Zcash’s Coinbase Moment Is Here | ZODL CEO, Josh Swihart

Añadido: 2026-06-02

[00:00:00]as a society, if we don't have privacy or private money on the web, we'll in we'll enter dystopia. I think uh biology said it very succinctly uh somewhere else. It's it's Zcash or it's communism.

[00:00:14]Uh I believe that same thing. And so if crypto is really going to be used as money on the internet as internet money, uh we have to have privacy for agency to be who we truly are for security um and even for censorship resistance. You can't have censorship resistance without um without privacy >> bankless nation. I'm joined by Josh Swehart. He is the founder and CEO of the Zcash Open Development Lab, otherwise called Zodel, which is the new home for what used to be the core engineering product team at the Electric Coin Company, which is kind of like the uh Ethereum Foundation for Zcash, uh where he was previously CEO. Josh, welcome to Bankless.

[00:00:55]>> Thank you for having me on. Josh, why work on Zcash? What motivates you?

[00:01:01]>> I found Zcash in 2016. Um, I was looking for a privacy solution. Zcash hadn't launched yet. And so, somebody else in the crypto ecosystem had said, "I need to check out this project." Um, that this uh that was launching later that year. Um, I had years before I had actually uh built uh systems that did data tracking um situation awareness in the adtech and had um a pretty deep understanding of uh what it meant to have public data exposed. So, I had built uh an intelligence system uh a long time ago using um satellite imagery, aerial imagery, UAV imagery, extracting data, metadata from that, being able to kind of get a good understanding of what might be happening on the ground. Um and uh the architect of that and I um started working on another project and this was all kind of pre-Cambridge Analytica aggregating data being able to do get a deep understanding of people who they were who their kids were where they lived how much disposable income did they have were they good at their job and we could get a high degree of probability about um people based upon what they were willingly posting online.

[00:02:15]So when I found crypto uh when I actually went down the the rabbit hole actually with Ethereum, not Bitcoin initially um in the Ethereum Dow um but I had a need um a friend had a need overseas. I need to be able to send money to them uh and I had been shut down by Western Union. and they were unbanked um based in India and I knew I couldn't use or I felt like I couldn't use Bitcoin because it wasn't private and I was concerned about um someone being able to use that information to be able to dox the person or dox me. Um and so I went looking I was like well crypto should solve this.

[00:02:53]I went looking for a privacy solution.

[00:02:56]uh kind of got involved with the Zcash community in 16 uh formerly joined full-time uh in the community in 18.

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[00:03:54]Five weeks, three tiers. Whoever earns the best percentage return in each tier wins the biggest cut. Pick from 260 Ono tokenized stocks, funds, and commodities to swap inside MetaMask and let your portfolio do the talking. If you think you can outrade everyone else, this is your chance to prove it from now until June 18th. Click the link in the description below and opt in on MetaMask Mobile. Trade RWAS on mobile or desktop to compete. Not investment advice. And uh what about just the current moment 2026 we have AI uh people we have people chronically online. Why does Zcash uh stand out in that environment? What does Zcash mean for you in the modern times since you've been with Zcash for almost a decade now?

[00:04:35]>> Yeah, I've been with Zcash around the ecosystem at least for a decade full-time for more more than eight years. Um so this you know this for me became my life's work. So I was the CEO of another company. uh an owner in the company um since sold it and decided this is what I need to work on uh full-time because as a society if we don't have privacy or private money on the web um we'll we'll enter dystopia.

[00:05:05]Um I think uh biology said it very succinctly uh somewhere else it's it's zash it's communism. Uh I believe that same thing where like we have an expectation of privacy or some level of privacy on the internet today. So I can choose to disclose information and it's my choice as to what I disclose. But if I want to make a purchase, I have an expectation that that interaction between that vendor is encrypted. So I'm choosing to disclose some information with that vendor, but I'm not choosing to disclose my credit card information or that purchase with my neighbor or anybody else that may be snooping on the internet. And so if crypto is really going to be used as money on the internet as internet money, uh we have to have privacy for agency to be tr who we truly are for security. Um and even for censorship resistance, you can't have censorship resistance without uh without privacy. So I think this is uh existential. I think this is not a crypto thing. I think this is a world um I I think it's important for the world and I think Zcash is world changing and I think it's best in class and it's the best chance that we have for humanity to kind of realize that kind of freedom online. If you just go back to 2016 when you started with Zcasher or just went down the crypto rabbit hole originally.

[00:06:26]Privacy was said a lot more back then than it was in maybe the 2020 through 2025 era. you know, privacy is making a comeback, especially with the context of AI, but I I think if if you asked me uh when I first got into crypto in 2017, not terribly long after you, uh, and you asked me what crypto would be like in 2025 and beyond, I would have said, "Oh, there would be a ton of privacy." And I look at crypto now and it's kind of the opposite. Uh, we just did an episode with Ari Redboard from TRM Labs. It's kind of like edge analysis. uh and he talked about how the uh FBI, CIA, OFAC, these uh intelligence agencies are actually kind of into the idea of society moving on chain because it makes their job easier. And you know, one one half of me is like, "Oh, great. Like another another force to push everyone on crypto. That's great." The other half of me is very scared that if these controlling agencies are happy for finance to move on chain because they get to trace it more that makes me just wonder is like wow what as an industry what have we been do what have we been doing and so that's kind of my like speedrun from 2017 to now is like did you did you going into crypto way back when kind of have similar expectations?

