think he looked into Avalanche.

2:52:50Reuben YapYes. Yeah, yeah, that's right. Avalanche is very interesting.

2:52:53Vlad CosteaFor providing some extra security to his network. And he launched his own fork of Bitcoin cash. I think that community was doomed to have multiple various implementations. But sometimes being a Bitcoin maximalist feels like you're being held hostage by guys like Michael Saylor because you're going to have very good proposals that come around and everyone agrees that they're great and that they're needed and that they don't change too much. I mean, compared to segWit they're almost nothing stuff like cTV or whatever it doesn't even affect most node runners it just enables some extra use cases that people can use for doing stuff that maybe you don't like but once again why would you stop developers from building?

2:53:43But then you get someone very big who put a lot of money and they say no. Why would you want to do this? No. Let's just use custodians. Bitcoin is digital gold. Why not use this bank? They don't say bank but that's what it is. Let's just use ETFs. Let's just use exchanges.

2:54:03Why would you want to do that? And I think the looming threat in the case of Bitcoin is the fact that we need to have a healthy fee market.

2:54:16Reuben YapYes, that actually is something I tweeted about and I feel like well you know I don't really know whether this 21 million limit is going to keep to me. It just doesn't make sense even if the fee market works to have this kind of security that fluctuates based on how many people use it sounds like a really bad idea because that means in bear markets or like low transaction volume the security drops. And then when more people make transactions then the security goes up and it makes it really hard for miners as well.

2:54:53I'm not sure if that's sustainable. I really like the tail emission, the model that Monero uses which we have also adopted as well now. I don't think it goes all the way in solving all the issues but it is good to always have a stable base that people know like if I mind this is what that's available right rather than it's very hard to predict transaction volumes. And even with the smaller block size and all of that, I still think the miners still are very very largely reliant on the block reward component of it although I guess maybe that's gotten better.

2:55:33I'm not sure. I know it got quite good when Ordinals came about and then I haven't heard much about Ordinals since. I'm not sure how has that gone. I know there was a lot of a kickback and I'm like hey you know your taproot enabled this right?

2:55:49Vlad CosteaIt was just yesterday that Casey Rodarmor launched the new version of Ord of the protocol. So it's still being maintained. It's still being developed. There's still a community of people. It was funny that some people ran a node for the first time just to do ordinals. And it was also funny that it seemed like these tokens were going to secure the network because they paid much higher fees than the average high priest who talks about you know this is not the right way to use it but at the same time they're not actually providing any value to the miners who are securing their stash.

2:56:26Reuben YapI'm like, isn't this what you wanted? You wanted the block size to be small so that you could get you know there will be a fee market and Ordinals was exactly providing the exact conditions that you wanted to create and then you said no it's not good for us because all this is shit. I'm like wow you know that's so freaking ironic.

2:56:49Vlad CosteaYeah and they're saying they're bloating the blocks and it's harder right now to run a node and I'm like okay but it's within the limitations of the system. It was assumed when the limit for the block size was set. It was assumed that even if it gets filled it's still reasonable you know.

2:57:10Reuben YapYeah they were paying for it too.

2:57:13Vlad CosteaYeah but there's also this broken incentive with nodes, right, because if the block size is bigger and you get to store more data, you're not getting paid to store that data and you have to store it in perpetuity and you're going to have to upgrade at one point if you have a one terabyte SSD for your node you're going to have to upgrade that one to two terabytes four terabytes or whatever. Fortunately I think storage is becoming cheaper by year and also bandwidth is becoming cheaper and also you have Starlink that operates everywhere around the world so you can run a node in the middle of the desert.

2:57:59I think at one point we will increase the block size because right now I think the only roadblock is just consensus just agreeing that okay this is a good idea. Obviously not to have every transaction on the base layer but to allow users you know this is a big discussion now with covenants because you're going to have maybe thousands if not millions of UTXOs in one transaction onboarding layer twos which sounds nice. But then how do you exit because there is no unilateral exit.

2:58:34There is no way to get out once you get into that system and you do join the layer two you're stuck there alongside everyone else who joined with you. So the question is what can you do next you can swap the funds for on-chain funds and you're going to pay a fee for that. But it's still not the ideal design it's not what it's not the way it's intended. If you look at the lightning network paper you're going to see that the recommendation is like a hundred megabytes or something or blocks for this to work at scale. It's difficult.

2:59:11Reuben YapSo, I mean, I mean, if I'm not mistaken even the original authors of lightning that were in. Who was it was it. Poon and Dryja was it, I think. And I think they never intended for Lightning Network to be this ultimate scaling solution for Bitcoin. It was just like, oh yeah, you know, this state channels can do this. It can, you know, relieve some bloat, like, you know, it can relieve some use cases like repeated payments and stuff like that. Oh, but it can be also extended this way, you know, have this other use cases.

2:59:46I don't think it was this like, oh yeah, lightning is going to solve all these issues that Bitcoin has, which, you know, during the block size wars, you know, that was what lightning was being promoted as. It's going to provide privacy, unlimited scalability and all this type of things. And, you know, how many years since then, I think it's very clear that that vision has not happened. And, you know, as far as I know, like the few times that I used Lightning Network, I couldn't get like the enough liquidity.

3:00:19It failed. And then in the end, a lot of people say, oh yeah, let's use this custodial, like custodial lightning wallet or something like that. And that was what a lot of people defaulted to. And yeah, I just kind of, I got really jaded. And for a long time, I mean, to be honest, I should be doing it, but long time I didn't follow what Bitcoin was doing because I just felt that, you know, the logic wasn't there. They weren't intellectually honest. And, you know, you may hate on Ethereum and hate on a lot of things.

3:00:52I felt that there was a lot more intellectual honesty when they were discussing about the limitations of their system and the pros and cons of different things. And I felt that was a much more healthy kind of discussion than Bitcoin, where you have this weird kind of like, oh, I don't want to change, but if it comes from a select group of people, even though it's a big change, it's fine. I find that very off-putting.

3:01:19Vlad CosteaAnd centralizing when you think about it.

3:01:22Reuben YapYes, exactly. So that's why when people say like, oh yeah, Firo, altcoins are centralized and whatnot and all of this, I'm like, how decentralized do you think your networks are? Like a lot of people say, oh, Grin is decentralized. No, it's run by appointed, like accounts of appointed people who decided how much they should pay themselves. How is that decentralized? Right. And I have no hate for Grin, but, you know, I found that argument, you know, and then next thing they said they won the privacy coin. That made me very upset. But yeah, I mean, that's the whole rant on itself.

3:02:03Vlad CosteaNow, when you think about it, who came up with SegWit and Taproot? Yep. And those are the only upgrades that were allowed and were promoted on every conference. Right now, it's so divided. You have all of these covenant proposals and they come from different people. And it seems like it's more important who promotes it than what it enables.

3:02:32Reuben YapExactly. And I remember they were promoting Taproot as this huge privacy improvement, the Bitcoin. And I'm like, it's not. It only hides like, you know, whether it's a multisig or not. And that about more efficient CoinJoin, that's not even it. It's some multi aggregation thing. And I was like, start talking about like, you know, just because I'm naked and then now I put a sticker on my nipple, that doesn't make it. Yes, technically it's more private, but not to any sort of meaningful amount. Right.

