The Vergecast - Amber Baldet on what blockchain technology can do for us beyond cryptocurrency

Episode Date: October 29, 2019

Verge editor-in-chief Nilay Patel interviews cryptocurrency expert Amber Baldet, co-founder of Clovyr and on the board of the Zcash foundation. Nilay and Amber discuss where cryptocurrencies on the blockchain are going, the potential of Facebook's Libra project, and how the blockchain can revive our trust in putting our data online. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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covering the biggest names and stories in sports and mom. And this is Am Mom, a community for athletes, game changers, and moms of all kinds. dropping May 14th. Tap in with us. Hey everybody, it's the United from the Vergecast. On this week's interview episode, I'm very excited to welcome Amber Balday. She's a co-founder of Clover.

She's on the board of the ZCash Foundation. One of the most common requests I get is to do an interview about cryptocurrencies and blockchain. Something to be quite honest, I don't think I know nearly enough about. Amber is an expert, though. She's been working in this space for a long time. She's worked for big banks. She has worked at startups in the crypto space. She has consulted for a huge number of companies.

We talked a lot about where cryptocurrencies and the blockchain have been, where they're going, where they're still promise, what they're for. We talked about Facebook's Libra project, which seems to be falling apart. And we spent a lot of time talking about trust, how the blockchain can make it so that we don't necessarily have to trust these big companies with all of our data, with all of our services. This was a fascinating conversation with somebody who is deeply, deeply steeped in a world that I have been very interested in. but needed to learn more about. I'm very happy that Amber was here to talk to this about it. Check out, it's Amber Balday on the Vergecast. Amber Balday, welcome to the Vergecast.

Thanks for having me. So you used to work at JP Morgan Chase. You were the, it says here, blockchain program leader, which sounds exciting. But you're left there. You're on the board of the Zcash Foundation, and you're the CEO and co-founder of a startup called Clover, which I take to be a blockchain startup. A little bit. We do work with people who say they would like a blockchain, but we're really working.

on orchestration and coordination of decentralized-type networks. That does not always mean a blockchain. We can get into that. I would love to get into that. But really modernizing the tooling that people are using for some of these new apps. So one of the most common requests I get every, at the end of every episode, I say, let me know he want me to talk to. I always get asked, bring on someone to talk about the blockchain.

This is a revolution. You rarely talk about it. You're always talking about monopolies and platforms. Blockchain's the answer. Just give me a little, not like a history of the whole blockchain, but in terms of your personal history. You were at JPMorgan. The big financial company seemed to have this, I would say, casual interest in blockchain that is becoming a more serious interest in blockchain. You left there. You now are obviously on the governance board of a cryptocurrency. You have a startup in this space.

Give me kind of your big picture of where it's gone, where it's been and where it's gone. Where the public space has been thinking for several years now is really around financial transformation. And I have worked in financial technology for my entire career, which involved a number of different stops along the way. But yeah, when I ended up at J.P. Morgan, I was there for a number of years before blockchain was a thing, but eventually worked with their new product development group who was experimenting with all these sorts of technologies. And I think, you know, where I was coming at it was from more of an information security community kind of standpoint, where we had been watching Bitcoin as a funny little nerdy hacker project for years and understood, you know, when people talk about,

well, not to get too technical around encryption and all these things, but there's a longstanding community, the cypherpunk community, who's been saying for years and years and years that people need to be more involved in their technical life and their technical agency. And one of the things that humans really need is a medium of exchange. It's one of the things that we all rely on day to day. So the ability to have this independent personal agency around your money, and that this is a type of money that wasn't necessarily minted by a government, was intriguing.

And simply getting to explain that in the context of a larger financial industry was a fantastic opportunity. I think that most people that had my job had been kind of handed a PowerPoint and said, you're in charge of the blockchain now. And so I came at it from more of a perspective of, you know, where did this start? and what were the original principles here. And now it's bloomed into these multiple industries and Bitcoin, not blockchain, and we're building a world computer over here. And we're focusing on financial privacy over here.

And it's just so many things now. So it's funny because the financial services companies, even JP Morgan for a while, was like, this is not going to happen. And now it seems like they're not necessarily all in, but they're aware that it's going to happen. Well, what the banks are working on for the most part is what they would call enter. enterprise blockchain or distributed ledger technology. And that's really a way for organizations to work together across trust boundaries to get something done. It is not about tokenizing representations of money all the time. You could tokenize lots of things, including existing

securities. But really what they're looking at is data exchange and data tracking, supply chain provenance. And then it's really seen as a separate sort of project from, say, public cryptocurrency, where anyone can download this software on their own computer. You can run your own node, connect to a network pseudo-anonymously, with varying degrees of anonymity depending on how technical you are. And there's really no gatekeeping there. So there are kind of two different types of projects. Although we see them blending together in some of the new corporate-type currencies

that have been announced. So you just said a really interesting phrase. You said trust boundaries. What is a trust boundary? You think you own your data, right? And a long time ago, you probably got some floppy disks. Well, some of us used to get some floppy disks and put them in the computer and install an application and use it. And you know what?