[00:07:46]>> I just fundamentally knew it wasn't private. I think people talked about privacy. I think there was a lot of laring. There probably still is a lot of laring. But um you know the intention with Bitcoin is private. It all came out of you know it came out of the initial crypto wars where we were fighting for online privacy well ahead of cryptocurrency. Um if we grew up in this like I grew up in a world uh that did not have uh the internet. I mean we had chat boards. BBS ran a bone board system. Um, we could be anonymous or pseudo anonymous in those places, you know, but all of our kind of interactions happened in in real space, human to human. Um, if I wanted to get a a new album, I'd have to go to the um to the CD store, you know, and buy buy a new album. So, when we we put everything online, we digitized everything. Then all of a sudden that information is like longtail set of information is available.

[00:08:43]the permanence of permanency of it like it never goes away. It get cap it gets captured on the internet gets captured on the web and like we hadn't adjusted our completely adjusted our thinking that we are now like permanently exposing a whole set of activities and who we are um to a world where we don't know we don't know who's watching. Now, there was this fight for privacy from the cipher punks and famously we won that war. Um, but we won that war on kind of communication transactions between with intermediaries and I think we're back to the same thing. Um, this is just part two of something that's been going on for for decades. And so it's a it's a vision that's not realized and for the internet to really work. Um we're we're gonna have to have this Yeah, we're gonna have to have this capability. And I knew it like I knew it in 2016. I knew it before I saw cryptocurrency or got engaged with cryptocurrency. Um but with crypto, it became clear like we're going to have to have privacy for this to work at all if it's not just going to be like a financial asset that sits on somebody's balance sheet. Crypto's been fighting a bunch of wars. Um, we're especially with a vote the the Senate Banking vote of Clarity Act. It's like bundled up a bunch of fights that we've been trying to fight. There's the stable coin yield fight. There's the fight for developer protections. There's securities versus commodities. Uh, the the crypto fighting, the the political fight is like well underway. Privacy is just not included in these modern conversations when it comes to crypto and politics in Capitol Hill. really the only fight for privacy that I see is uh Roman Storm and the the Samurai wallet guys and far more mixed results uh versus anything else versus like stable coin or developer protections. Uh do you think the fight for privacy if we're crypto is ahead of us or are we in the middle of it or what do you think happens in the short or medium-term future when it comes to crypto the industry fighting for privacy in Washington? I do think we're in the middle of it. I like I've been engaging with with policy makers and regulators and law enforcement in Washington DC for as long as I've been working on this project. Um, so while not everybody recognized it, like famously I like I won't tell you which agency they were with, but somebody from one of the agencies told me like we look we recognize this is a national a massive national security problem. If all of our citizens data is exposed to foreign adversaries for everybody for for them to see for all time, we just don't intend for crypto to go mainstream.

[00:11:18]Prior administration, prior years, recognition that the problem was there.

[00:11:23]Um, but they intended to kill crypto, you know, full stop. We saw it. We saw it. I had conversations with uh DOJ and DOJ years back had said like they had used kind of the same talking points like aren't you concerned that it will be used for terrorist financing, money laundering and child porn, right?

[00:11:44]Um and they said wouldn't it be better if we had keys and we had access to all the transactions and we could keep everybody safe. Um what happens when you have an expectation of safety but somebody has those keys and those keys get hacked, right? it completely breaks down. All that information gets exposed.

[00:11:59]There's not a government system that has ever been invented that has not been hacked. Um, it's super dangerous. So, my question back to the DOJ is, don't you have other tools for catching bad guys, or do you need just this one? Do you need to run over the top of somebody's Fourth Amendment right to be able to transact freely with unlawful without unlawful search and seizure? They said, "Of course we do. Like, we're super smart. We know how to catch bad guys without having to trace all the transactions." So, they knew that back then. They still do it that way. And again, that was like close to a decade ago. Um I had the conversation with the prior administration's White House. Um that was another one. They knew very clearly that this was a security problem, but they wanted a solution where they had visibility because they were the good guys. Um and they would never do anything evil with any of the information that they would see. Um so I think within the within the inside of Washington DC, it's been known to be a problem.

[00:12:54]Um there's been kind of conflicting views very like Fininsson for the longest time um was actually uh like pretty positive where uh when Mike Moer who's the former acting director of Fenson was like pulling in projects to give briefings to Fenson on how like zero knowledge cryptography works. um recognizing that there's a problem with uh how they handle SARS that they can't even manage that data effectively um and looking for novel kinds of solutions and and promoting privacy. So now we have like Michael who's very uh you know outside offense and very a active and an advocate for for privacy.

[00:13:38]the folks like Michelle Corver who's former DOJ prosecutor um prosecuting financial crimes now working with A16Z very um very supportive and very pro privacy um so yeah there there there have been some of these things going on for a long time and yeah for a long time is actually you know under the private administration is actually pretty terrifying right you you don't know as a developer when like the same people that came after Roman are going to come after you the tornado or samurai um because they're using these arbitrary rules to to um uh to make these arrests and and make these charges in order to try to shut something down uh and you know make it an example of people. So um I don't know. I think it's it's it's it's been ongoing for many years. I don't think it's been visible to much of the crypto ecosystem for many years. Um and it will still be ongoing. Um but there are friends that we have that are um on the hill um as as well as in regulatory agencies that are in support of human liberties and privacy.

[00:14:43]>> Are you optimistic that crypto will be able to retain privacy?

