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116. 30/10/2018 20:48
What Bitcoin's White Paper Got Right, Wrong and What We Still Don't Know

The Bitcoin white paper has been, rightfully, recognized as one of the most original and influential computer science papers in history.

It has launched a billion-dollar industry and thousands of follow-up papers.



But it's worth turning a critical eye on the paper (and elements of the original Bitcoin design omitted from the paper) to ask what did the paper get right? What did it get wrong? And what questions do we still not know the answer to?

What Bitcoin got right

This may be the hardest category to compile.

One mark of a truly successful idea is that we forget how people thought about the world before that idea came around. Many of the most fundamental contributions of Bitcoin seem obvious only in hindsight.

It's easy to forget that cryptocurrency was a research backwater for most of the 2000s. After the failure of many attempts in the 1990s to build a working system (largely using the ideas outlined by David Chaum in the 1980s), few papers were published in the area. Many simply believed there was no viable market for a non-state currency.

Prior to Bitcoin, decentralized systems were an active research area in the 2000s (often described as peer-to-peer networks) and anonymity research was coming into its own (with the development of Tor and other systems).

But these were not seen as necessary features for a payment system. What did Bitcoin contribute?

  1. Incentives for miners. One of Bitcoin's core contributions is providing incentives for miners via inflation and fees. This model has generally been successful and it's fair to say few saw it coming. Many P2P systems in the pre-Bitcoin era that offered open participation (anybody can run a node) were plagued by Sybil attacks and other problems. There were many attempts to incentivize honest participation, but prior to Bitcoin no system quite got it to work.
  2. Light clients. Bitcoin's support for both full nodes and light (or SPV) nodes has proven quite powerful, and the block structure embedded into Bitcoin has made it not just possible but natural to implement a light client.
  3. Scripting. While limited, Bitcoin's scripting support (not discussed at all in the white paper) has enabled several useful features like multi-signature accounts and payment networks. It was wise to envision a system supporting more than simple payments.
  4. Recognizing long-term incentives. Satoshi didn't anticipate industrial-scale mining or mining pools, at least not in the white paper. But the paper does include a very prescient line about the risks of centralization: "[an attacker] ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth." Despite a large number of theoretical attacks by miners being written about since, none have been seriously attempted in practice. Satoshi recognized a powerful principle – that miners have long-term incentives not to attack since they are invested in health of the ecosystem.

What Bitcoin got wrong

We'll ignore some quaint-in-retrospect features in early versions of the bitcoin code, such as pay-to-IP-address and a built-in e-commerce system, that never saw the light of day.

But there are several features of Bitcoin that appear "wrong" in that no system built today should repeat them.