3:03:04I mean, you're probably more an expert on Taproot and all of that. But I really remember being really upset when they were promoting Taproot as a huge privacy benefit to Bitcoin when it really isn't.

3:03:16Vlad CosteaI remember some guys saying, you know, Chainalysis is obsolete now because we have Taproot and all transactions are going to look the same. That was part of the marketing for it. But they were hoping, I think, that multi-sigs are going to play a much more major role when in fact they really haven't. I interviewed the CEO of BitGo in the first episode of this season, like a month ago. And, you know, there were very high expectations. No, it wasn't even a month ago. It was January 4th.

3:03:52It was this month. Time flies. Yes. The expectations for Taproot were very high, but it didn't really get that much traction. You can even say, and pun intended, that it's untapped still.

3:04:09Reuben YapWell, Ordinals used it, right? I think Ordinals was enabled by Taproot. So I guess it was a success in that regard, right?

3:04:18Vlad CosteaYou could do them just using SegWit and you don't even need that. Like, they were more scalable and more efficient because of SegWit and Taproot and they occupied less block space. But there is something else that's called STAMPs and they're much larger. And basically, this was always possible to do. They are embedded in the UTXO set. They're not prunable. You cannot remove them. Every node on the network is going to store them. And they were always possible. It's just that there was no market for it. Once the ordinals came along and people praised them, they said, you know, I disagree with the use case, but if there is a way for it to be done, I think this is the best way to do it.

3:05:08Because it occupies a small chunk of data. It's not that intrusive. Like, this is the best way to do it. It's the most elegant design. But STAMPs are, on purpose, the worst design. They're expensive to, quote unquote, mint. But they're there forever. And it seems like there is a market for this. There were people who did some pixel art and they put that just because they could afford it. And I've interviewed Mike In Space, who is the guy behind it. And he said, you know, this is just like a hobby between collectors and there's nothing you can do about it.

3:05:47The only way you can actually destroy this use case is to add confidential transactions to Bitcoin. And that's when it's going to become pointless. Because, of course, you can give up on your privacy, just like on Monero. You can allow someone else to see the transaction. But it's peer to peer. You actually have to go to that person and reveal the transaction. The rest of the blockchain is not going to know. And if the entire blockchain doesn't know what's happening, maybe that the value of your asset is going to diminish greatly. Because the value of these NFTs is specifically that anyone can watch them.

3:06:31Reuben YapSo I have an interesting question because you mentioned several times in this interview about, oh, yeah, you know, it's kind of weird incentives that nodes have to store this data and they don't get paid. It's just a matter of like, oh, yeah, you know, we have to use it and therefore we have to maintain it. And I think that's a bit naive. I also agree that that's a bit naive in what incentives. And obviously, like, you know, back in Darkcoin Dash days, you know, one of the ways that they tried to address this was through the concept of masternodes, which Firo also uses.

3:07:08Where they're giving a part of the block reward for providing these node services. And people say, oh, well, it's a scam because you need to have a certain amount of collateral. But at the same time, you have to prevent some sort of Sybil attack, right? Which means that you cannot have, and these masternodes, you can de-register them anytime there's no lock-in period or anything like with other validators. It's just that you can de-register them immediately and have those funds available immediately. And I remember, who was that guy who wrote the, Andreas Antonopoulos, I'm not sure, I'm probably butchering his name, but you know, he was also very favorable of this sort of solution.

3:07:56But yeah, this kind of like widespread consensus among, I guess, many people, even like Monero people, that masternodes are a scam, right? And I just can't quite understand why. I mean, I feel that, yeah, nodes who bear the cost of hosting the blockchain that's always growing, they're still doing all the transactions and propagating them, shouldn't they also earn a part of the fee? And we use the kind of, like it's a hybrid system, that means that protects us against 51% attacks. It gets also like almost instantaneous finality, you know, and blocks are also finer because of the way masternodes sign these things.

3:08:44And I personally find that masternode systems aren't as bad as people think they are, and I think it makes sense, but I kind of would like to hear from you know, especially from Bitcoin Maxi, what is the, why are masternodes seen as a scammy consensus? I mean, we can say that, yeah, masternodes, like, masternode coins are scams, but then is the consensus, the mechanism, the logic behind it seems to be more or less sound. But I mean, of course, you know, other projects do masternode voting, which I feel is...

3:09:20Is a separate kettle of fish altogether which I'm strongly against which is why Firo doesn't employ masternode voting. There was actually something that the Chinese investor really wanted to say make the masternodes unaffordable and then only the masternodes can vote you know and I saw that this was a very very flawed way and this was actually you know lessons that I learned from the Dash community having been a masternode owner as well. Like, you know, I own a decent number of masternodes, and that's why when we were implementing in Firo, I specifically did not want that to happen. But I'm curious to hear your thoughts on it.

3:10:00Vlad CosteaWell, you can argue that it resembles proof of stake, and a lot of people resent that, because you need to have a certain amount of coins to basically matter and participate in consensus. You can also argue that they can be centralizing, or that the team, if there is some sort of pre-mine or allocation for the team, that they can use this. But if it's not used for voting, it doesn't matter as much. But the team can use them to collect rewards and pay themselves in perpetuity.

3:10:34Like, I can understand why, you know, there is no cost for some people who got their coins for free, and they can just use that to get even more coins at the expense of the rest of the participants to the network. So maybe this is the argument that people use to say that this is scammy. I'm not sure if from a security point of view, if this is secure, or you can find ways to break it. I'm not a security expert.

3:11:06Reuben YapOne of the cool things about the masternodes, and I'm not, again, you know, although we use the masternodes system, I'm not saying that it's the best consensus mechanism. It fits our purposes, it serves us fine, it's good enough, and it's better than pure proof-of-work, where we have been attacked horribly. We were almost destroyed as a coin when we were 51% attacked. And people say, oh, it's the fault of the developers. No, it's proof-of-work as intended. We didn't do anything wrong with the code.

3:11:38This is how it works. And we actually, for a very long time, this is something interesting because you know, one of the goals of Vertcoin and even Zcoin or Firo was to keep that mining egalitarian. You know, back to that idea of one CPU, one vote, that Satoshi created. And we realized that with ASICs, that wasn't really the case. The people who were selling you the machines also had an incentive to, you know, mine themselves with it. And once they had the necessary capital, why should they sell you the machines?

3:12:21Because they could be mining themselves. They just needed enough capital coming in for some liquidity and to fund their R&D costs. But they were also centralizing, you know, because all these ASIC manufacturers, they're not open source, right? Everything is what they want to do, right? And this was actually a huge centralization factor. So we actually spent too much time and too much resources actually working on mining algorithms that targeted consumer commodity hardware. And obviously, we initially kind of went in with like the Monero route, like the go through use CPU mining and all of that, because we thought like, yeah, you know, everyone has a CPU.