Like, you owned your data. You probably remember that because when your file with your college thesis got corrupted, you were screwed. But now it's in the cloud somewhere. And that's fantastic because you no longer lose files. But it also means that you've brought in additional trusted parties. to your data. And you think you own them, but actually you license them a lot of the time. We see that also with something like blogging. Maybe a long time ago you would have installed a WordPress instance on your website so you could blog and hope people would find it. Nobody does that

anymore. You sign up for medium because you didn't want to run infrastructure. You wanted to write a blog. And so we're really operating in this kind of, we trust those centralized intermediaries that do different things for us. A lot of people think banks are the only centralized intermediaries, but they're all over in our life, whether they're cloud providers or all these SaaS companies that we've brought in. And so finding a way to achieve what you wanted to do without having that kind of intermediary in the middle requires that instead, what would I do? Email you my blog.

I can't email everybody in the world my blog. So I need to... I mean, newsletters are taking out. There's like a $16 million investment in substack. I get some newsletters that I think might have been emailed to every email in the entire world. To your point, right, that distribution mechanism is very difficult. Right. So how people can manage to coordinate, when you're sending something like your blog that you wanted to be entirely public, that's one kind of issue.

But if I wanted to say, and if I wanted to send you a picture, it would be easy. You'd have the picture, and then I would have the picture, and we'd have two pictures, but we'd have achieved the goal. But if I wanted to send you something like a dollar or something like an intellectual property, right, where I cease to have it because contractually now you own it. Doing that digitally without an intermediary that kind of sat in the middle and facilitated. that escrow was not something that we could do before this type of technology. So that's brand new. But it really bumps up against what people would consider decentralized web and how we can manage to unbundle some of these aggregators

that have come to control our digital lives. And this gets into the issues that everybody has with big platforms. I mean, we talk about Google and Facebook constantly, but they own a surprising amount of our data, or they have licenses to a surprising amount of our data, I guess. And it doesn't seem like it's easy to get them out or move it along, and it seems like you're saying a little bit of blockchain technology, a little bit of decentralization can actually reduce their power because you make that data scarce?

Some of the projects people are working on are making specific assets digitally scarce and being able to move those around and what becomes something that feels like an internet of value, kind of like this internet of information that we have. Other projects that people are working on aim to increase kind of private networking, for example, there are a lot of experiments about whether or not the economics of digital scarcity need to be overlaid onto something like that in order to make them work and be functional. Because one of the biggest problems we've had with operating some of these global common services or it would be great if everybody used them, but how do you incentivize people to use them,

is how do we make people want to participate? And so there's a lot of these like token projects that try to do that. I'm relatively unconvinced that you need a token to facilitate them. But it's fantastic to see people experimenting with why fundamentally the types of problems that continue to persist haven't been solved already. I was just reading some of the stuff you've been writing. You've got this line here. We might not be able to stop the rise of the machines, but we can at least create a more consensual system, a fair day's wage for a fair day's data. How would that work?

I mean, I just, like the example you gave. Well, to be honest, that was kind of a tongue-in-cheek jab at a fair day's work for a fair day's pay, because I don't know about you, but it hasn't worked out for a lot of the global populace. That's kind of what I'm asking. But the example you just gave, I want you to have a photo that I took, so I sent you a photo. And now we have two copies of the photo. Sort of reduces the value of my single photo in a way that if I had a print before, you know, if I wanted to give it to you, give me some money, and then you would have it and I wouldn't have it anymore. How do you stop things from being copied infinitely in a system that is designed around that specific. mechanical task?

That's a slightly different problem. Having something that is like a dollar, a dollar is fungible. A dollar in my pocket is as good as a dollar in your pocket. But when I have $100 in my pocket in singles, I can give a portion of them to you. And then I simply don't have them anymore. The challenge with file distribution is something called digital rights management. people have been trying to watermark photos and somehow stop the spread of them for 15, 20 years. I used to work at a company that made very proprietary research.

How do you stop people from just forwarding on the newsletter? And all of the solutions are relatively hacky or not elegant and pretty easily undermined. At the end of the day, your ephemeral photo app might tell you that it prevents screenshots. it doesn't stop you from holding up another phone and taking a picture of that picture. So there's a difference between data privacy, which is the data that you have and that you want to keep yours and prevent from leaving your purview and the concept of confidentiality, that you've shared something consensually with someone, whether that's a point-to-point text message or with a vendor where you signed a toss that I'm sure you read 100% of the Terms of Service for,

that once they have it, in a way, it's theirs. There's simply not a way to pull that back. There is privacy research happening now, though, for ways that we can coordinate and collaborate on things without disclosing that data, where you can say either bring an application or an algorithm to data that stays with you and we can train models collectively and we can come to agreement about things without disclosing things. It's very exciting, but it also has become this kind of silver bullet now of a technical problem trying to solve a or a technical solution trying to solve a, a social problem that we have, which is that we don't trust each other, again, these trust boundaries, but also all of the legal agreements that have been created have this power asymmetry where it just, there's nothing I can do once my data is gone. It's gone. So I think that there are a lot of different tools in the toolkit when you're designing systems that provide people more agency.

But right now, they are so either in the R&D stage or incredibly complex to interact with, or you need a PhD to be able to install and run these things, that for most people, you're going to sign up with Medium. I mean, that's what you do. It's funny. So my position is that in terms of service agreements should be legal. We actually, we're doing a thing in our reviews now where in every review of every device,

we just count how many service agreements you have to say yes to because it's the only thing that we can measure. Like, we can't dive into them. And it's a lot. And you can't negotiate them. You certainly can't say no and then still use your iPhone. You're just kind of screwed. And that to me is a very powerful idea that you would somehow clossom power back to the individual

and they'd be able to express some market signal. I don't want to give you this much data. But it seems very hard to get from what we're talking about, which sounds great to your point, which is the applications and services are so very complicated and so very far away from the consumer. Yeah. And to your question about what is a fair day's wage for a fair day's data, right? half of the global population is coming online over the next 10 years. And not everybody's data is worth the same thing.

