Hodling, Buidling, Spedning: Andreas Antonopoulos about anonymity, privacy and sentiment changes in the cryptosphere

Image: Max Gurresch, RIAT, CC-BY 3.0

Andreas M. Antonopoulos is an author, speaker, and educator. He is known for delivering electric talks that combine economics, psychology, technology, and game theory with current events, personal anecdote, and historical precedent effortlessly transliterating the complex issues of blockchain technology out of the abstract and into the real world.

Matthias Tarasiewicz and Daniel Pichler from the RIAT Institute for Future Cryptoeconomics spoke with Andreas Antonopoulos at the WeAreDevelopers World Congress in Vienna, Austria. Hyperlinks have been added to this transcript.


DP: We have met on multiple occasions in the past years, but I never asked you what drove you into Bitcoin and cryptocurrencies in the first place?

AA: I’d say I was primed. What I mean by that is, my background is in distributed systems and information security. I started programming when I was just under 11 years old and I’ve been involved with computers since the early days of the internet, but I also got interested in the cypherpunk movement in the early 90s and in the first digital currencies like Digicash with David Chaum. I was fascinated with the application of cryptography to the social sciences and the impact this could have on political movements. When I first came across Bitcoin I didn’t understand what it was, and ignored it and then 6 months later, the second time I came across it, there was a link to the whitepaper of Satoshi Nakamoto and the moment I read it I realized what it was. I realized it was a very powerful decentralized distributed system with a security foundation based on cryptography and in fact the entire construction incorporated all of these cypherpunk ideals that I strongly believed in. So I immediately dropped everything else and dedicated my focus onto that. Here we are seven years later, still as excited as ever and fascinated by this technology which has gone further than I ever expected.

MT: I personally came to Bitcoin through an experimental research project (Bitcoincloud) in late 2010. I then started further researching on the culture of decentralisation in a paper I wrote in 2014 [Cryptocurrencies as Distributed Community Experiments], which examined how different altcoins emerged from Bitcoin and how forking culture developed. I was fascinated by it, specifically how value was created in these emerging communities. A lot has changed since then, especially the actors in the cryptosphere and how they interact. How is your perspective on this, how did you perceive it, and do you think this cypherpunk ideals are still there, out there?

AA: Oh they absolutely are, because they are still being espoused by a lot of people who are very much engaged and are working in research, innovation, technology and are building new systems. A lot of people have joined this entire space, for whom this is not interesting because it’s inevitable, that if a technology becomes more mainstream it loses some of its root principles. People forget why it was created in the first place. But that’s ok because one of the interesting things is that in many previous technologies, new people come in who do not understand, know about or even believe in the original principles. They change the technology to match their new interests. They can’t do that with cryptocurrencies, because the technology cannot be changed, because no one has control over it. People can create new cryptocurrencies that don’t have those principles, but they can’t change those principles in existing cryptocurrencies, because they have no control over them. That’s a very interesting phenomenon. If you believe, as I do, that those principles translate to greater usability, greater freedom and in the end greater utility and value, then the fact that they can’t be changed means that we will continue to have this technology and we will continue to have these principles and they will be very useful.

DP: At your Patreon meetup you have also mentioned that you are careful in picking where you are going to attend. You stated that conferences like Consensus are not the right place to be anymore compared to ‘back in the days’. Today in The Standard [an Austrian newspaper] there was also an interesting article, pointing out the fact that the “hoodies to suits ratio” spiked so that there are only suits at Consensus, and not so many people like the old ‘original cypherpunks’. How do you experience the change in crypto-culture? Do you see this as a negative effect, especially as you are here at WeAreDevelopers and not at Consensus?

AA: Well, my interest is to talk about this technology to people that haven’t encountered it or who don’t understand it, so to bring new people to understand, why this technology matters, at least, my perspective on it, what it is and what it means. There is no point in me talking to people that already have a preconceived idea in what this technology is. Especially if their idea is to use it to do some corporate closed blockchain that increases the yearly profitability of one corporation by 0.25%. The thing is, it’s not that’s insidious, the main thing is, it’s boring. So I’m much more interested in looking at technology that has a very, very real potential to change our world and have an impact that lasts for decades and generations perhaps and brings freedom and financial inclusion and empowerment to billions of people, that’s not what those conferences are about and that’s ok, because it doesn’t change what this technology can do for billions of people. We can still build a revolutionary technology and they can build a boring intranet that increases their profitability by 0.25%. It’s just that I’m not interested in participating in that and so yes, the ratio from hoodies to suits has changed, but who is building the interesting stuff? Still, the really fascinating stuff that has happened in our industry is that developers who use this technology are for the first time able to fund their own activity independently, without the need to appeal for corporate investment. Ironically, while we’ve seen an explosion in the VC space. Venture capital is the first industry that got disrupted by blockchains and it now allows a developer with just an idea to fund it quite easily. There is money being thrown at good developers and you cannot hire a good developer to write your idea for you, because they are not interested, because they can write their idea and money is plentiful, and capable developers are very, very rare. This has disrupted the very power balance in the startup scene and made developers self-funding. So, in the end, the funny thing is that the person in the hoody next to you probably has a higher net worth than the idiot in a suit that only has that car on a lease and is buried in debt.