[00:14:48]>> Yeah, I I wouldn't be working on it if I thought it was going to fail. So I fully intend to win.

[00:14:54]Do you think that that will come smoothly or easily or will there be much nashing of teeth, blood, sweat, and tears along the way?

[00:15:02]>> Nothing important comes easily. There's always somebody there's always somebody that is that is uh wanting to take you down that have other interests in mind.

[00:15:11]Whether their interest is surveillance, whether their interest is in control, whether their interest is uh purely money. And um you know, we saw that with with the current clarity act. the banking industry has different incentives than uh than the crypto industry as it relates to stable coins.

[00:15:26]The stable coin yields different issue.

[00:15:28]Um kind of say, you know, everybody's got different incentives, but um but we are we are fighting on on behalf of of humankind. I I we will win. When I had um Mer on the podcast to talk about Zikash, he framed it as we have about a thousand days left before this administration departs and we don't know what administration comes after after that. And so we have a thousand days to lock in privacy, legalize privacy, make sure privacy and crypto can can stay retained. What do you think about that framing? Is that too black and white? Uh is there some urgency to get some political process done while the Trump administration is in office? What do you think about this? you only have so many windows of opportunity in order to make major shifts. And to the extent that we have a window right now, whether that's um 900 days or 1,000 days or or whether it's longer, like I can't tell the future, I just know that we have to get this out into the world and people using it as quickly as possible. It's got to be so big um that it it is impossible to kill. That's one of the awesome things that's happening within Zcash right now is there's more and more developers coming in. And there's more and more uh organizations that are supporting it um that are adding the capability. There's more source code being written. Um and so we we definitely need to be too big to kill and we need to get Zack in the hands of billions of people. Let's talk about uh Zashi. Now Zod, I want to learn a little bit about the history of uh of Zcash. Um Zashi was previously owned by the ECC, the Electrocoin Company. As I said, that was like the Ethereum Foundation, but for for for Zcash.

[00:17:03]Today, Zashi, which has been rebranded to Zotle, is a privatelyowned company.

[00:17:08]You guys recently did a $25 million funding round. You guys raced from Paradigm, A6, A16Z, Winklevoss, the Winkle Boss Twins, Coinbase, some pretty heavy hitters. Um, can we talk about that story? Just the the transition, the history of of Zashi to Zod uh from being part of the ECC to now being a private startup. Um what what do listeners including myself need to know just about about the history of all of that? Uh so we can kind of just be up to speed with Zcash.

[00:17:36]>> Yeah. So the Electriccoin Company, which was always the Zerocoin Electric Coin Company, formerly but originally known as the Zcash company, is the company that that brought Zcash to life activated in in October of 2016.

[00:17:50]Um so again, I joined that team in 2018.

[00:17:53]Um and uh you know it was when it launched it's like a you know it's like any kind of technology the the things were fairly nent. It was very difficult to create a shielded transaction. You needed a a heavy duty laptop and minutes of time to be able to send a single transaction. So there had to be a a number of cryptographic breakthroughs in order to make it performant to get rid of something called trusted setup. um and then uh to just you know kind of distribute um you know governance and um across the ecosystem. So you know like raising a baby and like Ethereum's gone through like different um uh different projects have gone through kind of those teething pains all the way to um to maturity.

[00:18:38]Uh so things had kind of flattened out around 2023. Um and there wasn't a lot of activity. I think people were interested in other things. They weren't really talking about privacy. so much um and the adoption of of Zcash was uh was slow to flat and so uh at that time I left ECC. So I left ECC so I could speak vocally in the community about what I saw the problems being with the governance structure, the things that were holding it back from massive growth. And um and so I did that and uh a few months later then ECC brought me uh brought me in as the as the CEO um and Zuko was out at that point um and onto other things. And so since that time we've done another number of things within the ecosystem to kind of address those issues. We got rid of direct dev funding model so that doesn't exist anymore. where we got rid of the governance structure which was effectively a two of two multi-IG between the Ccash Foundation and ECC.

[00:19:42]um we open sourced some additional code and I think most importantly as it relates to adoption um launched an opinionated wallet um has become the flagship wallet for for Zcash and so that um that was originally Zashi it's now been rebranded to Zotle and what we've seen with that is a massive increase in adoption where the shielded pool growth and the amount of Ze that's that's shielded uh which had been flat to declining was suddenly increasing and on the move we added hardware support later that year it went expon idential.

[00:20:12]We added swap support um in partnership with Nar Intense and it went vertical in terms of in terms of adoption and we saw during those same milestones the chatter increase people start to get more excited. Um, quite frankly, it brought a lot of people back into the Zcash ecosystem that had kind of been dormant or maybe quiet for a while. And then at the same time, things were happening with Bitcoin, right? So, people were starting to question the financialization of Bitcoin um whether Bitcoin had really been captured um by Tradfi and whether it was staying true to its cippher punk ethos and looking for kind of a hedge. I think um Naval put out a tweet in October of of 25 and it said something like Bitcoin is a hedge against the US dollar and Zcash is a hedge against Bitcoin. Uh and we've seen an inflow and a migration of Bitcoiners who are either hedged in um or who have kind of fully made a transition today. There's some people that are more concerned about whether or not Bitcoin can get to postquantum in in time for Qday. Uh, I think that's a valid concern. And um, again, I think Zcash was born out of Bitcoin. So, Zcash was a code fork of Bitcoin plus zero knowledge cryptography that these uh, these scientists had had figured out how to make it work on on top of Bitcoin.