And we do run quite a risk of looking at populations that are even less educated about what their data means and how it's deployed than the people that have been on the internet for some time, that applications come to them and say, hey, we're going to pay you for this. You're not involved necessarily in understanding the market rate of this, but we're going to pay you for something. what is it a value that they have that they're necessarily going to sell in that situation? It's very likely that privacy becomes something that the rich can afford and that the rest of us simply cannot because you need either the compensation or you are offered access to a network that you couldn't afford otherwise as long as you give away your data. So would it be better than the system that we have now wherein you have no say? Maybe.

But it might simply be papering over the underlying and growing kind of technical inequities that are happening. So we've been talking about a lot of things blockchain might be able to do or different systems might be able to be the foundation of. But right now, most people think of cryptocurrency. They think specifically of the financial aspect of it. Why is that? Why hasn't it broken? I mean, I guess the question is what is the app that makes people think about blockchain in a way that's relevant to them besides I'm going to hold Bitcoin and hold Bitcoin? I don't really think people need to hope that blockchain is relevant to them any more than at some point someone said, hey, how's a relational database good for me?

That's just not a question that we ask. It was all of the applications that were built on top of this new type of architecture that allowed kind of the Web 2.0 emergence to happen. That suddenly there was something you wanted to do. And it wasn't because you were able to store and join SQL databases in brand new ways. That's how I think about Facebook. Absolutely. Facebook is the best SQL database. Right.

I mean, and it was just, you know, we're storing the social graph there. And now we're going to do different types of operations on that. So I think money is a fantastic application. And people have been working quite hard on making, whether it's Bitcoin or some other coin, making it usable. I think what would be great for people to understand is not how does a blockchain help me. But rather that right now we're seeing a huge push towards cash list. in society in general. Scandinavian countries right now are almost entirely cashless.

They trust their government. They have a very different opinion than somewhere like India that's attempting to demonetize and go cashless forcibly where they have a very large cash economy in existence. So it really is a radical idea to have people not have cash in their pockets. You know, 30 years ago, I remember my mom telling me when I was a kid, it's illegal not to accept cash. You know, only some places will accept credit cards. That's optional, but cash, cash is money. Now, you can definitely go to a bistro and they will say we're cashless or your farmer's market where you buy asparagus for five bucks. They'd rather you use square. And what does that mean? It means that every financial transaction, every time you buy something, you are actually asking a third-party service, is it okay that I do this?

And you don't really have insight into how many different providers are part of that yes or no decision that happens so quickly. And a lot of people say, well, it doesn't matter. I'm buying asparagus. There's nothing wrong with that. But, you know, what if you were buying an engagement ring? Would you want that broadcast to your Facebook feed? Probably not. What if you're paying a health insurance bill or a medical bill that you want to make sure your employer doesn't necessarily see? We have these separations of concerns. And there are plenty of legitimate reasons that people expect financial privacy. Perhaps you want to donate to one political cause versus another. We can't really look at if you're not doing anything wrong, then you don't need privacy. It really is privacy from whom in what context. And that context is changing all the time. So what might be fine for you today might not necessarily be fine for you tomorrow and might definitely not be fine for a vulnerable population that struggles to be financially included day to day anyway. So that conversation is very much sort of like the Bitcoin argument, right? It's the most popular one. It doesn't necessarily have to be Bitcoin, though.

And I'm not saying anything good or bad about Bitcoin. I'm not a Bitcoin maximalist, but I'm also not anti-Bitcoin. I'm just a person who knows things. That's where you're here. I mean, that's why I want to get into it. But there's certainly something to be said for a version of digital cash where right now we go to an ATM. You take out money that you have. You can do something with that cash.

And then if you don't use all the cash, you can deposit it back into. the ATM. What happened with that cash in the interim? Banks have collectively decided, as long as you're not depositing more than X amount and X days according to X client customer profile, you're fine. We'll take your dollars back. In an entirely cashless ecosystem, every transaction, no matter how small, would be on that grid. There's simply not a, there's not an escape hatch where you can take something out. And a publicly accessible cryptocurrency does provide that. It could be more seamlessly integrated into the banking system where you have certain digital wallets that you open at a bank, just like a debit card. There's no reason that those

kind of hybrid solutions can't be explored other than current land grabs around market share and conversations with regulators about what is or is not acceptable. So you're on the board of the Zcash Foundation. It's obviously, it sits around Bitcoin in the way that cryptocurrency sends it around. Zcash was originally a fork of the Bitcoin project with additional cryptographic privacy added to, I guess. So just in that role, how do you think about the ecosystem and what Zcash is trying to do? They really are keeping this idea of a technically pure privacy solution to digital cash as their North Star. There's certainly people who can flame each other on Twitter about whether or not that goal is being

achieved. Most of the transactions in the Zcash network are just as public as Bitcoin ones. for people who don't participate or play with Bitcoin, they might not realize that it's actually not as private as maybe the news has made it out to be. It's sued anonymous. So as long as you keep some information private, then it's hard to trace back to you. But actually, a public ledger, a public blockchain is completely visible to anyone. You could, for example, a couple years ago when the NHS was hacked and there was this ransomware attack where all of their files were encrypted and they say pay us Bitcoin and we'll unlock it, you know, the address to deposit that Bitcoin, it's in the malware, you could look at it,

you could go to your favorite blockchain explorer, put in the address, and watch funds flowing into that wallet. And then you can trace those funds after that. There's ways to kind of split and obfuscate that trail over time, but really those are tainted funds forever in some ways. And so the Zcash project is kind of working on making sure that some of the, that the Privacy isn't simply at that networking layer and at the we can all have unbounded number of keys layer. Sorry, I don't want to get too technical here.