MT: I also want to shift the discussion a little bit further to what people are actually using cryptocurrencies for, what is their utility. There is the term #HODL and the Ethereum community recently used the term #BUIDL. Monero with Monerujo now calls to #SPEDN. Could too much focus on hodling in the end hodl back cryptocurrency mass adoption?

AA: Absolutely! Any form of single focus, refusing to appreciate the diversity of applications, the diversity of viewpoints, the diversity of interests that come into this space and trying to make this a single choice that everybody has to follow is not relevant to everything that this is about. It’s all about choice. One of the beautiful things about this is that in traditional startups, traditional funding mechanisms and traditional platform technologies, especially centralized platform technologies, to introduce a new application to the platform it has to have a very, very large addressable market, otherwise the entity that controls the platform has no interest in introducing it. You don’t get your application to run on facebook unless it has a very, very large market. It’s not an open system. The beauty of cryptocurrencies and open platforms is that the market space you need to address in order to run an application is two people. You and the other person, and as long as you two are interested in writing an application and using an application as a trust platform behind it, you can run your application. If nobody else is interested in that application, it still runs, it still gets the same level of priority on the network, it’s neutrally treated by the platform. That’s how innovation thrives, you get permissionless innovation at the edge, you don’t need to have a market of more than two people. That means that we are going to see applications that serve narrow markets, you get applications that serve people with disabilities, people with neurotypical, people with different economic or social backgrounds who have different needs. And the need of someone who is trying to protect the wealth of their family in Venezuela is very different from an Austrian who wants to buy coffee at the local store. That’s ok. The thing is that these platforms are big enough and varied enough to serve the needs of many. I think it is wrong to focus on one approach and say, we win if we all do this. No, we win if we let everyone do what they want to do on this platform. Big approach! Broad approach! I don’t think anybody should tell anybody else what Bitcoin is, what a blockchain is and what they should be used or should not be used for. That violates neutrality and I think neutrality is one of the strongest building blocks of this technology.

MT: I want to point at the cash debate. Some voices are arguing that Bitcoin failed the cash aspect, not only because of rising fees (that got largely solved by SegWit and Lightning), but also in regards to the deliberate design aspects of Bitcoin as a deflationary currency. There are a lot of external factors, that would drive this scarcity higher, there is this saying that a third of all the Bitcoins are not in circulation, they are stagnant.

AA: Or lost

MT: Or lost, yes. On top of that, there are blockchain analysis services to mark coins as tainted or clear them as untainted, so we have a specific, two-layer value already within Bitcoin. Andreas, do you think the cash aspect of Bitcoin is relevant anymore, do you see it as cash or as gold, what is your position on this, as there are a lot of coins that are already tackling the cash aspect. We also know that Bitcoin has never been fungible in the first place.

AA: I think once again that is wrong to ascribe a specific function for everyone. Meaning, what I use Bitcoin for is not what everybody else uses Bitcoin for, and that’s ok. In fact, I don’t think we’ve closed the door on using this technology as cash. I think we don’t know where the evolution of this technology goes, it’s very, very early days and to say that the future is already written in one way or another is naive. To say that it must be one way or another is hubristic and I don’t think we should attempt to predict, which way it’s going to be used. The truth is that design of technology has a small influence over its future use, adoption and the markets ultimately decide, what a technology will be used for. I also take a broader view, which is that we don’t have to solve all the problems with one cryptocurrency. In fact, I think when we have a future in which you can enter and exit a cryptocurrency in milliseconds, for values of milli-satoshis and you can switch between one and another cryptocurrency with almost zero cost and almost zero time. What does it really mean to commit to one? I would like to see this almost as a routing mechanism in my wallet. I don’t even know which currencies I have. My wallet automatically decides, based on heuristics, which currency are the best store of value for the moment and if I need to do a transaction that’s more like cash, if the thing I’m holding isn’t the best thing or isn’t the most compatible with the vendor I’m standing in front of, then my wallet can, in one millisecond, switch to the lowest exchange rate, lowest fee rate, highest privacy coin according to my settings that both I and the merchant accept, out of maybe 1000 different currencies and then take the change and switch it back to the highest store-of-value currency. I mean at that point, what choice have I made? None. So the very idea to committing to a single system to the exclusion of all others seems ludicrous to me. It’s almost like saying, I have to pick one website to get all my information, I have to use one routing protocol to get my packets from A to B. That’s not the case, it hasn’t been the case on the internet, why should we make it the case for cryptocurrencies.

