Cryptocurrencies like Bitcoin have made significant strides in the last decade, but the modern crypto industry has been distracted from fulfilling its primary ambition: accessible, fast, and inexpensive digital payments.
Despite a market capitalization that numbers above $100 billion, cryptocurrency as a movement has produced no mainstream blockchain payment solutions that can offer these three vital criteria.
Bitcoin is the culprit that most point to when they need to demonstrate the ineffectiveness of traditional blockchain-based ideas. At a sluggish seven transactions per second, Bitcoin wouldn’t be able to support a mainstream application even if the average consumer was left with no other alternative.
Most cryptocurrencies claiming to address Bitcoin’s flaws are constructed in a similar vein, contributing to an echo chamber of ideas that’s tough to escape.
A newer—or rather, older—perspective is needed. There is likely no one more qualified in this respect than David Chaum.
As the mastermind of eCash, an anonymous electronic currency that predates Bitcoin by almost 30 years, Chaum is the forefather of the crypto movement and has studied the accompanying topics extensively.
I was lucky to catch him after the recent 2019 Bitcoin Summit in Tel Aviv, organized by Bittax. The event was the largest blockchain event in Israel to date, with the theme of ‘anarchy versus regulation’—a forte of Chaum’s.
At the event, attendees were enraptured by his unique perspective as one of the many keynote speakers, who came from over ten countries which are currently evolving their own blockchain sectors.
When I asked David about his motivation for coming to Israel he said: “It’s been 50 years since I was last in Israel, and it’s refreshing to see the explosion in community, talent, and innovation focused on the blockchain industry here.”
He also added: “Israel is a key market in blockchain’s growth and development, and I’m excited to see the many intriguing use-cases for blockchain which will emerge from Israel in the future.”
Yoav Vilner: It’s safe to say that your visionary ideas, from eCash to DigiCash, eventually led to the birth of Bitcoin. Do you feel as if you’re a part of Satoshi Nakamoto’s invention, and should be credited for it in some way?
David Chaum: I’ve always had a fundamental belief that individuals should control their own digital lives, and to do so, peer-to-peer networks are necessary.
In the early 1980s, I open-sourced the first decentralized network, portions of which are still used today. While my 1982 thesis at UC Berkeley shared many components with Bitcoin, it is up to Satoshi to share whether this influenced his vision.
Vilner: Is Bitcoin’s design similar to how you first envisioned DigiCash? What would you say are its main disadvantages?
Chaum: The goal of DigiCash was to create the first digital cash that held all the properties of paper cash. Cash is a bearer instrument, and is peer-to-peer, permissionless, and confidential.
Digital cash should ideally share these same characteristics. At the time, personal computers were not powerful enough to run nodes, so we worked with banks and corporations to complete transactions.
Vilner: You’re launching a new coin called Elixxir. Why do we need another coin, when there already are so many in the market?
Chaum: We have created a platform that people can build on that is extremely secure, fast, scalable and private. Elixxir has been designed from the ground up to solve for the adoption issues ,that many in the first wave of full-stack solutions have difficulty overcoming.
As a proof of concept, we are launching our own fully functional free messaging application on the platform first, which will allow users to send messages quickly and with true privacy—no metadata creep of any kind.
As 2019 progresses, we will enable payments between users in this environment as well. Our vision is to push back against metadata creep and to give individuals control over their digital lives, and a working alpha version is currently running in our lab.
Vilner: With recent advancements in the blockchain-sphere, do you think we’re headed towards a new economy? Or are we still in the experimental phase?
Chaum: As individuals gain more access to technological tools and awareness of the benefits of a decentralized economy, I am optimistic that we are heading toward a new economy.
Bitcoin has obviously just celebrated its 10th anniversary and the industry surrounding it has experienced significant growth in that time, but I believe we are just seeing the beginnings of real growth and development.
Vilner: Israel is known to be the “Start-Up Nation”. It is also especially relevant to the blockchain space, given that Israeli startups have raised over $600 million in 2017 and 2018. Where do you see the country playing a role in the industry’s future?
Chaum: The success of Israel’s startup scene is truly incredible. You can see the strength of the Israeli entrepreneurial spirit through the success of Israeli-founded startups that have become household names globally: Viber, Waze, WeWork, Via, Wix, and many more.
It’s only natural that this entrepreneurial spirit would transfer over to blockchain. Israel has a history of being on the cutting edge in privacy and security—often out of necessity—and the presence of this need in the everyday lives of Israel’s citizens, entrepreneurs, and academics, makes the Israeli startup community particularly fertile ground for the development of blockchain technologies that people legitimately need.
Elixxir was specifically built to support those same needs, and we wouldn’t be surprised if a healthy community of Israeli entrepreneurs end up building on our platform.
This is a primary reason for my recent lecture at the 2019 Blockchain Summit which was held at Tel Aviv University, though market research on the countless other projects hosted by the event was also a relevant factor in my decision to attend.
Vilner: 2018 is now officially behind us. Some claim it had been the best year for crypto because it gave the community time to build and develop, while others say it was a disaster due to new regulations and of course, steep price declines. How would you summarize it?
Chaum: If anything, 2018 reminded the blockchain community why we are pursuing the worthy vision of decentralization, and has re-gifted an opportunity to those who are serious about bringing blockchain into the world to execute it well.
Vilner: What major hurdles do we need to overcome in order to bring real digital money into the mainstream?
Chaum: Until now, we haven’t realized four requirements to bring blockchain technology to mass adoption: speed, privacy, security, and scalability on a single chain.
We’ve built our project specifically to meet these needs, after having the opportunity to see where the first wave of blockchains have fallen short of enabling real utility for the average consumer.
Now that we have a platform which can meet the requirements necessary to get digital cash into the hands of individuals, we need to meet people where they have their most frequent digital interactions.