Go for it. But rather that there... Every time you say something I don't understand, I get to ask you what it means. It's great. This works out perfectly. But they actually generate what are called zero knowledge proofs as you go. And like I mentioned before, that's a way for two people who don't trust each other to prove something without actually exposing what the inputs to the question. A simple example of where that might be used.

in regular life would be, let's say that you had five people in a room and they all wanted to figure out if they were being paid the same for the same job. How would you solve that right now? You'd probably find a person and everybody would tell them what's your salary and then that person would say, okay, it was you. But without disclosing what all the numbers were. So you can construct zero knowledge proofs to do that essentially in a black box way so that you can solve that problem without having to have that intermediary. It's about being able to remove unnecessary kind of central actors and achieve something technically that we couldn't do before. So I want to bring that all the way back around to like the first thing you said, which is the first group of people, the cypher punks, the people who brought about the technology, they had not only like a technical problem they were trying to solve, but a massive social problem. There was a philosophy behind it.

And what you're describing is we should be able to put a bunch of salary information to a black box and get it out without. figure out who disclosed what to whom. That's never before been possible, and now it's mathematically possible. Do you spend a lot of time thinking about, well, should math enable us to do things that human beings themselves could not do in that way? Well, fundamentally early on, the challenge that – or one of the things that was so amazing about the early cypherpunk work is the advocacy for strong encryption and the work there. And we all use strong encryption every day. We probably don't know it, but every time you visit – a website that's using SSL or TLS now, you get the little lock in your URL bar.

This is part of the PKI, the public kind of key system that the Internet is really built around. And it's just we take this for granted that there's an ability for us to transact securely and to end on the Internet. And it simply didn't need to be that way. In fact, those initial algorithms that allow you to do this. And what's in layman's terms, I will try. In layman's terms, what's interesting about strong encryption is that you can publish the entire algorithm without it becoming weaker for having done so. There's no golden key or secret bit of information that has to be kept in a vault that someone controls in order to have the algorithm be secure.

And this is actually really important. It becomes important, for example, when after the San Bernardino shooting, when Apple had an iPhone was used and the FBI went to Apple. said, can you open this phone for us? And they simply said, no. We just simply cannot do that. There's no backdoor to this encryption. We can't do that for you. And so you'll see it again arise in Congress. The question, should we have strong encryption? Should it exist? Well, it does exist. And if we collectively as a society decide that we want to only use backdoor to encryption, then other people will simply use the strong encryption, right? And now we are using something that's intentionally hamstringed and it becomes a security threat, a national

security threat, essentially, to our financial systems, our internet, our daily banking, everything else we do. And so that advocacy early on was very important. But where we're at now has gone much farther than that to say our privacy, our daily privacy of our goings about simply cannot be separated from our digital lives. There's no such thing as IRL anymore. IRL is digital. We are all online all of the time. If the verge has a thesis statement, it's that. Yeah. So, the internet is IRL is life.

You know, I am from the internet. And so as privacy becomes something that you simply cannot divorce from your digital privacy, we need to have tools that allow us to maintain our agency and our simple human dignity. So that brings back to something you mentioned earlier, which is right now it's very complicated. installing many of these apps and services is very difficult. It's hard to even quite understand which ones you should participate in, right? Apart from Bitcoin and potentially Ethereum, none of them have really reached that network effects scaling moment where they're valuable to everyone, not just sort of early adopters.

What is the inflection point, do you think? When does it become a consumer? And I realize that you said it's not important to you, like it's a SQL database. But at some point, SQL databases took over the world and now I can point to them everywhere. I can't quite do that with blockchain yet. Well, one of the, I mean, the main project that I'm working on at Clover is about infrastructure, orchestration and coordination, and eventually user discovery of apps that are out there in a decentralized, non-cureated by Apple in the Apple store kind of way. But early on, that looks a lot like also great developer tools and developer enablement. So we kind of have to walk before we run there.

But I think that for every app in the retail space or the regular user space where we sign up for some service because it says they're going to give you your astrology chart or they're going to let you blog or they're going to tell you where the restaurants are in your neighborhood, there is probably a very motivated group of college kids trying to get a Y combinator grant to solve that problem in a decentralized way. It was very frustrating over the last couple years to have that suddenly mean ICO and token rather than thinking about, you know, what would this just mean as a self-hosted application, something that I could run. For folks that don't necessarily code or deal with infrastructure themselves, that probably is a meaningless phrase to them. But to go back to the like, let's stick a floppy in a computer model, the reason, one of the reasons that we all wanted to move that to the cloud was that you wanted to access your document from a number of different machines. maybe your phone, maybe your work computer, maybe your home computer. And so you need what's called a server to sit in the middle and serve out that data. And it's much, much more efficient to aggregate all those servers into one place, to virtualize them, slice them, dice them.

Now we're moving into a serverless model where you don't even know where the heck, it's getting crazy out there. I mean, it's a challenge for new developers that come into the space. You don't even, you don't need to understand kind of the technical stack the way it used to be because you never see these things isolated. It's just a connection of services that you glue together into some sort of application. But for regular people, what you wanted to do was run the app. I wanted to run QuickBooks or, you know, whatever.