DP: Let’s stick shortly with the privacy debate. I think that this is a very important topic, which is underrepresented in mainstream media. After all, the majority of people still believe that Bitcoin is anonymous. What is your position in the ‘always on’ vs ‘optional anonymity’ debate and do you think one of them has more viability as an idea?

AA: Absolutely. Yes, to me the only privacy and anonymity technologies that are really powerful are those that are always on, for everyone who uses them, all the time. If you look for example on the internet, what is the most effective privacy and security technology that has been deployed, it’s not PGP, it’s not encrypted drives, it’s TLS, it’s SSL. And the reason it’s TLS and SSL is that 90% of the people who use it have no idea they are using it, and they don’t get a choice. In fact, you can’t turn it off, for most of the sites. You can’t connect to them over a non-encrypted connection, so when everybody’s connection is encrypted that massively increases the privacy for everyone. Even if you have sophisticated privacy and anonymity technologies, if they are only used by 100,000 people on a single blockchain, then arguably these people can simply be monitored, all of them, all the time and eventually they will not have perfect operational security. They are going to slip up. I’m much more interested in having a lesser degree of privacy, which is always on for 25 Million people that are using Bitcoin. So for me, it really matters what the set of users is. And I think that while privacy and anonymity coins are great because they provide an excellent basis for providing experimentation and pushing the envelope, they also somewhat attract the attention and anxiety of regulators.

In the end, I think applying these privacy and anonymity technologies to every blockchain out there is going to be essential. Because to limit freedom of expression, to limit freedom of association, you don’t only have to deal with prior restraint. If you have the freedom to transact with everyone, but all your transactions are visible to everyone, then you can be punished after the fact for transacting with the wrong people, which essentially robs you of your freedom to transact. I think that’s important. We have to realize that privacy is a foundational human right and without privacy, freedom of association, freedom of expression, freedom of political expression, all goes away. If you can vote for whoever you want, but your family can be shot for voting for the wrong person… you cannot vote for whoever you want! The vote is useless without a private vote, and this applies to all of the human rights. So privacy is a fundamental human right, I don’t think we can afford to have blockchains without fundamental privacy tools, which is why I’ve been talking for a while now, on the importance for establishing privacy technologies within Bitcoin and I think we have some excellent choices. Confidential transactions, joined-transactions, Ring Confidential Transactions, schnorr-signatures, aggregated signatures, lightning network, onion routing, dandelion routing and several other technologies, that are being developed, eventually possibly zero-knowledge SNARKs. All of these are great, but they are only useful if we give them to everyone and turn them on always.

“I would prefer to seize [human rights] with the force of cryptography”

MT: The right to privacy is heavily debated. For instance, despite it being mentioned in the US Bill of Rights, for example, it does not have the same status in the European Union. There has been a lot of debate on this recently, because of data collection, the facebook trial and the General Data Protection Regulation (GDPR). Richard Stallman wrote in the Guardian that “the surveillance imposed on us today is worse than in the Soviet Union”, arguing that “to restore privacy, we must stop surveillance before it even asks for consent”. How do you see the current situation, with corporate surveillance being on the rise, forced consent, and with surveillance packages being activated across Europe? Could it be, that Bitcoin, in the end, creates a more transparent society, which could be problematic for end-users?

AA: Absolutely, until we fix privacy and anonymity we have a problematic situation. But then again, you have to compare it to the status-quo. The status-quo right now increasingly is not anonymous cash, it’s very, very surveilled financial transactions through debit cards. Which means that not only you are under complete continuous totalitarian surveillance for every single one of your financial transactions, not even by one single entity because every intelligence agency in the world is sharing. So the European Intelligence Agencies are prohibited from spying on Europeans, so they outsource that to the Americans, the Americans are prohibited from spying on Americans, so they outsource that to Europeans and your rights are meaningless.