[00:21:34]So, um, it's it's very much a a close relative of of Bitcoin to begin with.

[00:21:41]There's definitely just an aligning of the SARS when Zashi really uh went private got out of the ECC uh started thinking like a for-profit company and then also the timing of uh Zcash kind of being branded as a a hedge of Bitcoin.

[00:21:55]Those happened in pretty close uh timing to each other. Is that correct?

[00:21:58]>> You know, my team ECC historically pretty underfunded so didn't have a lot of resources. Like there's no big ICO or any big event like that. There were no big VCs involved um uh that were able to kind of keep it supported. So, we just been freaking grinding for years and years and years and doing it because this is a belief. The mission is a belief. It's not about cryptocurrency like the broader industry. It's not like maxi like the there's Bitcoin and that's it. It's not like that at all. Um very much believe in a multi-chain world. But this problem there's like nobody else going to solve it. Like if we're not going to solve it, who else is going to solve it? Because there's nobody else.

[00:22:38]And so, um, we've been kind of grinding through that thing. Uh, I got to token last year and network state and and Bali, uh, had me speak and I was I was talking to Bali afterwards and he's like, you know, Zcash is one of the most important projects in the world. Not one of the most important crypto projects of the world, one of the most important projects in the world. like are you wellunded enough to get to the level of growth that we need to get to in order to make this this dent in the universe?

[00:23:09]They said no we're not. Um he said all right let's fix it. So that's when we started working on fixing it um and started this kind of process of talking to third party investors and I was quite frankly surprised. Um I think I think many have been uh kind of realizing with with AI with the things that are going high with Bitcoin we have this kind of existential threat as it relates to cryptocurrency how important um privacy was as a thesis um to these major investors. Now we had to make a change in the middle. there was a little bit of drama um in order to uh to kind of reestablish Ztle like get it get Zashi effectively out of um out of ECC and uh but 100% of the east former ECC team is um is now at Otto and we're continuing to do what we were we just now have the backing of um these kind of players and what what what's really important is when we started when I was talking to B about the cap table I was like you know what it's like really important that we get the right people. It's not about the check. Yeah, the check is important. Um, but we need to build a coalition of people that believe in what we are trying to accomplish, that want to be a part of what we're trying to accomplish and that are in positions of power to to help us do that. Um, to help help us p push boulders that we just can't do alone. Um, so yeah, it was heavy hitters. and and it was people that normally even don't necessarily even invest with one another uh that that have been part of that round. So that's been it's been really encouraging to see the entirety of crypto kind of come behind uh this mission. I I was curious to see if there was going to be some sort of cause and effect of uh Zashi turning into Zotel, going private, thinking like a startup, really becoming product focused and that leading to a Zcash awakening of the narrative of the price of the UX all because of the work that you were doing at Ztle. But hearing your answer now, it seems a little bit more that the universe just decided that it was time. It created the environment uh the need for privacy. People like Naval Abology, you know, others all kind of identified the growing urgency of of privacy at around the same time that you really wanted to uh spin out of ECC and take Zashi wallet. kind of felt like there wasn't any one particular trigger, but just a bunch of disperate factors all kind of came together to just align stars behind a bunch of momentum and energy behind Zcash. Is that right?

[00:25:45]>> Uh no, I don't think I don't believe in accidents. I just I don't believe I I think there was momentum that was building and the momentum really kind of had started a couple years before like we had to deal with governance. We had to deal with some toxicity like every every ecosystem goes through these kind of governance and toxicity stuff. Um, but we had to get that behind us.

[00:26:03]>> Um, we had to fix the user experience.

[00:26:06]The user experience just absolutely just sucked, right? So, if you were going to use Zack, like go fine, go in Coinbase and store it, but you're not actually using Zack and you're not getting any any privacy. And so, to use it on a self-custody wallet, the user experiences were like something like a decade old. It wasn't or or very like crypto native. So we had to build a very simple, easy to use like had a lot of complexity behind Zotle um in order to protect privacy and and make it work well. Like I uh I can't tell you who it was. There's there's another company that is well known for privacy and I was talking to uh the founder of that company and they said, you know what, I think people don't realize that it probably takes two to threex the engineering to build something uh that's not private than to build something that's private. So, not only do we have to build something that's private, we have to make it super super simple and easy to use and make it in such a way that people actually want to use it and they're going to trust um they're going to trust their money with it. And so, uh that that the creation of of Zashi uh Naz and the usability and the capability um I think are really important because then what it did is what what it demonstrated is there was actually product market fit. Um, people wanted to move off of exchanges onto self- custody because you don't get shielded Zcash on an exchange. You don't get shielded Zcash with a synthetic. You don't get shielded Zcash with a custody provider. You have to self custody in order to do it. And to see the size of the shield pool triple, you know, to now billions of dollars of of value being held on people's phones or hardware wallets uh with something like Keystone.

[00:27:44]um high conviction high conviction community that that was there that that was really unlocked as soon as we gave them the tools to unlock it.