So there should be a way to decouple the infrastructure and the piece of where does this thing sit and how does it run and how do I access this from what you wanted to do, the app usage and the content creation and the data that it's storing. So I think there's an entire, and this goes into what people would call D-Web or decentralized web kind of projects, there's an entire bunch of folks that are looking at how can we create new types of self-hosted applications where you simply don't have those other intermediaries, but they can connect to each other, swap data, share information, just like you did have a central coordinator. In order to do that, you need to be able to make running that infrastructure as seamless as if somebody else was doing it.

And that's one of the things I'm working on. So thank you for talking about Clover. I was trying to get you there. That was a small plug, I guess. So you're talking about Clover, which is your startup, which builds tools for developers. So if I was a college kid trying to get a Ycombinator grant, and I was like, I'm going to do Instagram on the blockchain. How would I go about building a service that didn't require me to have some massive cloud data center using your tools or somebody else's? You don't necessarily need a blockchain again.

But the problem that you're trying to solve is you want. That would be my winning white combinator. That is. You need to put it. No, no, no, no. You need to put it on there. It also needs to have an AI curated algorithm. And, right, it's a cognitive network for photo sharing.

Neuro Instagram on the blockchain. Oh. See? I think VC money just came out of the sky. I'm rich. So what you'd probably want to do is create a peer-to-peer communications system where you can transmit things between people and you'd need to create privacy groups and all these other things. Maybe in that instance, if you were using some kind of.

kind of blockchain. What you need to do is you'd be logging events of who's allowed to do what as those permissions change. You know, you're my friend today. You're not my friend tomorrow. These kinds of events. But what you ultimately, where you need to get to is that people can come and use your application without knowing that all of that stuff is going on underneath. If it's not a 10x better experience than the current app, people aren't going to pick it up. They're not going to pick it up because isn't this exciting. Instagram on the blockchain, like what do I get for that? As of yet, it's pretty unclear unless we're talking about things like censorship-resistant communication. And there are already applications like,

say, Mastodon, which is Twitter but federated. And federated and distributed and decentralized are actually slightly different terms here. But there's a big difference between a peer-to-peer network where everybody can connect to everybody and networks where you have kind of relay operations, where one thing is kind of passed off to others and to others. And it's one thing to say you want to build Instagram on the blockchain. It's another thing to say you want a way to privately share photos with people to build, say, Snapchat on the blockchain. That is a much more difficult problem. So step one, it just sounds like getting everybody onto the service with an account, making sure they are who they say they are, is like just the first hardest problem?

It actually is, yes. There's a lot of work happening in what's called the decentralized identity space where people would like to create a world where you could have this wallet that sits on your phone that has a bunch of pieces of information about you. So maybe your diploma actually cryptographically signed by your university. Even if your university goes out of business, you could forever prove that you went there on that day. So preventing diploma fraud. Great. Maybe you have your LinkedIn is actually really into it. You know, that you could put your Uber driver or rider score on this thing. Maybe something. from your Tinder profile, who knows,

but that you have all these bits and pieces of information that at any given time you need to disclose some bits to some people. And right now, we don't really have a coordinated way to do that. What's really hard about that is to draw the line and say, what is it that identifies me? Right now we probably use an email address, which is an awful way to identify an individual human, or maybe a phone number simply because they're harder to get,

and they're generally tied to a hardware device. But really your phone could be taken or compromised. And so solving the, when you truly need it to be one person to one account, it's kind of a problem at a fundamental opposition to making sure that anybody can use this thing. And because in anybody can use its system, anybody can grab an account, anybody can grab a key. You get tons of sock puppets and trolls and that's, you know, it's Twitter today, right? But that's actually a feature of the system in something like Bitcoin is the anonymous access. It means you can have any number of keys and they're not necessarily all tied to an individual human. So it's kind of like these things are kind of at odds in a way when you create decentralized applications.

And being able to create a system where you can recover a key without having somebody else just hold it for you somewhere is truly difficult. But people are really working on it, and I think that we'll see a lot of hybrid, quote unquote, good enough solutions, which for Instagram, decentralized Instagram would be great. For voting in a U.S. election, awful. But we need to recognize that those are two different types of problems, and a technical solution that works for one might not be good enough for the other. Support for this show comes from Shopify. Every thriving, successful business has to start somewhere. A good place to start is a relatively simple question. What if, given the right tools, I've really put my all into this.

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And instead of getting buried in resumes, you get a focused shortlist that actually moves your hiring forward. Join the 2.7 million small businesses using LinkedIn to hire. Get started by posting your job for free at LinkedIn.com slash track. Terms and conditions apply. So you talked a lot about the benefits of sort of moving all the servers in place, centralizing them. It seems like, okay, if we decentralize, we're going to do a lot more processing down on our devices. We might have some people doing proof of work elsewhere in the network. That is a resource problem, like a thing that I hear about blockchain all.