3:13:10But when we went down that path, we were actually mined to the hack by botnets, by people who had like, you know, hacked Amazon credits or something like that. And we found like, wow, that's not really a fair distribution either. If we were going to be run by botnets, that's kind of against what we want. So we decided to say, okay, let's target instead modern GPUs, where, you know, there are less botnets with GPUs, right? And it's more likely that there's an actual user behind it. And I guess because our algorithm also requires increasing amounts of VRAM.

3:13:58So that means that, you know, you can't use the really, really old graphics cards on our algorithm. And it was designed in such a very cool way. It was actually from ProgPoW. I don't know if you follow what Ethereum does, but basically every block, it changes itself. Like the algorithm kind of changes itself every block. So that is very difficult to have an ASIC for it. You need kind of like a semi-flexible machine like a GPU. So that if you start trying to build an ASIC for it starts kind of resembling a GPU.

3:14:35So I thought that was a really interesting approach. And, you know, when we came up with FiroPoW or ProgPoW, or we didn't come up with ProgPoW, we adapted the work of ProgPoW. We thought that this was a great solution, but it was actually, as much as it sounded great in theory, it was a horrible security mechanism and it really didn't create a good group of community members. I mean, last time in the early days of crypto, the only way you could get a cryptocurrency was to mine it, right?

3:15:11And maybe, you know, on a few select exchanges and before it was on any exchange, you would mine it, you create this community of people that would, you know, mine your coin, install your wallets, get involved in the community so that the miners became part of the community. And that was one of the best use cases for proof of work. To me, proof of work, one of the major benefits is the distribution, right? It's like fair-ish distribution. And that is hard to replicate with like in a proof of stake or anything like that, because you don't have to have any existing coins to earn that.

3:15:48But we found that actually with the current GPU mining kind of environment, there was no loyalty to a particular coin. People would just set their miner and mine directly to an exchange address. They would use NiceHash and just see what's the most profitable coin to mine. And then if they're being, if we are being attacked or if there's a huge concentration of hash rate in a certain pool, they didn't care because all they were caring about was how much am I getting from my mining returns?

3:16:25And you just take a look on YouTube, take a look at all the mining videos. How much can I earn from mining? How much can I earn from mining? It's no longer about in the early days where miners also contributed back to the projects that they mined, they had funds and like the early Chinese mining pools, they actually contributed back to Bitcoin, they contributed back to Ethereum. This culture is totally gone in today's mining scene. And when we found that, we were like, why are we paying such a big amount of our block reward to community members who, they're not community members, they're basically just, it's just another coin to mine, they mine directly to exchange, they sell, they're adding selling pressure and they're not even participating in our community or installing our wallets or running the nodes.

3:17:18Because now it's just so easy, you don't have to do any of these things. And that kind of made me awake like, wow, all these people who say, yeah, proof of work is the only fair and the honest way to do things. And I just disagreed. I said, no, like we actually went through this process where we were trying to decide with the community, like what should the block reward division be? And I was like, and obviously all the people who were active were masternode holders, even though they had no official votes, they were the ones who were coming in the forums and saying, I own X number of masternodes, I believe this is the way, why should we have miners and all of this?

3:18:00And they were the ones that were actively following the project. And so the community was actually like, let's slash miners rewards from 50% of the block reward or 60% of the block reward to 10% or 5% because they have served no purpose in the community. And I actually was like really sad about that. And I said that, look, let's try to be more measured and try to engage this miners. Maybe they just don't know. So I went on some of the biggest mining channels like VoskCoin and a couple of other mining channels and back this miners, please come and vote.

3:18:44We don't have masternode voting. Just come in into our forums, express your opinion. And if you don't even want to say anything, the least you could do is shift your hash rate from the one that's controlling 90% to another pool to show that you care about the project. None of that happened. They just kept silent. There was a few very vocal people, but there was no meaningful shift in hash rate. And when the change happened, and obviously they got slashed really badly, all these mining channels were like, oh, you know, screw Reuben, screw Firo.

3:19:21They abandoned miners and whatnot. I'm like, we got 51% attack. You didn't help us. We asked you to decentralize, actually, you didn't help us. We went on all these big channels. We begged you to come in to participate in our governance. You didn't show up. So it really made me kind of like, you know, is really proof of what the way to go in this day and age, maybe in the early days, you know, but now it's really hard to see that. And, I mean, my opinion was like, wow, we just wasted so much of our time trying to develop ASIC resistant mining algorithms, which was really tough work only to, you know, when we should have been focusing on our privacy and other things.

3:20:08Right. So, so yeah, I mean, I thought that was just like a very interesting insight because as to the state of mining and I'm not sure how much, you know, unlike ASICs where if you have a Bitcoin ASIC, you're kind of aligned with Bitcoin because that's the only thing that your ASIC can mine, right? If Bitcoin loses value, your ASIC loses value. With a GPU, that's not the case. I can still game. I can still do AI. I can still do mine other coins. So it really kind of like shifted my thinking to say like, look, you know, sounds great in theory, but it's not a good idea.

3:20:44So that's why like we have this hybrid proof of stake and not, it's not proof of stake, it's hybrid masternode and proof of work system. But even then to me, the proof of work is like a backup because if the masternode gets attacked or some other things happen to them, the Satoshi consensus, Nakamoto consensus then is the prevailing thing until the masternodes come back online. So I thought it was interesting and it was just interesting to share that kind of experience here because, you know, there's a lot of misunderstanding that Firo is anti-miners or anti-proof of work.

3:21:25We were the biggest GPU mining supporters, fair mining, and we spent so much resources on that, but that never was appreciated. So, so yeah, just a little story.

3:21:39Vlad CosteaI guess that's the tragedy that happens when you're not the leading coin for the mining algorithm. You're competing against others that maybe pay better or I don't know. Miners are mercenaries. You should not rely on them to be loyal. Even in the case of Bitcoin, it's SHA-256. They can mine something else. They can mine BCH. They can mine BSV depending on how profitable this can be for them at a certain moment. But if it's the majority, if it's the chain that holds the majority of the hash rate and the price is going really well, there is an incentive for them to stay. If it doesn't go up all the time or according to some expectation, they're going to look for other ways.

3:22:27And it's tricky with GPUs because everyone just, as you said, goes to NiceHash, lets them choose whatever is most profitable. They don't even know what they're doing. It's somebody else that's programming their GPUs and pointing them to provide hash rate.

3:22:45But this thermodynamic security, it's important. You can't really deny that proof of stake, which is only about buying a certain amount of coins and running a node is as good as this. A hybrid system? Sure. It's also what Zano uses. I've interviewed them and they have described this similar situation where they are afraid of getting 51% attacked and they want to protect the network by also having this extra layer of proof of stake, which is not like other systems where you lock your coins or something. You just run a node with a certain amount of coins in it.

3:23:30And you're going to get a reward according to how many coins you own. So it is full proof of stake. In your case, I guess with masternodes, does it really matter how many coins you own to the amount of rewards that you're going to get?