    1. ECDSA. While this signature algorithm was a far better choice than, say, RSA, it is inferior to EC-Schnorr in all aspects. Most likely Satoshi simply didn't know about this option (a legacy of software patents around Schnorr). Today, it would be clearly advantageous to use Schnorr instead given its support for threshold signing, if not a more advanced signature scheme such as BLS.
    2. Transaction malleability. This unintentional issue has led to headaches for protocols such as payment networks as well as famously enabling the attack on Mt. Gox. Today a prudent design would use something along the lines of segregated witness (SegWit) to ensure transaction hashes are non-malleable.
    3. Features since added. Quite obviously, it was a mistake not to include popular features such as pay-to-script-hash (P2SH) and check-locktime-verify, which have been added since by soft forks.
    4. Limited divisibility of coins. Bitcoin has a limit of 21 million bitcoins, but more importantly, it has a limit of about 2^52 satoshis as the atomic unit. If Bitcoin were to really become Earth's only payment system, this would provide fewer than a million units per human being. This isn't nearly enough to capture both day-to-day transactions (even rounded to the equivalent of tenths of a dollar) and also large holdings. It would have been quite cheap to expand this with a few dozen extra bits such that divisibility would never be an issue.
    5. Blocks in a simple chain. Given how much of a buzzword "blockchain" has become it's worth noting that putting blocks in a linear chain is an oversight that makes it costly for an ultra-lightweight client to verify that an old block is included in the current chain. Bitcoin correctly puts transactions into a tree, so why not the blocks themselves? A skip list would be another major improvement. Interestingly, the Certificate Transparency project (designed independently of Bitcoin in the same era) gets it right and puts each update into a tree, while few successors to Bitcoin have strayed from the linear chain design.
    6. No state commitments. Bitcoin miners all track the system state as the set of unspent transaction outputs (UTXOs). But this is not committed to each block and must be imputed from history. This makes it hard for light clients to confirm what the current state is and if the transaction has been spent. It would be quite easy to add a UTXO commitment to each block and many subsequent systems (such as Ethereum) do a version of this.
    7. Simplistic attack analysis. The Bitcoin white paper devotes a relatively large amount of space (about a quarter of the text) to analyzing the chances of a miner with less than 51% mining power successfully launching a fork by getting lucky. Subsequent analysis has identified many other attack vectors (such as selfish mining) and this analysis now looks dated.
    8. One-CPU-one-vote. Satoshi described Bitcoin as a system where most participants would be miners using their CPUs. This has not been the case for many years now as mining is dominated by dedicated hardware. While it's debatable if ASIC mining is a good or bad development-it's certainly not what was pitched in the original white paper.

What we still don't know

  1. SHA-256 puzzles. Bitcoin's use of hash-based computational puzzles ("proof-of-work") has been one of the most active topics of debate. Does it consume too much energy? Do ASICs encourage centralization? Would puzzles designed for GPU-based mining or storage-bounded mining produce better incentives at lower cost? Will proof-of-stake eventually win out?
  2. The block size and other parameter limits. To say the least, the 1 MB block limit has been a source of debate, as has been (to a lesser extent) the 10-minute interval between blocks. Many follow-up systems have thrived with larger or more frequent blocks. Is Bitcoin's conservative design going to prove wise in the long run?
  3. Anonymity. The arguments sketched in the white paper about Bitcoin providing anonymity as only public keys are posted are now known to be incomplete due to the development of transaction-graph analysis. Systems such as Confidential Transactions, Monero or Zcash offer stronger cryptographic privacy. On the other hand, many backwards-compatible schemes have been proposed to obfuscate activity on the Bitcoin blockchain by mixing. Is anonymity a critical feature requiring built-in support that Bitcoin overlooked?
  4. Inflation. Bitcoin's design seeks to avoid inflation, but many economists have pointed out it is actually deflationary, as eventually coins can only exit circulation when keys are lost (or coins are intentionally made unspendable via "proof-of-burn" transactions). Zero inflation actually requires a small amount of new currency issuance just to keep pace with lost currency. If this was a mistake in Bitcoin, we may not realize it for many years as inflation is slowly wound down.
  5. The switch to transaction fees. Bitcoin hardcoded a slow transition from rewarding miners primarily by inflation to rewarding them primarily via transaction fees. Nobody knows how this will play out but some research suggests that this may cause significant instability in the post-inflation world.
  6. Limited programmability. Bitcoin imposed severe limits on its programmability to keep transactions easy (and predictable in cost) to verify. The Ethereum project has demonstrated significant demand for a richer programming model, though its model introduces additional scaling concerns. Will Bitcoin be handicapped in the long run by its weaker programming model?
117. 30/10/2018 10:27
Institutions Are Coming for Your Crypto

The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.

The term "institutional crypto" sounds like an oxymoron. There's something quite ironic about financial institutions adopting a renegade technology that was designed to do away with them.

Yet a string of developments this past month suggests that – to put it bluntly – the institutions are coming for your crypto.



Whether this is something to be alarmed, excited or bemused by, depends on what you want out of cryptocurrencies and blockchain technology. Do you want fully independent control over your assets, a more efficient and inclusive global economy, or just to get insanely rich?