the time, which I don't quite know how to evaluate, is, hey, this is sucking up a lot of power, like literally just a lot of electricity is being used to run these applications. Do you think that's something that I'm very interested in decentralization? I would love to not give all my data to Facebook and Google, but if the cost is, this is actually incredibly inefficient, I might reevaluate that position. How should I be thinking about that? It is a good question. If you're looking at something like data storage and computation and just running servers and is it better to have, you know, something running an Amazon EC2 or should I be running my own servers? There's a number of reasons why it makes sense right now and people do that

in major clouds. There's not a huge difference between running it in your own private account because what your private account is or a virtual private server is probably just a virtualized bit of one of those larger pieces. So that's fine. And running a decentralized web shouldn't necessarily be less efficient than now. What you're talking about is more, if we're working in a system where to create digital scarcity, we need to be solving these math problems that create proof of work. Is that a good use of our time and resources? And that's a question that, you know, the community grapples with because on the one hand, well, we spend a lot of electricity in society doing things that are maybe not fundamentally useful as it is. So, you know, any industry is

guilty of that. The billboards in Times Square are guilty of that. But it really comes to what is the value for what we're spending. Right now, yeah, I think we're consuming more than, you know, Greenland or Denmark or something, you know, or put together these days to kind of keep the Bitcoin network secure. And people simply ask for the value that we're getting out of that network based on the current amount of transactions and the current, you know, it's mostly speculative investment activity. Is that a good use of that energy? If it was securing a much, you know, a much larger sort of financial system, maybe it would be a proper value tradeoff. Just for me, I don't know much. How would I evaluate that? How do I read those headlines

and know how to think about them? Well, I guess one thing to know, I would be remiss not to mention, is that there is a lot of research into what alternatives would be to that sort of electrical hogging or electricity hogging sort of system. As of yet, none of the alternatives seem to get us the same kind of security and other kind of liveliness and other guarantees of these sorts of systems that people need to say it's as good as what we're using now. But over the next couple years, you might see that change. One thing to note from the enterprise space, though, is when you talk about big businesses using this stuff, they are operating under a slightly different trust model. They know who the other participants in the network are. In fact, they might K-Y-C-them,

you know, know your customer. They might not. need to completely whitelist and onboard all of their friends. And they want to operate within their own little trust bubble, but as we mentioned earlier, across that trust boundary to someone else's trust bubble. And simply by knowing who owns one of those other organizations, you can completely change the trust assumptions and what sorts of consensus algorithms, which is where you're getting proof of work needing to burn energy, you don't necessarily need to do that anymore. So large-scale production enterprise-grade-type systems in the future are very unlikely to operate on proof of work.

And that's because they have recourse to the government. You brought up KYC. You can just go make the government use force to operate some law for you because you don't need to do the other thing. If you see someone spamming the network, you call them up and you say stop spamming the network or you cut them off. And the reason that they want to participate in that network is access to that liquidity, that asset, that whatever that's happening. in that network. So you have less of an instance of bad actors. But it's really an ongoing discussion of what the tradeoffs are because you don't want to trust too much. So there's a lot of, there's several different kind of algorithms that these enterprises are using. They're different

than the ones in the public space, but they're just as experimental, whether you have a kind of a single leader that broadcasts transactions and that leader changes over time by, you know, only when the leader disappears, or do we all elect new leaders every couple weeks, every 10 seconds, you know, or, you know, the, before we get into Facebook and all of that. You're headed there. I'm excited for it. I was going there. But no, the consensus algorithms that they're looking at are different as well.

And it's really cool time to be a researcher who has worked in distributed systems or applied cryptography for the last, you know, 20 years because all of a sudden this stuff is super relevant and you're probably getting paid super much more than you were before. But it's a really interesting time to be able to be experimental. So let's actually talk about Facebook for a minute. They did Libra. It has a complicated governance model, which is it seems to be just a feature of the ecosystem. It seems like people are quitting the Libra Foundation. I think PayPal just left, Visa and MasterCard, potentially out. Why do you, I mean, it just seemed to me, again, as somebody who doesn't know very much.

But just from the outside, it seems like Bitcoin, Ethereum, the universe of blockchain financial systems, there is an ethos there. We've been talking about it the whole time. There's an ethos here that says we don't want big companies to have this much control. Facebook is obviously a big company. It is the avatar of maybe too much control in our society. And it seems like they came out. They didn't realize they were fighting against that current and now they're being crushed. Technically, is that a good idea, Libra and how it was built?

Is it a good idea run by the wrong company, or is it just the wrong company expressing itself in a zone where it has no business? From the company's perspective, I'm sure it was a good idea. I mean, they're in a position of owning many different properties, whether we talk about WhatsApp and Instagram and Facebook collectively, but also their entire app ecosystem and wanting to facilitate payments in that ecosystem. I'm not entirely convinced that they needed to have what was considered a coin to do it. the banking industry has been concerned about not just PayPal, but like social graph type networks creating a currency type or payments type systems for, you know, 10 years. Because when payments and transactions are kept private, see it is, it really comes down to this data privacy, right, but private within the Facebook ecosystem, then that's, they have

all of the payment data tied now to also social graph data, which you. is extremely valuable kind of primary information. And then the ultimate payments processor become kind of dumb commoditized systems that perform higher level settlements. And that's, you know, so banks probably didn't think that was a great idea either. Governments got a little upset because they're like, hey, don't we make the money? You know, previously when there have certainly been projects from banks to attempt to either tokenize existing currencies, whether that's the dollar or Singapore did something.

interesting experiments kind of all over the world. There's a very close relationship between banks, regulators, and governments, government, you know, Office of the Comptroller of Currency type agencies, where they're working on designing these solutions collectively. Because of that, they're very slow moving. But whatever emerges from that is in some way kind of, okay, we all agreed that we'll work on this together. In the other hand, when you get something from a private entity

that suddenly says, hey, we did this, move, fast, break things. then you get all of those larger organizations all kind of riled up. So what happened really is, you know, and then out in the cryptocurrency community where people said we wanted this to be private and anonymous, et cetera, et cetera, it doesn't really deliver on that. So I think they kind of just got stuck in the middle of pissing off people on both sides. Yeah. I mean, that's like a Facebook special.