3:23:46Reuben YapIt's just a fixed amount. You need 1,000 Firo and then you have a masternode. It's just to prevent that Sybil. You don't want someone to be spinning up a million nodes and doing that. It's just some form of collateral. It doesn't get forfeited. If you're not providing service, if you're not doing the signing and contributing consensus, you just don't receive your reward. You just get punished like that. You don't get slashed or anything. But I guess one of the arguments, and this was even from someone from Bitmain, who said that ASICs are kind of a form of proof of stake.

3:24:23I know there is some difference, but there is some truth to that argument in the sense that you align in the sense that because you are owning with proof of stake, you're owning part of the coin. But with Bitcoin, you can argue, I could mine other stuff, but with SHA-256, the only thing that makes sense to mine is Bitcoin.

3:24:51Once that machine only has value because of Bitcoin, that's why I used to be very anti-ASIC. I was like, if you want to do proof of work, maybe it makes sense to have this very exotic algorithm that is very ASIC friendly. But then that means people who buy the ASICs are basically locked towards your coin because without your coin, their ASICs also don't have any value. I've spoken to some guys who are in the industry and they say you don't need a lot of money. You need probably like US$100,000 or even less to actually come up with an algorithm and have an ASIC designed for it and then have people buy in and then you just launch a new coin with proof of work, a fair launch.

3:25:39But obviously, you know that with ASICs, it's not going to be a fair launch.

3:25:44Vlad CosteaIt's a bit messed up and it's still a mystery to me why there are not more players in this game of producing ASICs. We still have two or three players that provide 90% of the devices for mining farms in Bitcoin. That's a bit messed up because you rely on their ability to supply to a demand and if you're just someone like myself, you're never going to get access to new ASICs. They're always out of stock. You have to buy used ones from mining farms.

3:26:22Reuben YapYeah, and there's a geographical disadvantage. I remember I had my own little small mining farm and I remember that because the Bitcoin hash rate kept on climbing so quickly that if you did not mine, like most of your profits were made in the first month that you got the ASIC and if you're getting your ship from China, it takes two weeks. It goes through customs and all of that and you lose the most profitable period of your ASIC. You will probably make like 60% of your profits in the first three months of getting that ASIC.

3:26:57I mean, that was back then. I'm not sure about now but that means now you have a geographical advantage. That means China is the only place that you can get it really quick and they can just ship it through their amazing domestic network. On top of that, if I'm making a money-making machine, why should I sell other people my money-making machine? I should be creating my own money-making machine and that creates a huge sort of centralization forces, which I guess is one of those mysteries as to why Zcash embraced.

3:27:30Because you know when Equihash was supposed to be equitable and they just caved into Bitmain and the ASIC so quickly and that was like a huge shame for me.

3:27:44Vlad CosteaI remember the story that people were laughing at this situation where Zooko said he looked in the eyes of Jihan and perceived him as honest.

3:27:56Reuben YapHe's a good guy. I mean, Zooko's an interesting fella. He has me blocked on Twitter for some reason, and I don't know why.

3:28:05Vlad CosteaHe used to have me blocked. Now I guess we're friends of sorts.

3:28:09Reuben YapOh, interesting.

3:28:11Vlad CosteaI have a lot of respect for his work. He published about Bitcoin. He wrote, I think it was the first blog post the week when it was launched and Satoshi actually put that on Bitcoin.org. He used to work at DigiCash with David Chaum. Yes, yes.

3:28:32Reuben YapI mean, he's definitely an OG and he's contributed a lot now. Okay, yeah, he didn't invent the Zerocash protocol or anything like that. But you know, he created Zcash that kind of like funded all this development in ZK and all of that. So I think it is

3:28:49Vlad CosteaFunny because people think because his name is Zooko, Zcash is his Zooko Cash, you know? Yeah, yeah, yeah.

3:28:57Reuben YapBut I guess like, you know, like, I don't know nowadays. I don't know. I find that what he says like when he was talking about privacy pools and all of that, like, yeah. What's your opinion of privacy pools? Are you familiar with privacy pools and Vitalik's suggestion of privacy pools?

3:29:17Vlad CosteaI'm not sure I know exactly what you're referring to. So please define it. I know anonymity pools, but I'm not sure about privacy pools.

3:29:26Reuben YapRight. So privacy pools was this idea that you could allow stuff like tornado cash to happen, but whenever you did a transaction, you had to submit a ZK proof that you were not on this blacklist of like sanctioned addresses and stuff like that. So, you know, Vitalik's idea is like, yeah, you know, that means you don't have to do KYC, but then you were still using ZK to prove that you were not a sanctioned address to satisfy these regulators and all of that. And unfortunately, because Vitalik being Vitalik, that kind of gained some traction, even though I feel like you wouldn't satisfy any sort of regulators requirements or any of that.

3:30:19But it was implemented in Railgun, which I guess is a ZK mixer on Ethereum and EVM chains. And I've used it, and it's a horrible experience to say that, but it also has this really, like, you know, who maintains the blacklist? Whose blacklist should I implement? And should we be implementing all blacklists, right? And I feel like that's like a very slippery slope to go down because it means that, you know, it will trend towards implementing all blacklists because everyone's just scared to get, you know, if I'm not implementing this blacklist and then some actor comes through me and then I'm responsible, right?

3:31:05Why was I not implementing these other blacklists? And let's face it, you know, blacklists are just very, even with the way crypto, I feel like blacklists are just very, I don't know, they're just dumb. Like they aren't really that effective unless they're for really, really large amounts that the hackers didn't, you know, do the right work for it. And it takes time to update blacklists. And if you want that blacklist to be updated quickly, you're going to have a very scary centralizing force that can just freeze this address and that address willy-nilly, right?

3:31:41But I just thought it was like, well, I don't agree with it, but it was a very interesting approach to privacy compliance, which I don't agree with, but I guess it's an interesting approach. And when I'm using it on Railgun, you know, every time I do a transaction, I have to spend like, you know, half a minute or so generating this proof of innocence, which is horrible. That means like, you know, we are guilty until proven innocence. I have to prove that I'm innocent. And then there's this whole process of waiting for one hour for that proof of innocence to be accepted before I can even do any sort of transactions with it.

3:32:21I just think it's a horrible way to approach privacy. And so it doesn't really address any, it doesn't, it's not going to prevent crime like to any meaningful aspect. It detracts from the user experience and it doesn't even legitimize the mixers. So I'm just like, it's a lose-lose situation all the way around. Can you just say like, oh yeah, I'm not dealing with OFAC Sanction Blacklist. All right, that's it. And you have all these drawbacks to it, right? So yeah, I mean, that's privacy pools.

3:32:56Vlad CosteaSounds a bit messed up. I'm not surprised that it comes from Vitalik and he's proposing something like this. I remember during the interview with Amir that he said something about Railgun and we took a look at the website and it puts compliance right there on the front page. It says we are compliant. He was saying, oh, it's the new Tornado Cash. It's really cool. And then we discovered that, you know, it's, it's not really that cypherpunk. It's cool. I mean, it's nice that this feature still exists, but we should not fool ourselves that it's really that privacy tool that people expect it to be.