[00:27:51]>> Can you share what Zotto's role in Zcash is? You guys are something of a protocol steward. You weren't you weren't the only one, but a lot of the Zcash protocol is is uh at least in some part in Zotle's hands. Can you just shine a light on on what that dynamic is? Yeah, still c protocol developers very deep cryptographic and engineering tops um built and have managed the zcashd the the consensus node that's used most pervasively the zcash foundation has developed a new rustbased mod rust based one called zebrad uh which we all want to move to so we're all going to move to that um over the course of this this next year we're building um the command line wallet that will accompany that called LA so that um is built is being built and and managed currently in alpha uh with with sle um there's light client services that we uh built and support um and then the wallet. So we are really full stack. Um one of the great things about it is it allows us not only to have you know kind of deep understanding of the cryptographic the cryptography and the protocol. Um but to like um suggest or or kind of push for changes that allow for the user experience to improve since we're not like a degree or two of separation away from um users anymore and just focus on the protocol.

[00:29:05]So for example with a with a keystone wallet work it's an airgapped hardware wallet. um it needed something called partially constructed Zcash transactions that needed to be implemented in the protocol. So we can do that on the wallet side, yes, but it allowed us to do that on the protocol side as well. Um which I think is uh is is pretty unique.

[00:29:24]Um so we've kind of shifted from um cryptography and engineering up in terms of what we build for Zcash to what user demand is and and then bringing that back into the protocol. How would you articulate what the actual road map is for Zcash uh in Ethereum for the Ethereum listeners? Well, we kind of have this scale layer 1 uh scale layer 2 improve UX. So, those are like the three swim lanes to to meme the whole protocol development road map into just three lines. Is there something like that for Zcash?

[00:29:56]>> Uh I I'll tell you what mine are and there's some others that may have some differences of opinion. Um but yeah, number one is to be able to scale to billions. So, there's an effort that's going on with something called Project Takon um that a guy by the name of Sean Bo is is leading and that a number of us are um involved with or collaborating on. Um there that will introduce some new user experience uh elements that have to be kind of incorporated that may be kind of counterintuitive out of the gate but will be intuitive uh long term.

[00:30:25]So, we want to be able to scale to billions. Postquantum is a big focus uh in getting that over the line and then um and then usability is just making it easier and easier for people to get more and more access and so when I say usability like I want to build a complete like parallel pol this kind of system that's adjacent to but not part of the legacy financial system so we don't need to be you know zle in terms of the wallet itself is single currency multi-chain so um it's access to defy services borrowing lending yield you know the stuff like that that people want um that they would normally expect from a bank account but without the bank. Um and so we've already seen the high demand for um for swaps and have been working with near and then now with Maya for different for different paths. Um and then there's kind of other interoperability that that uh that we need to build out on the wallet side to deliver to truly deliver that uh that user experience people want. What do you think uh technically speaking is the thing holding back Zcash the most? Uh what what do you think is if if you guys could solve one problem and then Zcash adoption goes up, secoption goes up, more privacy transactions happen. Uh what do you think the most important thing is in the Zcash road map right now?

[00:31:38]>> Well, I think the most important things are the things we've talked about which is getting postquantum. I think people want to have that security that when QA hits, which may even hit earlier than than 2030, um their money is going to be secure. That's a it's a good store of value. I think we need to in order to scale the billions, it has to be able to scale the billions. So high TPS um and so people can use it to store but they can use it to easily transact. Um and then the user experience where it's just one clicks um lanes.

[00:32:05]>> Yeah. Yeah. So like even without you know it's like you can right now with with Zotle you can swap it's a single currency wallet but you can swap in and out with Ethereum with Salana with Bitcoin with stable coins. Um, so I can store my shielded Zach in uh in the wallet, have security in that, but that if I want to, you know, if I want to buy a bike for 100 bucks in USDC, then I can send somebody 100 USDC on top of Ethereum. Um, but I've kept my balance private. I've kept that my transaction history private and uh my counterparty can't see any of that information, nor can anybody else that's trying to snoop on my uh on my interaction. Um, and you can do that with just a couple clicks in your phone. Uh, you don't have to think about, you know, all the complexity of what happens behind the scenes. And so, um, it's important that we kind of drive those kinds of use cases out more.

[00:32:57]>> How do you think about Ze the asset then? Um, like Bitcoiners call, you know, Bitcoin digital gold. Uh, is Ze similar? Is it the same? Is a store of value? How do you think about just like the classification of Ze as a as a financial instrument? I don't care, you know. I really don't I don't. So, it's like, is it a medium exchange? It will eventually be a unit of account, you know, and and people like, you know, that that kind of uh store value medium exchange dichotomy I like I don't >> I don't particularly care that much about it's like it's like if I think about it in just in terms of US dollar or money, um like I have a bank account.

[00:33:33]I want to be able to put my money in there. I put my money in there because I want to ensure that it's secure and that it's guarded by people with guns and a and a door and that and that then I can put it to use so it's not just dying, right?

[00:33:45]That I can earn some yield >> uh on it. Um that I can get a loan.

[00:33:50]>> Um and then I have that money there and I've saved that money and I put it aside. It's is store value at that point probably. But now I want to go buy a car. So I withdraw the money and I write a check or I send somebody a bank transfer. Um it's now a medium exchange.

[00:34:04]Like what was the US dollar in that context? Um I you know it's I I I care about the utility. like I want to be able to store it. I want it to be mobile. I want it to be within my own hands. Um, you know, we have uh Zcashers who were in countries where their assets were seized. They're forced to move. Um, so that mobility, that self-custody is super important. And then, you know, the medium exchange is just based on on time preference for store value, right? So, I just want to spend it now or I want to save it now.

[00:34:35]>> Um, yep.

[00:34:36]>> Do you think Ze deserves a high price?