Rights are not secured or granted by governments. If you expect rights to be granted by governments, you lose your rights. Rights are like muscles, you exercise them or they atrophy. And you do not ask for rights, you seize them, and if you have to, you seize them with force. I would prefer to seize them with the force of cryptography, which is the defensive force, but when you realize that your society is abrogating your fundamental human rights, you fix your society, you don’t give up. The fact that privacy has a stronger constitutional basis in the United States is meaningless because the constitution is being violated on a daily basis. The government does not care to subscribe to a constitutional basis. The same thing is happening in Europe. People are willing to give away their rights and freedoms, to protect themselves from imaginary threats and in the end, those threats get amplified, and it’s their own government that is the greatest threat of all. And this is a lesson that Europe learned recently and America hasn’t learned yet. But unfortunately when we see the rise of fascism in Europe and around the world and in the United States, it’s unfortunately a lesson the next generation will have to learn again. I’m hoping that cryptography and cryptocurrencies and other powerful technologies like that can be used, especially by young people, to seize back and exercise their own rights. They will be called criminals, and they will be told that they are doing something that is wrong. And they need to ignore that, and do it anyway.

Image: Max Gurresch, RIAT, CC-BY 3.0

DP: On Anonymity, we already had the Bitcoin split with the blocksize debate, because it was a controversy within the community on which route to take. Do you think that the next debate we’ll have in the Bitcoin community will be anonymity/privacy?

AA: Yes. It is very simple. Anonymity is going to become a controversial and contentious issue. Those who want to sell the anonymity of people and in return get corporate profit or favourable regulation or government endorsement, will try to do that and they will fail to compromise on the integrity of the underlying chain and will fork-off their own. That fork will be compromised by design and I won’t use it, but other people might. And in the end, as long as their government remains free, they will be safe and in the moment they have one bad election, their freedom is gone. So I will continue to use the things that secure my own freedom and assert those rights.

“Cryptocurrencies are just a litmus test. It allows you to test your own government and I think some will win that test.”

DP: Let’s start a thought experiment, and let’s argue from a statist perspective about cryptocurrency and blockchain. If a country like Austria would want to foster cryptocurrency experimentation, what would you recommend to them? To regulate or to encourage?

AA: One of the things, that is becoming quite ironic, is that cryptocurrencies become a litmus test. They serve to reveal the intentions of your government. If your government has no respect for individual freedom or is worried and terrified that if people have the power of privacy, anonymity and commerce, and the capability of private transactions (which for thousands of years has been something we have had with peer to peer anonymous cash) — if your government is afraid of that, it says a lot about your government and very little about cryptocurrencies. So it becomes a litmus test that allows you to evaluate how freedom friendly your government is. It’s a test that many governments are failing. And when they fail this test, they try to remove cryptocurrency from their country, but what they achieve is removing their country from cryptocurrency. They remove themselves from innovation from growth and possibility and eventually also from liberty. And that’s fine. Because it won’t affect cryptocurrencies. They’ll just continue to happen, they’ll just happen underground.

I think we’re already seeing a level of competition emerging, where governments act as magnets for those who are interested in pursuing these innovative technologies. In the end, it is just as much a litmus test as the internet. If you’re country does not believe in the free internet, there is a problem with your country, but the internet will still remain free, somewhere. You maybe need to move and you’ll have a problem with your own government. In the end you’ll see, which countries that are likely to ban freedom of expression are also the ones that are not happy with a free internet.

MT: Could anxiety foster mass adoption of cryptocurrencies? The transparency vs. privacy debate, or the shortcomings of fiat, banks and large financial institutions?

AA: I don’t think privacy is going to ever be a popular adoption mechanism. I don’t think freedom, privacy and independence is something that most people seek. As a popular cartoon shows where you have two tables and one shows ‘uncomfortable truths’ and the other one says ‘easy lies’ and there is a very big line in front of the one for easy lies. I don’t think people are conditioned to seek uncomfortable truths. But the bottom line is that at some point you’ll become forced to confront reality. And that can either happen because your government becomes corrupt, because your government becomes totalitarian, because your money becomes worthless, hyperinflated or controlled as a political weapon against democracy, and all of those things are happening in many places around the world. Let’s hope they don’t happen here. I would certainly not want to see that. But again, if they do, that’s the reason why people will seek alternatives. And sometimes you have to be outside of your comfort zone, in order to discover that alternatives are needed. I’m just very interested in making sure that those alternatives exist, when people need them and where people need them. Today it’s Venezuela, let’s hope it will never be Austria.

The RIAT Institute for Future Cryptoeconomics researches in the fields of cryptoeconomics and thematizes topics of the future of decentralisation. All content is made available under the Creative Commons Attribution 3.0 Unported (CC BY 3.0) license.