3:33:36Reuben YapI would say it's better than it's not existing, you know, like I use Railgun to do stablecoin payments. And actually, like, it was quite funny when I was using Railgun to pay some of my market makers and stuff like that, they were not happy. They were like, can you not use Railgun because now like the exchange has frozen this account because it came from the Railgun mixer and stuff like that. So yeah, you know, you can be compliant, but still exchanges don't like it. Then it's horrible.

3:34:07And I don't know what kind of compliance it is. I mean, you can just say, I'm not dealing with OFAC sanctioned stuff. I don't think that's enough, but the fact that there is a tool that you can use is something, right? So I wouldn't say that Railgun has no purpose. I think it's really important, especially if you're transacting in the EVM space.

3:34:28Vlad CosteaI think like three years ago, Wasabi wallet was in a similar situation where they had to follow through with some blacklists. So they had to remove or not remove. They had to basically not allow certain addresses to get into their CoinJoin rounds. And it was a big deal at the time, but I was still thinking that in a bullish scenario, you're going to have maybe some mixers that are quote unquote compliance. And you can safely, for example, withdraw your coins from Kraken, get them into this CoinJoin and then go to Binance without any repercussions.

3:35:12And then you're going to have maybe CoinJoins that are non-compliant. And that's how you make Bitcoin fungible. You just move from one mixer to the other. And there's going to be, you know, it's hard to maintain these lists of addresses. You get a new address, you just move your coins around and eventually it's going to be fungible. Of course, it's a very ugly workaround, which is costly and it's a bad user experience. It's just like, I know some people who think that their way of getting privacy is to just send amounts and divide them between wallets at different times, you know, randomly to make it look like it's different users.

3:35:56And that's how they gain deniability. It's just horrible. And you're going to make your UTXOs smaller. And at one point, they're going to be unspendable if the fees keep going up.

3:36:07Reuben YapYep. I actually wonder how this large CoinJoin is going to look on the blockchain. Like, is it going to contribute a lot to bloat, right?

3:36:18Vlad CosteaNo, actually the way in which they did, so it was what they call the WabiSabi protocol for Wasabi 2.0. That one actually made, so they batched transactions in a way that it was actually more efficient. For example, if they had a CoinJoin with 300 inputs and 300 outputs, it occupied much less space than 300 single transactions would.

3:36:41Reuben YapOh, sure. I mean, I'm not arguing that, but the fact that you're doing all these transactions to get privacy, right? Like if you didn't have to, it would just be like one transaction or two transactions. Like, you know, people hate on Monero privacy because, Oh, your transactions are so large. Right. But then at least it's just one.

3:36:59Vlad CosteaYeah.

3:36:59Reuben YapYeah. It's just one. But then you have all this CoinJoins. Yes. You aggregate them all of that, but there's still this, all this unnecessary transactions to make, to get some sort of privacy, right? So there are some trade-offs.

3:37:12Vlad CosteaAnd of course, one Coin join round is not enough. You have to do remixes. Yes. You have to join and yeah, the coordinators are going to say, we only charge you for the first CoinJoin, but you still pay the miners. You pay the transaction fee. Yeah. And privacy, of course, in everything you can ever imagine privacy is the more expensive option. You want to be private. You need to get your own house or something. You need to buy drapes. You need to do something.

3:37:43But when there's technology that can prevent this cost, why would you enable it? It's a bit mind blowing. I do understand. Okay. Some technology is premature. It's not ready to get added to Bitcoin. It's a $2 trillion asset right now. You don't want to tank that with something that maybe is not ready, but if you do some have something that's ready, it's much better than having nothing. And of course you can always replace that. You can, if something better comes along, maybe you can disable it with another consensus mechanism.

3:38:2851% of miners deciding to turn that off. Or maybe you can replace it entirely and just move the users to the new thing. I don't think the lightning network will get censored or whatever by the miners. If it doesn't get traction, it will just be another option out there. I think. So we spoke about this earlier. I think if it was promoted as just payment channels between two parties, instead of doing, let's say, 50 transactions between one another on the base layer, they just do it on lightning. Two transactions on the base layer. That's a good way to promote it. But the way that they described it, like the scaling solution, that's going to be better than Visa and MasterCard.

3:39:15And I don't know. I was one of the node operators back in 2021. I had a top 500 node. It wasn't very big, but it was something. And that was part of lots of telegram channels. We're opening channels with each other. We call this the Ring of Fire. Basically, everyone opened the channel with everyone else. And we had these circles. And it was very cool because you could access liquidity and be able to send to someone else. But then I went on vacation and there was an electricity blackout.

3:39:53And for some reason, my node restarted, but it was not syncing and it appeared to be offline. I didn't get robbed or anything. Everyone else was honest with me. But it was still an inconvenience and I got some forced closures of channels. And that's the worst kind of situation. When someone closes the channel with you and you have to speak with them and try to open again or whatever. It's like a full-time job just to make sure that this works. It's not even profitable, right?

3:40:28Reuben YapI understand you're losing money or something.

3:40:32Vlad CosteaYou're paying a lot for rebalancing channels. For reopening them when they close. I never got that back because the amount of money I was making from fees. I was trying to be a routing node, but my issue was that I was using Tor. And when you're causing a delay in propagation, you're not going to be the preferred route. The Lightning Network is searching for the fastest route. And of course, I was only routing maybe one transaction per day. So I was earning one Satoshi per day from that node.

3:41:09And it was costing me even at one satoshi per vbyte fees, it was costing me like 250 satoshis to open or close another channel. And this was promoted. I remember Alex Bosworth, maybe he's gonna hate me or whatever for this. He was presenting his example that he made more than one Bitcoin in transaction fees. And I remember looking at that saying, oh my God, this is so cool. It's like passive income. It's like yield or whatever. I think that was also the buzzword for DeFi at the time that you earn yield.

3:41:51Reuben YapYield? Oh yield. Yeah, that's right.

3:41:52Vlad CosteaYou earn yield on your Bitcoin. I was thinking, oh, that's so cool. I got to do this, but I actually lost.

3:42:01Reuben YapSo I'm assuming you're not bullish on Lightning.

3:42:06Vlad CosteaI do think it has its place.

3:42:09Reuben YapYes, I do think it has its place too.

3:42:11Vlad CosteaBut I don't think it's the scaling solution. I think we should have something which has a much better user experience. I dealt with failed payments when I expected them to actually go through because the amounts were small, but I also dealt with large payments that actually went through. Like when I bought my car, I used the Lightning network to send to Kraken because I was concerned that I'm going to have some fungibility issues with my UTXO. So I just put the funds on the Lightning network and I sent from...

3:42:43Reuben YapBut they still got you, right? They still were asking all these questions, right? Oh, but this was after.

3:42:49Vlad CosteaIt wasn't in the beginning. It wasn't like they froze my funds and they said, wait a second, there's something wrong on the blockchain here. And that was the scenario that I was imagining because I did play with privacy tech on Bitcoin. I did CoinJoin. I don't see anything wrong with it, but maybe that they do. So I didn't want to have this situation. So I put my coins on the Lightning network, Kraken supports that. They're one of the free exchanges that do. And I said to myself, OK, I pay more in fees for this, but at least I know that there's not going to be any issue.