[00:34:40]Oh yeah. So if people are if look I mean like it's funny for the longest time we've had this kind of very purist perspective. It's like we're not ever going to when I first um joined ECC it's like we're we never talk about price. We never talk about price. Uh-huh. Um, and that and it was good, right? I mean, in that we uh we were focused on delivering the best technology that we could and we weren't focused on whether or not we could get our market cap up because we had a lot to do to get done and it was not ready for prime time at that point.

[00:35:13]So, it is ready for prime time. Um, it there is a need in the world for it.

[00:35:19]It does have value. It is a scarce asset. it has the same tokconomics as as Bitcoin 21 mil cap supply. Um, and it things are very reflexive. So, I don't care like I know we get into these kind of speculative bubbles and and people start buying and they're buying just to have exposure to the asset. Um, and yes, there's a benefit of liquidity. The challenge that we have is informing people like what it's really about. So once they've like had price exposure, they get in um they learn about it, they're like, "Oh [ __ ] like I want to I want to have a a self I want to self-custody and I want to use this privately." So they do and then the size of the shielded pool rises and people see that uh size of the shield pool rise and the wallets become very sticky that way. Um and then the price goes up and then it becomes very reflexive. So, the more we have some of this price volatility, I think it's actually better for for people to kind of ultimately learn what this asset is.

[00:36:16]The price, if if nobody's caring about the price and it's in the doldrums, it means nobody's using it, nobody cares.

[00:36:22]>> Um, so yeah, I do think it's important and it's terribly undervalued. I mean, you think about um and I know the Bitcoiners hate this and they gripe or whatever, just technically um it is better. it is better than Bitcoin >> and and look at the price, right? Um so you can say okay not technically it is but like we have more reach and more institutions and greater I I think the greater decentralization thing is total BS. Um I think it's made up but um yeah so it's just it's way undervalued what it should be.

[00:36:56]>> I love it. I love it. Um talk to me about the the shielded pool. Right now I think there's like 32% of all outstanding ze inside of the shielded pool. Talk to me about what the shielded pool is for the listeners who don't know and then why it's significant and and what it means.

[00:37:12]>> Yeah, so there's two types of addresses essentially. Um it it gets like it's a little more complicated. There's like multiple shielded address types, but essentially there's a transparent address type and there's a shielded address. The transparent address works just like Bitcoin. It was part of the Bitcoin code codebase. So it's just like a Bitcoin address. you don't have any privacy guarantees. Same same. Then you have shielded which uses zero knowledge encryption. Um if you move your ZEC from a transparent address. Let's say you have coin you bought some Zcash on Coinbase or better yet you buy it on Gemini because Gemini supports sending it to a shielded address and I send it to my shielded address. It enters something called the shielded pool which is the cryptography that is um uh being able to to to guard your privacy.

[00:37:59]It's a UTX host based chain. So in very simple terms, we say this is the number of Ze, right? That there's 5 million whatever Ze that's stored in the shielded pool.

[00:38:10]Um there's something called the anonymity set and it's based upon the number of UTXOs that are actually in the shielded pool that gives you like increases privacy. So as you increase the size of the shielded pool um you increase the total anonymity set or the number of transactions that are or outputs the transactions that are um that your kind of transaction is is swimming in.

[00:38:34]>> Yeah. You increase the size of the crowd that you are hiding in.

[00:38:37]>> Yeah. Yeah. Yeah.

[00:38:38]>> Yeah.

[00:38:39]>> Um so uh that's kind of basically how that works. And so again like all the exchanges in the world all the custody.

[00:38:46]So the institutional investors they all have to custody with custody providers right just legally they have to comply.

[00:38:53]So all of that is sitting in on on in transparent addresses.

[00:38:57]>> The only way to get a shielded uh Zcash is to use a shielded wallet like Zotle move it from your exchange or whatever and choose to self custody. Um so we went from in the beginning of early 2024 from about 11% of the total supply of Ze at that time uh was shielded to now now north of 30%. Um has shielded over the last 2 years um as compared with the you know the previous eight. And so uh that's great. I think that more and more will come in line. I'm I'm guessing some custody providers will will come online and start to uh offer that. Uh Ledger is working on adding support for Ledger devices. I think there are a lot of people on ledger devices that want to keep you using them and and so we'll see more more hit independent of of uh kind of new user acquisition.

[00:39:46]>> Does the um percent in the privacy pool the percent of Zcash in the privacy pool does that represent some sort of like KPI for you or a target of growth like something that you want to go up in number?

[00:39:58]>> Yeah, it's the most important KPI in my mind.

[00:40:01]>> Okay. Um, so like price is great, but um, and like wallet downloads and stuff like that is great, but I know what's going on. I can tell what's going on.

[00:40:10]And I keep telling people this is the alpha. Um, and so, but if you look at the if you look at the shielded pool, the shielded pool is generally up and to the right. There's some dips and some things where kind of make people move in and out, but it is extremely sticky. If you look at it over the last, you know, 10 years, so there's a ton of data.

[00:40:29]If you see the shielded pool going up, typically you're going to see the price going up as uh as uh Zcash um supply moves off of exchanges and into self- custody because then there's just less available liquidity. Um we've had a couple happenings now. So there's less liquidity that that that's that's entering the market. Um less inflation.

[00:40:52]Um when you see the price go up exponentially, a huge price, but the shield size of the shield pool is flat, then it's speculative, right? Right.