What is clear is that, for a time at least, there will be an awkward and increasingly intensified clash of cultures between the pinstripes of Wall Street and the hodlers of crypto land.

And while an influx of institutional money may at some point drive up crypto prices, that clash portends more uncertainty and volatility for at least a while longer.

Institutional-grade custody

An important development came with the news two weeks ago that Fidelity will offer a digital asset trading service. The sixth-biggest fund manager in the world announced a project catering specifically to the trading demands of large institutional investors in which, most importantly, they will provide services such as "institutional-grade custody."

For believers in the "be your own bank" philosophy of bitcoin, the very idea of third-party custody is contradictory to the "trustless" ideals of cryptocurrency's origins.

But this was inevitable. If corporations – banks, hedge funds and brokerages, first, then non-financial enterprises, second – are to participate in the crypto economy, the legal, compliance, insurance and risk management demands they live under almost require that they pass off the risk of holding such assets to outside custodians.

And let's face it, an increasing amount of the world's crypto holdings is in the custody of third-party operators, whether it's with custodial wallet providers such as Coinbase or at centralized crypto exchanges that comingle customer assets with those of others.

A key difference is that these kinds of services are now being developed for hedge funds and other professional investment firms by more heavily regulated firms such as Fidelity. Custodial banks such as State Street and Northern Trust are also working on delivering similar services.

At the same time, a number of providers that started as crypto companies have earned regulatory status as qualified custodians, allowing them to also go after compliance-sensitive institutional investors as clients. These include BitGo, which received a charter from the South Dakota Division of Banking in September and Coinbase, which only last week received a similar qualification from the New York Department of Financial Services.

Meanwhile, the Intercontinental Exchange, or ICE, which owns the New York Stock Exchange, is preparing to launch Bakkt, a new bitcoin futures trading service – likely in December, the company said last week. The key difference with the futures contracts that were launched late last year by both the Chicago Mercantile Exchange and the Chicago Board of Options Exchange, is that Bakkt's will be for physical delivery rather than merely a cash-based settlement. That will, in turn, require custodial and other services.

Goodbye ICO, hello STO

This race to serve institutions comes as the mania for initial coin offerings, or ICOs, has waned on account of the dramatic downturn in the prices of tokens attached to decentralized applications. That was in turn mostly due to a regulatory pushback from the Securities and Exchange Commission, after commissioners argued that most, if not all, ICOs were in breach of securities registration rules.

Now, a new buzzword is emerging in the ICO's place: the "STO."

This is the idea of a security token offering. In many respects, it is far less revolutionary than an ICO. Most ICOs purport to be selling "utility tokens" whose governance structure includes a unique cryptoeconomic model for rewarding and incentivizing certain behavior within decentralized networks. STOs, by contrast, are a crypto-based version of more traditional assets such as bonds or equity.

Still, R3, the distributed ledger technology consortium founded by large banks, is already calling security tokens the "third blockchain revolution."

It's perhaps a little ironic that a group founded by Wall Street firms, which scoffed at the absurd hype in the ICO market last year, is now using language that could also be deemed hyperbolic. Still, it's true that STOs could have a big impact, especially in terms of smart contracts helping to more efficiently manage cap tables and, potentially, bypass underwriters in a more direct issuer-to-investor model.

To be clear, though, the impact will mostly be felt by traditional investment firms and other accredited investors who participate in primary securities markets. It might make it cheaper to raise capital and open up new models for doing so with institutional investors.

But it's not really about democratizing finance, as the ICO phenomenon, with its direct reach into retail markets, was purported to be.

Institutional framework, non-institutional model

There's a pattern to all this: new custodial and trading services being offered by large, regulated entities, all in preparation for an expected influx of new securities that use smart contracts and blockchain technology to manage transfers of more traditional assets. All are aimed squarely at the expected arrival of institutional investors into the crypto world.

Holders of bitcoin, ether and other crypto assets that might now receive a flood of incoming orders from these deep-pocketed investors sometimes salivate at this idea – essentially because they expect prices to rise.