3:43:25And there wasn't. So there was a proper use case. I sent the equivalent of $10,000 in one transaction. I think I paid one of the largest fees on the Lightning network ever. When the on-chain fees were like two cents, I actually paid like $100 fees on Lightning, which is insane. But it served its purpose because Lightning actually makes for sender, you actually have pretty good privacy. And if exchanges accept that, it's good.

3:44:01Reuben YapI accept that. I mean, I always thought that Lightning is something that should be developed, but shouldn't be the panacea to do all things. And if just people would be honest about that, then Lightning development should continue. Things should improve, but people should be looking at other solutions as well.

3:44:24Vlad CosteaI'm proud that I was able to use Lightning non-custodially to do this. And even though I'm bearish overall on Lightning, I think it was overhyped. I don't see it coming back to the same level where it was a few years ago when there was this grassroots movement. There was genuine enthusiasm regarding it. People were building stuff. They were making it work on Raspberry Pis. I don't see much of that happening anymore.

3:44:53Reuben YapWhy do you think it's just too difficult?

3:44:55Vlad CosteaIt's not just that. It's also the change of narrative because at the time it was...

3:45:02I remember I went to a conference in Istanbul and people were saying, this is Web3. This is the real Web3, where you actually own the hardware, you own the software and you get to do financial stuff in a way that scales. And I was thinking, this is really cool. But then they said, you know, you should not run your Lightning node on a Raspberry Pi because you're slowing down the Lightning network. They tried to push this idea that you should make Lightning more efficient. And what does it mean more efficient?

3:45:34More centralized. You should go to LSPs, which are Lightning Service Providers. They have more liquidity. You open channels with them. You own the channels, but you don't own the hardware. It's technically non-custodial because if they close the channels, you still get your funds back on the base layer. It's cool. But they kept on making it more centralized to the point where... I don't know. I sort of lost interest. I feel it defeats the purpose a bit. I do get why it's made. I do get why it's important.

3:46:11In two days, I'm going to interview Super Testnet and he's going to tell me that Lightning is more private than Monero.

3:46:19I do understand some of the points, but it's not there yet. And I don't think it will ever be. I think the way in which the technology works and it was like this since day one. I don't understand how people overlooked this. If you want to receive, let's say, a hundred dollars, you need to have a hundred dollars in the channel that you'll put. So you need to lock the liquidity that you're going to receive.

3:46:45Reuben YapThe thing is that it's so obvious even when you first read the Lightning paper and how it's set up. This is super obvious and I was wondering how can all these smart people decide that this is the way to go. It's just so glaringly obvious. It seems like they knowingly or willingly went down this path. Knowing this issue or they somehow convinced themselves that this was the right way to go. I think we've been on for almost three and a half hours. I don't want to beat Amir on it.

3:47:22But I guess since we're on the topic of Bitcoin, this is called the Bitcoin takeover podcast. Now that Bitcoin, you don't have the Samourai wallet, you don't have Wasabi anymore.

3:47:36Vlad CosteaYou do have Wasabi.

3:47:38Reuben YapOh, you do have Wasabi? I thought they decided not to.

3:47:41Vlad CosteaThat was the company. I think the biggest merit of an open source project is that someone actually keeps running it even after the money is gone. You have a bunch of developers who are still maintaining the code. And they enabled this situation where you can pick any coordinator you want. And there are a bunch of them that are still running. And I've interviewed the developers. I've interviewed the guy who is running the largest coordinator. He's actually from the US and he embraced this idea. From where? From the US.

3:48:21Reuben YapOh, the US. Okay, interesting.

3:48:23Vlad CosteaI was actually asking him, don't you fear that there might be someone knocking at your door any day now?

3:48:30But I think he's still too small. He didn't get to the scale where Wasabi was. I think at their peak, Wasabi was making millions of dollars every month from CoinJoin fees.

3:48:40Reuben YapWow, I see. Because it's very hard to say. Because when you charge fees, you're profiting from the laundering, right?

3:48:51Vlad CosteaYeah, this guy who is running the largest coordinator, he doesn't charge any coordination fees.

3:48:58Reuben YapSo he's just doing it as a service. That's interesting. Then yeah, okay, maybe.

3:49:04Vlad CosteaBut there's still Wasabi and there's still Samourai. I did see that there was a community effort to bring it back. It was called something else along the same line of Japanese culture. And I'm not sure how many users it has. The problem when you have just a bunch of people in charge of a project and they get arrested, is that this is the ultimate test to see if they built a real community that's resilient, or they just had a product that's gonna disappear the moment when the main people around it are no longer around.

3:49:49I think Wasabi did a much better job inviting developers and getting builders to work on their project. I think they had quite a few contributors and they were running these hackathons and they're inviting devs to come up with ideas to improve it. And maybe this is why they are the ones that survived and they landed on their feet as an open source project. In the case of Samourai, you had this sort of benevolent dictatorship with a bunch of guys who were clearly the leaders of the project. And they were everywhere. They were on Telegram.

3:50:30Reuben YapAnd they were running most of the infra if I'm not mistaken as well.

3:50:35Vlad CosteaYou can actually find them going back to the John Dillon story. If you go to the CoinJoin thread on Bitcointalk from 2013, there is talk about employees from blockchain.info or blockchain.com at the time adding CoinJoin by default in their wallet. So they do mention this. And I think this is the earliest mention of what became Samourai.

3:51:03Reuben YapI see. Interesting.

3:51:05Vlad CosteaBecause William Hill, the guy who was basically TCDev, I think that was his name. Samourai Dev, basically. He is the guy who was working at blockchain. And I think also Keonne Rodriguez, but I'm not 100% sure.

3:51:24Reuben YapBut the rivalry between those two was so toxic. And I was like, what are you guys fighting about? And it just was so like Wasabi, like the Samourai people were shitting on Wasabi itself, when I actually felt like the Wasabi protocol was better than Samourai. Because I think you had to give your xpub or something to Samourai or something like that. And I was like, why are these people just so hating on each other? When they were trying to do the same thing, just with different risk appetites.

3:52:00And I just found it unfortunate because they were trying. I mean, competitors, but at the same time, it's the same goal. Do you have any thoughts on that? Because I'm interviewing you.

3:52:11Vlad CosteaYeah, it was funny. But it's the same that's happening in Zcash and Monero. It's the same that's happening with Graphene and Calyx, or Signal versus Telegram.

3:52:27Reuben YapIs Calyx even still going? Well, Telegram is totally not private. So I don't know why people keep on saying that, right? Everything's stored to the cloud. There's no end-to-end encryption. I mean, it's not even a competition there.

3:52:42Vlad CosteaYou're going to find people who say, you know, I would rather trust some Russian server than the cryptography of some three-letter agency, whatever. They're going to point out to the CEO of the Telegram company and say, you know, chose to work with these three-letter agencies. I don't trust this. I don't know. There's a rabbit hole for everything. And there's an excuse against every possible privacy tech. You point to me, the privacy tech, and then there's going to be someone who says, oh, these people are not doing a good job.