Yeah. But, you know, like the United States government doesn't get mad at Microsoft for having, like, Xbox Live bucks or whatever in-world current. see the Xbox uses. I mean, there are problems that solves, right? Like, okay, we don't want to do currency conversions if you buy something from, you know, in every country that we serve, but it just seems like Facebook scale leads it to a set of problems. Did you buy the argument that it was not actually a cryptocurrency? This is something that I heard a lot about. That just gets into how you define specifically what a cryptocurrency is and a specific number of very nitpicky kind of tweak.

So I think that their goal was to have it be publicly available outside of just the Facebook ecosystem to kind of the point earlier about being able to take money out of your ATM, use it, and then put it back in. They were trying to do that. And in doing so, that makes it seem a lot more like a public cryptocurrency. I think some of the concerns are about whether or not anyone can validate the network, anyone can participate in the network. but simply being able to take their coin out and then use it elsewhere and then bring it back is definitely a cut above what would be considered a completely private ecosystem. That said, what that means also is that they're creating kind of this multi-tiered system where you've got how it's functioning as a coin internal to the network,

whatever the heck kind of gray market is going on outside of that, and then how you're able to mix the exchanges, the regulators, and the auditors and kind of data science companies that sit on top of saying all of this stuff looks okay to us. It's not crime, et cetera, how all of that works. So they've been very creative in designing that interplay so that it might have been functional. But we really, it's just too early, it's really just too early to tell what's going to happen. So I want to end by talking about a book that right before we started taping, we were talking about,

which is the age of surveillance capitalism. Shoshana Zewoff was on the show ages ago. It seems like a lot of this cuts at, hey, surveillance capitalism is great. That book is, as we were laughing about it, the book is very long. It's very complicated. But it resonated. It sold very well. People are very interested in, okay, here's an academic discussion of how money works now.

And it turns out every company is just pumping you for data to do X, Y, and Z things. How might a move to more distributed technology actually undo surveillance capitalism? Is that something that you see actually happening or do you see them operating in parallel? Or do you see the pendulum swinging in some other way? It's hard to say what will truly happen. I think that when you kind of work in this area day-to-day, you have to keep focused on what you hope it could potentially look like because what is likely to happen is still probably not that.

But every little bit counts. I think that it is entirely possible that we could change the way that this kind of data slush, slushy lakes of data all over the place that are just kind of mixing together and you don't know who has what and everybody has 15 copies of everything and it's just way beyond our control. It's too complex. I think there can be some erosion of that. Some of that is regulatory driven, things like GDPR overseas where you should be able to call up and get your data removed, really presuppose that your data is in only one place. But it's a step in the direction of recognizing that people do care about privacy. We're seeing some similar regulations out of California.

And one of the reasons that I continue to work with Enterprise, not just on these like cool, fun, you know, hacker public applications, is that any changes that Enterprise adopt happen at scale very, very quickly. And so it's not just about regular individuals realizing, oops, I have a privacy problem, but actually businesses have huge privacy problems. And the data slush is kind of coming for them. And, you know, they've been pushed over the last several years to create data lakes internally themselves. But they're realizing now that... I'm sorry, what's a data lake? Oh, where you, you know, you had many databases, but really you want to just one big database so that you can operate on all your data at once. Because in order to run a credible kind of machine learning

program, or a data science program, or if you want to call it an AI program, you need to have tons and tons of data. And so the paradigm for the last decade has been just give us more data, More data, more fuzzy data, it doesn't matter. We'll figure out what it means later. Collect more from the customer now. We'll store it. It might be useful later. But that's turning out to create technical risk and legal risk now,

in that when your data gets breached, it's a public relations nightmare. It's a legal problem. You don't necessarily want to have all of that data now. We're going back to a principle of least authority kind of model, where you should really only take from your customer the minimum. amount of data that you need from them. But you still want to train your data science program. You want to train your ML. How are you going to do that? Well, you can access data that is not necessarily owned by you. So the ability to do things collaboratively and derive business

insights like you had it in one place, which is actually 15 places because all 15 of your competitors are doing the same thing. The ability to do that, it can be quite transformational. I think those large companies are realizing that even with all the data lake that they've got, it doesn't matter because Google has a data ocean and it's hard to even compete in your own industry. And so that it's kind of just moving up the food chain, the problem of data aggregation and this loss of agency. And so we see businesses, large companies, big enterprises saying, how can I take back my agency? How can I keep this private to us? This data is very valuable, but it's part of our business.

But the data itself isn't just valuable. It's how we see the data, how we decide to use it and what comes out of it. from our projects. And so the data itself can kind of become that commodity. And that really could look very, very different for consumers because it will come, it's not going to be a trickle-down magnanimous solution, but you'll have businesses creating their sorts of solutions and consumer applications that can treat their data differently.

They're really kind of two different fronts. I don't know which will move ahead of the other. but we don't simply need some sort of data proletariat revolution in order to have our data treated differently. Data proletariat revolution would be an excellent name for a band. So that's just the first thing. Yeah, we're playing on Saturday. Great. But that seems really hard.