[00:41:00]>> Um now the the wild card in here is that you have institutions who may be coming in or you have maybe some large whales, individuals that may be coming in and they cannot move it to a shielded pool because of what I mentioned earlier. Um so you don't know kind of how to separate those things completely. Um but it is a leading indicator in my mind.

[00:41:19]Um, and so once you get to a certain shielded pool, whatever that price point is, is pretty good idea that it's a base plus some amount. Um, and so what we want to see is, um, if people are actually finding utility, if they're actually using our wallet, if they're using Zcash or using other wallets that are shielding, then the size of that pool should be growing. And if they're not, if it's not growing, then they're probably speculating. The reason why I like the uh Zcash shielded pool number is it it represents kind of like a political statement of how many people give a [ __ ] uh about privacy. And when that number goes up and to the right, like the the assumption is, and I'm sure technically there are probably ways around this, but the assumption is is that when you put your Ze in the privacy pool, you're it's not liquid. Uh it's not easy for you to sell. Well, if you want to sell that, you're going to have to do like two, three, four hops to get that exec onto an exchange. It's inconvenient. Uh, and you are adding, it's kind of a statement of like, oh yeah, I actually care more about privacy than I do liquidity. I care more about privacy than I do convenience. I care more about privacy. And so, the Ze Shielded pool going, I think it's at it alltime highs right now at 32%. Going up and to the right is kind of just a reflection of PE what people care about.

[00:42:41]uh at uh at least the the aggregate deck holders and so it to me it's like it's like a political statement that I find enjoyable. Yeah. Mostly though but the thing that the thing that's interesting >> is we made it when we made it easy to move in and out of shielded Ze.

[00:42:56]>> So I can like single swap in like I can swap in with USDC into Ze with a couple clicks in you know a few seconds and I can spend USDC >> um the same way. Um, so we actually made it easier to go in and out with the wallet and the adoption rate spiked.

[00:43:15]That makes sense to me. That makes sense.

[00:43:16]>> Yeah.

[00:43:16]>> Yeah. It's kind of like when Ethereum had enabled withdrawals from staking, what happened? More people staked because they had more assurances that they could get out.

[00:43:27]>> That's right. Yeah, that's right. Yeah.

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[00:44:41]I've been following him for years. And this year, we started recording weekly podcast episodes. Each one we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether, and where we are in the cycle. There's new episodes that are released every Wednesday. They're 30 minutes, they're short, they're punchy. I think this crypto cycle is harder to navigate than most. So, let's do it together. Go subscribe to this podcast. Search the DeFi Report wherever you get your podcast, YouTube, Apple, Spotify, or find a link in the show notes. There's a new episode waiting for you. Now, >> let's talk about the uh the raise. $25 million you guys raised from, like I said, Paradigm, A16Z, the Winklevi, Coinbase Ventures, uh, Chapter 1. Uh, what are your guys' goals for Zod? Yeah, I think um, again, I think everything is, um, very kind of intertwined in that.

[00:45:30]So, even with the investors, the investors that came in, as I mentioned, we wanted to be very careful about who participated on the cap table.

[00:45:36]>> Um, it wasn't just taking checks from anybody. We were very intentional. to um the investors and I don't know what the exact percentages are on each investor and they didn't disclose them to to me but the general sense with most of them is they were putting in they had an allocation that they want to invest towards Zcash in the Zcash ecosystem they were taking 75 to 90% of that and they were buying or had planned to buy or will buy um Zack and then the remainder 10 to 25% they uh funded um they funded Zotle because I believe that there's a symbiotic relationship between um Saddle and um and Zcash and um kind of another balism like um one of the things he he was he he told one he's like he's like look um Zot is to Zcash what Coinbase was to Bitcoin.

[00:46:30]>> Um and I think people immediately kind of kind of grock what that means if you've been kind of around and and what Coinbase meant in terms of onboarding uh lots and lots of users. um into it. And so, you know, we intend to build out a full set of capabilities. Um I think there's a sense that look, if if if Bitcoin is able to 10x from here, Zcash is easily 100x from here. Zotle can easily thousandx from here. um as part of a thesis um because we'll deliver kind of a rich set of capabilities on on top of the Zcash protocol and and nobody at the user experience level um kind of has the same uh depth that this team does um with the core protocol depth and history. Um so I think that's kind of going in where everybody's coming in at.

[00:47:17]Do you wonder that one of the reasons why Zcash is what it is is because the unshielded side of Zcash is uh friendly with institutions. It makes it allows institutions uh to be compliant because they can handle the the unshielded sides.

[00:47:30]>> Um >> yeah, that's total [ __ ] too. So I think >> Oh, interesting. They can they can be compliant, right? So I think Gemini like very early Gemini allowed for shielded withdrawals like everybody everybody can do shielded deposits and withdrawals. Um but only Gemini chose to do it. Um because it took some work with their HSMs, their hardware security manage uh managers to be able to implement um the elliptic curve that was necessary to be able to support that function to be to create a proof. And so there just wasn't commercial demand. So it wasn't regulatory because they still if you think about it, if you go to a regulated exchange, they still KYC you. They know who you are.

[00:48:07]>> Um if they want to get additional information, then they then they use ED.

[00:48:12]um and their due diligence and they ask you your source of funds or things like that where it's where it's going. And so all of those organizations everywhere could be in complete compliance and still support um shielded. They just chose or have chosen not to um because it's because it's work and their customers haven't demanded it yet. So, my understanding was that Ze has been uh Zack has won the compliant privacy coin brand because of the unshielded half of it. What what I'm hearing for you is that's not that's not true. But then my question is how come Ze did win that brand where Monero, which is the privacy by default coin, won the brand of uh the the criminal coin. How did how did Zcash get the complian?