That might be the case, but this is not going to be a smooth ride.

One reason is that, for all the efforts to jam the square peg of cryptocurrencies into the round hole of regulated, intermediary-managed capital markets, there is a fundamental contradiction that won't be easy to reconcile.

Wall Street types like to talk about crypto as a new asset class, one to add next to stocks, bonds and commodities in their clients' portfolios. But for the time being at least, while early-adopting retail players of varying size still dominate the crypto community, this "asset class," if it can be called that, is going to behave in a very different way from others.

That's because, for now at least, when you buy bitcoin, ether or other pure cryptocurrencies, you're not just buying a piece of real estate or a claim on a company's equity, you're buying into an idea.

And that idea, one that's supported by a very motivated, enthusiastic—if not always rational – community, supports a paradigm that would see these very same intermediating institutions removed from the economy.

I feel Wall Street analysts are going to have a hard time grappling with that contradiction. There will be a lot of surprises. And surprises create volatility.

118. 29/10/2018 19:34
The Race to Replace Tether (In 3 Charts)

The crypto market has a dominant stablecoin, make no mistake.

Tether, which aims to keep its token (called tether or USDT) at parity with the U.S. dollar by backing each token with $1 in bank deposits, accounts for the vast majority of the stablecoin market by total value, exchange volume and other metrics.

But the market has begun to show signs of anxiety around tether, centering on the firm's access to banking services and its claims to have fully collateralized the outstanding tether supply.

The token has not traded at $1 with any consistency since early October. It hit a low of $0.85 on one market on Oct. 15, and while the exchange rate has largely recovered, it still lags below target, trading at $0.99 Sunday, according to CoinMarketCap.



Meanwhile, several rival stablecoins have arrived on the market, including – just since September – Circle's USD Coin (USDC), the Paxos Standard Token (PAX) and the Gemini Dollar (GUSD). Older rivals include TrustToken's TrueUSD (TUSD) and Maker's Dai (DAI).

As one might expect in such a perfect storm, tether has begun to lose some market share to these competitors in the week and a half since it broke the buck, data analyzed by CoinDesk shows. Yet while TUSD and USDC have made the biggest inroads, the data shows no clear winner at this stage, and tether remains firmly on top.

All these coins are vying for a critical role in the crypto ecosystem. Stablecoins, in theory, allow traders to move money between exchanges quickly – without having to rely on access to traditional banking. They also allow traders to move their funds into a less risky asset during times of heightened volatility, without having to withdraw funds from an exchange.

Below we dive into the data.

Market capitalization

There are several ways to measure market share for stablecoins, none of them perfect indicators. One is simply by looking at the market capitalization, which, when the asset is supposed to trade 1-for-1 with fiat, should be about the same as the overall supply.

"Tether has definitely lost market share in terms of the supply of USD allocated to different stablecoins," Nic Carter, creator of the blockchain data site Coinmetrics, told CoinDesk. TUSD and USDC, he added, have been "the major beneficiaries."

Indeed, according to Coinmetrics data analyzed by CoinDesk, tether's market capitalization as a share of the broader stablecoin market has steadily declined, with most of that decline coming from a reduction in tether supply (a token's market capitalization is equal to its price multiplied by its total supply).

market capitalization tether stablecoins

Charts by Nolan Bauerle and Peter Ryan of CoinDesk Research. Data for all charts sourced from Note that vertical axis scales differ between charts.

"Prior to the run," Carter said, referring to a period in mid-October when tether's exchange rate dipped below $0.93 according to CoinMarketCap, "tether consisted of about 94 percent of the total supply in stablecoins; that collapsed to 83 percent after the run."

But it's important not to overstate the competitive implications of that collapse. The primary reason for this shift is that Bitfinex – a cryptocurrency exchange that shares executives and owners with Tether – has sent 780 million USDT to a company-controlled wallet known as the Tether Treasury since Oct. 14.