As an individual consumer, it seems hard for me to make decisions that push the market in that direction. How do you maintain your own personal agency while you wait for, I don't know, the giants to sort it out? Well, you can do simple things to manage your own kind of operational security as we would consider it. So use a password manager is always something to recommend to people, so you're not using the same password on many sites. It's more of a security recommendation, but I'd just like to put the plug in there. I think it's Infosec Awareness Month, so that was my plug for that. But you can pay more attention. I think a couple weeks ago when that app came out, they let everybody age their face.

And then all of a sudden there was an outcry that, oh, this is a Chinese published application. They're slurping all of our pictures. And so you're just training their data science model overseas. And people got really concerned and upset about it. But that happens all the time. Like, TikTok is also from a Chinese company. And telegram is from a Russian company. And, you know, which isn't to sound political necessarily.

But when we talk about these strong encryption guarantees, they are different around the world. And the requirements to be a tech company operating. in different jurisdictions around the world is different. But it hasn't seemed to necessarily made a difference here because we still just give away our data if you tell me what Buffy the Vampire Slayer character I'm most like. You can just take all my Facebook data. I'll do your quiz.

So simply thinking twice before participating in whatever the latest viral trend is is probably the easiest thing that people can do. And then realizing that once it's out there, it's out there. There is no such thing as a delete this message on someone else. device button, except for maybe I think Signal might have done something close to that, but they're an outlier. There's a TikTok Terms of Service scandal today.

Oh, really? Like minutes before we walked into this room. I didn't even hear about it yet. They're using people's videos and ads for TikTok on Snapchat, which is a very 2019 creator drama moment. But it's, I mean, I, again, my position as terms of service agreement should be legal because you can't negotiate them. And that's what, when we have this conversation, that's the thing I just keep coming back to, which is if I have more control over my data and I can revoke it from you, not just legally, but technologically, that actually makes me feel like I have a sense of agency. And I just, I've yet to feel that from any service that I use. And if that's where we're going, then maybe the market signal I can put in the world is I will pick that service over something else. But those services yet don't seem to exist for me.

I would love to have more people push for open data initiatives, the ability to take your data from one place and plug it into somewhere else. And simply being able to take what I've given to, say, I don't know, Twitter over the 12 years I've been on the platform or something now, and move it over somewhere else. You simply can't do that right now. And it's actually become against the terms of service to data scrape your own feed to take something with you. And I don't mean just on Twitter, but I mean any of these services that you use. There are very kind of bespoke slow ways to go about getting your own data out of one of these systems. And they're considered against terms of service. They're illegal to take what you gave them back.

So pushing for open data initiatives where I should be able to port just like I can port my phone number from one carrier to another would create more competition and choice in these marketplaces. And maybe at first, it's simply from one centralized provider to the next cool one. But maybe that means when we do have interesting decentralized alternatives, people can transition more easily. Okay. Last few minutes. I need to give you this moment. Tell them about Clover.

What does it do? Why should they use it? Do it. Get in there. You've been trying not. I've been asking you in subtle ways this all time. So now I'm just coming at you head on. So at Clover, we were working on infrastructure coordination and orchestration,

which doesn't mean a whole lot if you're. outside of that community. Developers listen to the show. There's a lot of really interesting trends happening in modern computing now and in the developer experience. But things are coming together in a way where we can build more things that run locally in a browser, that it feels like an application that is a SaaS app or something that was on your own computer.

So we can do cool things. Some of the innovation that we're working on is letting you do really cool things like create and run your own sorts of sites and apps in a way where it's actually private to you and we're not in the middle of it. I know that sounds counterintuitive because, you know, I don't have your data. It's actually a feature, not a bug. But it's very, very hard to develop something where you can help people have the feeling of this centralized SaaS sort of, I just signed into Medium to write my blog kind of a thing.

It should be just that one-click easy for them to launch a blog that is a self-hosting. and able to be used privately and where you own all of that data. Right now, what people want to do is create blockchain notes, connect to blockchain networks, and build blockchain applications. And that's great. I think that we'll see a lot of innovation in those sorts of applications trying to tackle those problems, but there's a huge spectrum from developer enablement to regular person enablement.

And so right now, it's a lot of developer tooling to make. make modern processes, you want to call that DevOps, you want to call that personal serverless. There's a bunch of buzzwords we could throw in there. But to make that work for people that want to solve problems in decentralized ways that users can then access. If you're a huge, huge business and you've got a blockchain pilot and you actually need to make it run, we can do that too. That's great. Well, Amber Waldai, thank you so much for coming and explaining to me who's not very smart about this stuff, how it actually works. I'm very excited to learn more.

Thank you. I'll be back soon. Thanks. All right, my thanks to Amber Baldet for joining us. That was an incredible conversation. We've got another incredible conversation coming up this week on Thursday in San Francisco at Mozilla's Glassroom. Dieter Bohn and Ashley Carmonauty will be interviewing Instagram's head of product, Robbie Stein, and the product manager of the Google Pixel camera, Isaac Reynolds, together on stage.

That'll come out on Friday. I am super excited about this conversation. As you know, the idea that cameras impact what we share and the platforms that we share on impact the cameras, is something that's very central to what we've been talking on the verge cast. I could not be more excited. Both these folks have agreed to have that conversation with us. That's live on Thursday in San Francisco. Thank you to everybody who's signed up to come out to that event.

I'm super excited about it. We're going to do more live verge casts in the future. I promise you. You can tweet at me on at Reckless. I love hearing your suggestions. I love hearing your feedback on the show. It is tremendously valuable. We'll see you on Friday.