3:53:17It's a scam. It's like this. It's like that. In the case of Samourai and Wasabi, they're very similar. Samourai came first. Wasabi came afterwards. What Samourai did well was to do a mobile wallet because it was portable. What Samourai did wrong was to not have some features for a long time. Like they didn't have the ability to connect to your own node for a long time. It took them like three years to come up with what they call the dojo. And all this time they collected xpubs from users.

3:53:56And even after they launched the dojo, if you were only using the mobile app without the dojo, you were still leaking your xpubs to someone else. And people were saying, oh, so why is this such a big deal? Because the coordinator could see for your transactions, not just the coordinator, the service provider. It didn't matter because you didn't have privacy against the service provider. Samourai knew exactly... It's like a VPN. Yeah. Samourai knew exactly what you were doing. And you could argue, you know, there were privacy advocates and they were not using this information. You don't know. That's the right answer. You don't know.

3:54:37Reuben YapYeah. I mean, if you're under stress and you say like, oh, this is going to prevent you from going to jail. If you release all this data, how many people aren't going to cave? Right. So it's better not to have that data to begin with. And I also understand their PayNym system was also centralized if I'm not mistaken as well. But I mean, I still do wish them the best. I feel that, you know, them being jailed and everything sets a very dangerous precedent. You know, I also do hope that the Tornado Cash people get out.

3:55:08I don't know. I mean, they have like Russian names, so I'm not sure how, you know, it's not like a Ross Ulbricht. Actually, Zcoin was a very early donated to the Ross Ulbricht fund where we gave a portion of our, a small portion of a block reward towards the Ross Ulbricht fund until he finally failed his appeal. And then we stopped donating because, you know, it was meant for the legal fund, but I'm very glad to see that he's out. But, you know, I guess like, and I'm all for Ross Ulbricht getting out, but he was also in the way, like blessed form from, you know, coming from a certain demographic, you know, like people can rally behind him and stuff like that.

3:55:52Well, you know, people like, people like the Tornado Cash people don't have that same privilege. Yeah.

3:56:01Vlad CosteaWell, I guess they're lucky because they were working on Ethereum and Vitalik is half Russian. I'm not even if he's half Russian. He is Russian. He was born there. His father is Russian. Maybe there's more sympathy. There's always a community that's going to support you no matter where you come from. So I wouldn't play this card and say, oh, just because Ross came from this American family and he's relatable because in the end, this is what it's about. Being able to, the whole legal system is based on stories and how you can impress someone else and how you can make them believe that you're honest.

3:56:45And maybe you shouldn't, but it is. Yeah. And a lot of it is based on language and how you get people to interpret certain words. And of course, when you have a piece of law, you read the text and you say, you know, it covers this, and this, but it doesn't say anything about that. So it means that is perfectly fine or else I'm going to use that until it gets included too. So there's always a loophole. We are limited by the language that we speak.

3:57:16And if the language does not include something, then we can reinterpret or whatever. And in the case of Ross, I guess his story was very relatable and it hit, also his contribution was massive enough for people to care. He was so influential because he gave a use case to Bitcoin when it was just speculation. There is actually a funny thread on Bitcoin Talk where Satoshi gets asked, so what should we use Bitcoin for? And he says, you know, porn. I'm not even joking. You can look it up.

3:57:56He says you can use it for porn if you don't want your credit card to get charged with that.

3:58:06Reuben YapThe guy behind privacy pools, one of them was, Ameen Soleimani and I think one of his early projects was SpankChain, which was this paying, I guess, like online, what do you call it? Sex workers? I'm not exactly sure. I think like cam girls. So yeah, I don't think that went very well, but yeah, I guess it's one of the, I think like one of the, I guess, I guess it's a finer take. Like one of the things I find quite unfortunate is that a lot of the biggest proponents of privacy are always like, you know, anti-government, anti-establishment, anti, you know, and like you say, yeah, you know, fuck the government, fuck the rules and stuff like that, which I definitely understand where they're coming from.

3:58:56I mean, I'm not a big fan of government. I'm not a big fan of like very overbearing regulation. The general general populace aren't like that, you know, the OK, maybe not so much of governments nowadays, but, you know, with regulation, with laws, with stuff like that, they they're still like, oh, yeah, you know, I'm going to comply. If you're not going to comply, you must be doing something wrong and stuff like that. But like with a lot of the people who are building privacy stuff, you know, like I think Monero was, you know, famous in saying that, oh, yeah, you know, criminals use us because we are we are effective, you know, criminals.

3:59:37Therefore, that's why we are private because, you know, we are private enough that criminals would use us, which I understand the logic. I understand what they're talking about, but it's not a good look. Right. You know, like you don't want to be promoting that sort of narrative because that just feeds into that fear of cracking down on privacy. And stuff like that. And that's to me doing a disservice to privacy when we should be talking about, you know, more relatable things. Right. Because most people don't see themselves as law breakers.

4:00:13I didn't see myself as a law breaker until, you know, banks and decided that my stuff was was not not wanted. And even when I was speaking to Aaron Day, like he was selling like health stuff. And the next thing the law said that his stuff was was not legal. I guess that's when you kind of like get radicalized. Right. But what radicalized you know, I mean, like for me, it was just being cut off from from from all my financial systems, you know, just feeling really unfair, like, hey, I'm doing legal and paying my taxes and doing all of this.

4:00:48And even then I'm being targeted. Even then I'm being cut off by some arbitrary decision or arbitrary regulator or, you know, somebody sitting in some AML department. Right. And that really sucks. Like like this whole experience with the bank, with with my it's like the largest bank in Malaysia doing this to me. It's horrible. Right. I just I couldn't sleep because, like, you know, I have loans to pay. I shit the stuff. And I can't even pay them off because I don't know how much money's in there.

4:01:18And they're all frozen. And that was just like a horrible feeling. Right. And even back in my VPN business, like, you know, my entire VPN business was almost wiped out because I didn't have any ways to accept payments until I found a workaround. Right. But I guess that's what what really woke me up to like, hey, you know, I need a privacy coin. I need to build this infrastructure. And because some people may say, well, you know, why not build Monero? Why not build on Monero and stuff?

4:01:47I guess it's the same reason, because I don't think Monero would want to build, you know, there's like philosophical reasons why it wouldn't implement certain things. And I think that's the beauty of open source. Right. You build one. You build what you want and you see whether people want to use it. So. So, yeah, I guess I just I just want to like, you know, remind people that, yeah, although we should be all about privacy and there's definitely going to be some crime happening on this privacy tools, we should not be promoting it.

4:02:20We should not be saying like cheering it on even like, yes, ransomware users. Yes. Yes. You know, if that's the case, then yeah, Tornado Cash is even more private than Monero, which which it isn't. But I mean, the fact that nation state actors used it, we should not actually be saying that this is proof of your efficiency. I mean, yes, we can know that, but I don't think that's something we are doing an injustice to the narrative by promoting that view. And and that's why I have immense respect for DarkFi, immense respect for Amir.