This process, which the company (controversially) refers to as "redemption," removes tokens from the supply and therefore reduces the market capitalization, which has fallen to around $1.9 billion from a peak of nearly $2.8 billion in September.

Hence, reductions in tether's supply haven't benefited rival stablecoins as much as might be assumed, Carter noted. "It looks like some USDT that were redeemed did not, in fact, flow into other competitors, but simply exited to BTC or fiat."


Another way to gauge stablecoin market share is to look at what's happening at cryptocurrency exchanges.

Unsurprisingly, during and shortly after the "run," a number of exchanges – including OKEx and Huobi – rushed to list alternatives to tether.

Yet Coinmetrics' data shows only a slight increase in trading volume for tether alternatives over the course of October, and from a tiny base (note that the vertical axis ranges from 96 percent to 100 percent, and tether remains clearly dominant by this metric):

stablecoin exchange volume

Coinmetrics exchange volume data is sourced from CoinMarketCap.

"Exchange volume is small for alternatives because traders aren't really accustomed to them yet," said Carter, adding "tether still is considered a useful (albeit risky) coin for traders to get fiat-denominated risk. It just has the accumulated financial infrastructure."

But there's one more metric to consider: the volume of transactions on the blockchains for these stablecoins.

By this yard stick, tether alternatives have made more headway. Compared to modest on-exchange volumes, total on-chain transaction volumes were considerably higher for non-tether stablecoins throughout the month, and they appear to have increased after tether broke the buck:

onchain transaction volume tether stablecoins

All told, tether is still dominant, but competition from its many rivals is heating up.

According to Carter, however, "it's still too early to say which competitor is best positioned to win long term."

119. 28/10/2018 23:16
Bitcoin's White Paper Was a Model T for Payments

David Schwartz is CTO at Ripple.

This exclusive opinion piece is part of CoinDesk's "Bitcoin at 10: The Satoshi White Paper" series.

In 1991, my patent for a multi-level distributed computer network was granted. I was working on graphics rendering problems requiring significant amounts of CPU power and wanted to distribute computing-intensive tasks to a network of devices.

The goal was to have a number of computers performing simple tasks to contribute to a single result. Creating this system, though, was a complicated task.



After the publication of Satoshi's white paper, that's no longer the case. Outlined in the paper was a peer-to-peer payment system poised to disrupt the financial industry, one that gave people the power to conduct transactions across a distributed network without the need for trusted middlemen.

As a cryptography geek, I was enamored.

Seeing the concept from my patent re-emerge nearly 20 years later, I was excited to see that now was finally the right time for this idea to succeed.

At the core of this white paper was the chance to democratize value exchange. It has the ability to protect consumers should another financial crisis hit by allowing them to continue exchanging money without high interest rates and inflation. Using cryptocurrency also prevents expensive transaction fees and promotes financial inclusion, especially in developing countries.

The exchange of digital assets provides the underbanked and unbanked population access to global markets that they wouldn't have otherwise and offers a massive business opportunity for providers.

A Model T for payments

The most important aspects of Satoshi's decentralized network that aided in this democratization – transparency and consensus – are what make this such a revolutionary concept.

When you pay your friend through Venmo or send a check to your landlord, you have no view into the transaction process. Satoshi wanted to provide users with the ability to know where their money was every step of the way. In that same vein, when you send your payment into the abyss, you are trusting a third party (AKA your bank of choice) to transfer your funds correctly and lawfully.

The consensus protocol for bitcoin transactions requires every participant to enforce the rules, this way no one party can control what makes a transaction valid.

I often compare this disruption to that of the Model T. Before it was created in 1908, cars were seen as a luxury item that most could not afford. The Model T was a practical and affordable option, democratizing the car industry. Soon after, others followed suit and started to create different types of affordable – and sometimes better – cars.

Likewise, bitcoin was a catalyst for the industry, and thousands of others have since been inspired by it and iterated on blockchain technology.

Maybe bitcoin won't survive (just like the Oldsmobile), or maybe it becomes the ultimate store of value. No one knows for sure. What is clear is that there won't be only one winner.

There are, and will continue to be, different use cases for cryptocurrencies, including payments, stores of value and smart contracts – think of these as race cars, trucks and minivans, all serving a different purpose but derived from the same invention.

A coming change

And that's the key – our world adjusted to the democratization of cars by building roads, highways, race tracks, and despite the hesitancy from regulators and institutions. We'll see the same with blockchain.

Without Satoshi and bitcoin, this industry wouldn't be what it is today. But make no mistake, we are still in the very early days and will continue to see new ways to apply blockchain.

It's been over 100 years since the Model T's creation, and the industry is still coming out with new concepts such as the driverless car and all-electric vehicles.

It's always hard to imagine what applications the future holds for new technologies, but there is a clear pattern emerging in cases where technology has drastically increased the speed of something while simultaneously decreasing its cost.

The Internet did this for data exchange. We share massive amounts of data across the globe instantly and the technology is invisible. It doesn't matter where in the world you are or how much you want to share – it is just something we can do now.

Blockchain is doing this for payments. If the pattern holds, the next decade will bring an explosion of low-cost, high-speed payments that will transform value exchange the way the Internet transformed information exchange. Payments will just be something we can do now.

120. 28/10/2018 16:36
Defending Decentralization, Like a Twice in a Millennium Chance

"We haven't had an opportunity like this in the past 500 years."

That's Amir Taaki speaking on a closing panel at the Web3 Summit in Berlin Wednesday, and his statement was greeted with breathless applause by the audience. An early bitcoin developer, Taaki addressed a crowd of more than a thousand coders that had gathered to discuss "Web 3.0" – or the restructuring of internet infrastructures with an emphasis on decentralization.

"Maybe the technological proposals that people are talking about are not very well grounded, but I do see a huge amount of young, idealistic people with a lot of capital," Taaki said, adding:

"If we can form a vision and direct that energy, it could be an extremely powerful force."



A concept which originated from ethereum co-founder and Parity Technologies founder Gavin Wood, Web 3.0 has evolved into a tech base that encompasses a wide range of decentralized technologies, ethereum and beyond.

Web 3.0 is intended to replace the existing online infrastructure with software that is decentralized from the start. To this end, much of the discussion over the three-day conference echoed Taaki's sentiment – that with the right combination of technology and vision, Web 3.0 can usher in a new era of digital emancipation.

And while that may sound idealistic – several attendees remarked that the event seemed to tip into naïveté at times – it was met with a wave of technological advances that reinforced this positivity.

"It's different this time around, and we have a chance to use these tools in a way that empowers and protects people," Patrick Nielsen, CTO of Web 3.0 startup Clovyr, said. "But it won't build itself, and just because the tools exist does not mean it's going to get used."

Ethereum developer Lane Rettig echoed this point in an interview with CoinDesk.

According to him, the Web 3.0 community is at a crucial turning point. Either it succumbs to the classic "rich get richer" dynamics or the community takes "the uncharted path" of permissionless innovation.

"But it's not something we get for free, and it is not something we get by default," Rettig contended.

What's more, such a vision requires careful coordination and an awareness of history, such as the failure of former technological movements that got co-opted by corporates. To this end, several moments during the conference reflected this idea in more cautionary terms.

For instance, ethereum developer Vlad Zamfir took the stage on Monday, saying: "Expect every layer to be captured. Defend every layer."

The 'protocol commons'

During the event on Monday, Harry Halpin, an academic and a former chairperson of the World Wide Web Consortium (W3C), gave some concrete examples of the risks currently facing the nascent industry.

According to Haplin, decentralized, open-source technologies have a historical tendency to fall prey to capture by corporations that implement the tech – thus further centralizing the Web.

Clovyr's Nielson seconded that, explaining that strategies – such as the so-called "embrace and extinguish" method – exist within corporations to allow them to take open-source software and reimplement it within their own systems (without so much as a thank you). And the tech, at that juncture, has been abstracted from its guiding principles and even be used for malignant ends, he said.