4:02:54I guess like he's more on the I don't think it was said like criminal activity, but he's really more on the very maximal. I think, you know, we should always try to say we shouldn't discount something just because it says compliance. It's not that we want to comply, but there is a significant group of people that don't want to touch anything that may seem a bit nefarious to them. And we should really normalize privacy and as shitty as the Zcash. What was that? Their motto is like make privacy normal or something like that.

4:03:31And like DarkFi is saying, no, privacy should not be normal. It should be outstanding and amazing and stuff like that. I actually have some you know, I do think privacy should be normalized. And the way to do that is not by promoting to say that criminal activity is great, that we should be sharing criminal use cases for for privacy coins or crypto in general. Yeah.

4:03:52Vlad CosteaOnce again, it's language, you know, you can sell very secure doors that cannot be broken. And your main customer is going to be criminals who don't want the police to break their door. I don't know. It's not your fault. You're building something that is useful. The fact that some people use it, like does Toyota get any accountability for the fact that their Highlanders are there? Yeah, Hilux. Hiluxes are being sold for war purposes. Like they're military vehicles in some parts of the world. Exactly. Do they have to account for that and say, oh, look, your cars are being used for that.

4:04:33You should be regulated as a military company. No, they just make their vehicles. Some people find them useful for whatever reason. You should go after those people that use them for that reason, not after the technology itself. Like, imagine if I try to project this like prehistoric life. You get a bunch of cavemen and one of them brings fire into the cave. And then someone comes along and says we should never use this again because it can set the whole place on fire.

4:05:12Reuben YapAnd it's also the double standards because banks have been behind some of the largest money laundering and even knowingly done so. And yet they get a pass. Well, individual developers who aren't those type of people who don't knowingly allow crime, they just build tools that they believe in, get targeted. And I feel that's a real crying shame. And I feel that we should be giving kudos to the people who are actually daring to continue this thing, despite it not being the most profitable thing and also being highly risky.

4:05:47Right. I actually feel like sometimes I actually got a notification. Me and my co-founder Poramin both got notifications on our Google to say that a state actor is trying to break into your Gmail, you should move to Google Advanced Security where you need to use a physical passkey. And I'm just a small guy and having that is kind of scary. And yet we still continue to do what we do.

4:06:19Vlad CosteaYeah, well, when you think about it's important to keep going in spite of all the challenges. And I know it's not easy. And I have a lot of respect for people like yourself who keep going. The price is 99 percent down against both the U.S. Dollar and Bitcoin, but you're not stopping the development because of this. And you're actually, you know, it's not like a meme coin, which you can argue, OK, it ran its course. It's not funny anymore. Nobody cares about it. You're actually building protocols that are used for stuff.

4:06:58It's used for your own network to keep it private. But it's also used by other networks that can employ the same protocol. So thank you very much for building on. First of all, it was Zerocoin and then Zcoin. And now it's Firo.

4:07:16Reuben YapNo, Zerocoin is a protocol. Oh, are you talking about the name? We were just... Oh, actually it was, there was an earlier name that was never, that it never went live in, but it was called Moneta or something like that. And then it launched as Zcoin and then it rebranded to Firo. But I don't think no one's... Very few people know about the Moneta history unless you're like really with us from the beginning, but it launched mainnet as Zcoin, and then we were rebranded to Firo.

4:07:50But Zerocoin, we were never called that. That's our protocol. But we've like iterated over four different protocols since then. So, so, yeah.

4:08:00Vlad CosteaI gotta ask you if people made it up to this point and it's four hours in. Yeah. And maybe they want to get their hands on some Firo to see how it works. What's the best way without buying it from exchanges? Is there any faucet or something that they can access?

4:08:19Reuben YapSo actually, if you go to our Discord and Telegram channels, like if you just say, hey, drop me an envelope, people might create an envelope and you can just get like some small amounts like 0.1 Firo, 0.01 Firo and just play around with it. That's a good way and it makes you join our community. Obviously, you can still mine it. You can still, if you just want some small amounts, you can use the GPU and mine it and get some within a day or so.

4:08:48That's not an issue as well. But if you want to get like serious amounts, they are DEXs. We have, recently, I think it's too long to talk about this, but there is a Firo DEX, an atomic-swap-based DEX that we are working on getting back up because there were some takedowns from the Komodo Wallet side, which I guess is too long to discuss here. But that would be a good way once we get that back up. It should be up in. Maybe like a week or so.

4:09:21And then we should have that infrastructure. I mean, you can swap with stablecoins, you can swap with Bitcoin and everything, and you can do that totally without any sort of custody on all of that. So that's the best way to get it. And yeah, we also support many, many swap providers as well. But hopefully we get an integration in Serai. We've been talking about that. And we're really, really looking forward to the Layerswap version integration in a couple of months as well.

4:09:55Vlad CosteaThat sounds promising. I actually checked the price to see if this interview has had any impact at all. The price went up like five cents, but it's within the daily range. The daily movement. Yeah, I don't think I influenced anyone. And I'm not telling you to buy anything. I'm just telling you this tech is interesting. I'm not giving financial advice. I'm just giving freedom advice.

4:10:23Reuben YapFreedom advice. Anyway, thank you so much for having me on. Is there any last questions or thoughts that you want to say before we...

4:10:31Vlad CosteaYeah, how can people follow you and keep up with the project?

4:10:36Reuben YapWell, I guess the best way to follow us is on our Twitter. I'm Reuben Yap. I guess you'll be linked in this thing. It's R-E-U-B-N-Y-A-P on X or Twitter, as you call it, Twitter. And I guess we have our Discord and Telegram channels. And yes, I know it's not private, but look, it's a public discourse channel. But if you want to communicate in the, you know, we have our forums at forum.firo.org. But I would say the best way to get involved in a community, drop by our Discord or Telegram communities, drop by our forums.

4:11:13And I'm pretty responsive. We have also a YouTube channel that we put up a lot of content on. And if you want to learn more about Firo, just give us a follow, like and subscribe.

4:11:26Vlad CosteaOK, thank you very much. Also, let's set a special word that people should write in the comments if they make it up to this point. What should they say?

4:11:39Reuben YapFiro is fire. I don't know. Maybe.

4:11:43Vlad CosteaI actually thought it's Firo when I saw Firo the first time. I was thinking, oh, maybe it's like fire. So it's Firo.

4:11:52Reuben YapYeah, I don't, I don't care. Firo, either one.

4:11:56Vlad CosteaSo write that in the comments if you made it up to this point. Thank you very much for listening. It's been really nice. We've had like 1,200 viewers across Twitter and YouTube. We've had some comments in the chat. And thank you for everyone who listened to this. Thank you to the sponsors. Once again, SideShift, Citrea, LayerTwo Labs, NoOnes and Hodling. And thank you, Reuben, for your time.

4:12:24Reuben YapThank you so much. And hope to stay in touch and maybe see you in MoneroKon if you're there.

4:12:33Vlad CosteaIn Prague. I'll be there.

4:12:35Reuben YapAll right. Awesome.