Zamfir specifically directed his warning about this process toward blockchain governance – where an economic elite can buy up crypto token ownership and divert the outcomes of a project.

According to Halpin, Web 2.0 technology underwent a corporate capture of its own, and the leaders of the projects "lacked the backbone to push back and fight for users rights." For example, Halpin drew attention to digital rights management (DRM) – a heavily criticized copyright-enforcing technology that led him to quit the W3C following its implementation as a Web standard.

To protect against such eventualities, Halpin proposed the notion of a "protocol commons," an overarching blockchain governance body for "certain things which are in everyone's best interest."

This could include the development of Web 3.0 standards, as well as protection against software patents, Halpin said, adding that such governing bodies should avoid deifying specific people, a process that can create single points of failure for blockchain projects.

As Halpin argued:

"We need to remove charismatic leaders, they are good at the beginning but they will become corrupt, or they will just go crazy, and either way it has the same impact."

A surveillance machine

Privacy was another significant theme discussed during the summit. While much in the way of privacy tooling is in development within the cryptocurrency community, there are still plenty of unanswered questions.

Halpin called privacy protection "the largest technological task facing the Web 3.0 community."

He continued: "Peer-to-peer and blockchain technologies are by design very hostile to privacy. There needs to be a lot of work."

It was a notable trend at the summit, with many, like Halpin, warning that the use of peer-to-peer and blockchain technologies could result in a new surveillance machine – one that is even more threatening than the current Web as it exists today.

And that's because not only do technologies like ethereum reveal transactional data, but they also expose subtler computational activity which can be a concern, especially as it relates to smart contracts that deal with sensitive tasks like voting, location data, social media and identity.

As Zamfir explained:

"Blockchain is a surveillance wet dream."

Still, several talks touched on the privacy question, sparking a sense of renewed interest in developing the tools necessary to protect users and even developer information.

Advancements in zero-knowledge cryptography, ring signatures, mixnets, privacy-enforcing contracts and messaging were discussed, and even lower level cryptography that enforces privacy as a default, instead of needing end users to adopt.

One such project is Centrifuge, a financial supply chain startup that performs transactions apart from the ethereum blockchain in order to preserve their privacy, while still communicating with the blockchain by way of non-fungible tokens (NFTs).

"From a technical point of view, there's a huge improvement in terms of the technologies we can use to preserve privacy," CTO of Centrifuge Lucas Vogelsang said.

He added that the implementations of such technologies are "just a matter of time."

All about freedom

Still, the mood at the conference was generally optimistic. For example, several participants pointed to innovations particular to the blockchain ecosystem that could help overcome dystopian outcomes.

Zamfir, for instance, said that stable blockchain governance can be achieved using systems that enforce distributed control, incentive mechanisms and general fault tolerance.

Halpin echoed this point by stating that Web 3.0's main protection against the failures of former software movements is the novel economic models underpinning much of the industry.

"Blockchain technologies have a fighting chance because they have an economic model built into how you use and work on the technology," he stated.

These economic models can help avoid outcomes like the onslaught of corporations that occurred in Web 2.0 and protect against the economic model underlying most of the internet – one that relies on user data and tracking as a primary business model.

Haplin continued:

"You can see a new route of innovation on the Web that is not based on mass surveillance, that is based on decentralization, the respect for human life and new economic models based on payments."

Speaking on the panel, Taaki reminded the audience of the importance of having a fixed ideological position to guide the Web 3.0 movement.

And while there are subtle disagreements about what the term "Web 3.0" actually means, Zamfir said in an interview that ideology can be boiled down to "emancipation."

"It's not clear that it is going to be good for people's privacy, it's not clear that it gives people control, but it certainly gives people a lot of freedom," Zamfir told CoinDesk.

In a similar vein, according to Halpin, while we won't know for years as the technology and the industry around it unfolds, but it's worth the risk, given the underlying promise – freedom from corporate control – the technology stands for.


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