[00:48:58]>> Like a lot a lot of that's mimemetic. So when we when we started the the for better for worse like again to create a zero knowledge proof and to create shielded Zcash when Zcash launched it was too computationally intensive. So realistically an exchange like whether it's like Paloni X or Kraken or whatever um launched it they couldn't realistically support Shielded Ze because to create a proof for every withdrawal um you know out of the exchange it they it would it didn't scale it just didn't scale. So that was kind of solved in 2018, but by then everybody had onboarded with Transparenc because it worked just like Bitcoin. The software is basically the same. They didn't had to do lift a finger to do hardly any work and now they've got this other new asset on. So then to go from Transparent to Shielded, still a ton of work. Now they can do it and they can scale, but they have to make the engineering decision that we're going to update our HSMs in order to make this work. So, it took Gemini Jim and I did it because they're very ideologic because Kim and Tyler are very ideologically aligned. Um, and so they they did the the lift to to make it work with their um with their systems. So, there is this kind of notion. Yes. Um, but it did get kind of broad traction um with exchanges and access to liquidity because T addresses work just like Bitcoin addresses. So super easy to support where initially I see >> um G addresses weren't supported. So and number two the other kind of fallacy that gets kind of thrown around is this like shielded by default. I think that I think it's better to say that there's or um private by default. I think it's mandated certainly in the Monero ecosystem or the mixing you have to have a certain now the level of privacy that you get with Monero um changes dramatically based upon how you use it.

[00:50:45]Likewise, the way that you use Zcash is, you know, changes dramatically. Zcash itself isn't opinionated as to whether you use shielded Zcash or transparent Zcash, right? It doesn't care. You can use either one. So, Zotle as a wallet, we care. So, we decided to take an opinion. We want shielded Zcash. So if you move transparent Zcash in um you have to shield it before you can spend it before it can go anywhere else. Um so we're seeing more and more like that and I think you know that's helping with the with shielded adoption. Ultimately I think T addresses get deprecated at some point and go away. They're not necessary. Um I you know some other people in the Zcash ecosystem have some different views from me but uh I don't get their arguments at all.

[00:51:27]Well, one uh question I have is part of the weight behind Zcash's current uh narrative is it is viewed as the compliant privacy coin. So, it's going it has uh the the treasury company from the Winklv trading on on uh the NASDAQ or the New York Stock Exchange, one of the two. Um there's the trust from Gayscale which is being filed to be an ETF. The idea is that it can follow in Bitcoin's institutionalization path. Uh, and that's one of the bull cases for Zcash. That's like one of the the reasons why people are excited about it.

[00:52:00]Do you think that that takes anything away from the more cipher punk side of of Zcash? Because this this what I think like a lot of Bitcoiners are pointing at Bitcoin be like, "Yeah, it's it's Michael Sailor owns like 2%. Uh, it's Black Rockck is in it. Uh, the United States government loves Bitcoin. It's lost its like cipher punk, you know, counterculture rebellious edge. Do you think that same thing might happen to Zcash? Is this something you worry about?

[00:52:27]>> Kind of like and I think cipher punk some people wear cippher punk is like this badge of honor and and I'm one of them. Um but I I think we interpret it sometimes differently. I think some some people interpret it as like this countercultural like rebellion. I'm this shadowy super coder whatever.

[00:52:47]>> Um >> and for me it's that this should be normal.

[00:52:52]Like we should not it shouldn't be this like band of Robin Hood and his merry thieves like out in the forest constantly like this. We need to normalize it, right? And it should be available to everybody. Um it should be easily accessible by everybody. I think that's what Eric meant. Um that's true to the cipher punk roots. That's different than an ETF in financialization. So if like Backark decides to do somebody decides to do an ETF, um you know, Grayscale's filed for one that's great. People can come in and get price exposure. Like I love my friends at Grayscale. I really don't care. Um like what we are building is for financial freedom. The protocol won't change. We're not going to change the protocol based upon um like this kind of institutional adopt. That's not why we're building. That's not why any of the people in the ecosystem is here are here. and it never has been. So, uh I I don't know if that answers your question, but um like we we are fighting to change the world. We're not fighting to build another financial product that you can put in your 401k.

[00:53:57]>> Sure. Sure.

[00:53:59]>> Uh just out of just curiosity, beyond Zcash, what else do you do for privacy in your life?

[00:54:05]>> I'm not going to tell you.

[00:54:07]>> That's a good answer.

[00:54:11]Okay, then. All right.

[00:54:13]>> I I will say I will say this. I will say anything that you do like privacy privacy is um is not an absolute it's a spectrum.

[00:54:22]>> Mhm.

[00:54:23]>> You know and we have this belief that it it is basically what you choose to disclose to the world. So by coming on this show with you right I've disclosed some things. I've disclosed both have white t-shirts.

[00:54:34]>> I've disclosed you know I've got a mirror in my background.

[00:54:38]>> Um there's some kind of and this isn't just a private conversation. This is go out to to other people. So I am very cognizant about what I choose to disclose to the world and make very conscious choices about where and how I do that. Um what I choose to disclose around my loved ones um and people around me and um and I think it's important like you don't want to have to walk around in terms with that kind of cognitive load. There's basic kind of hygiene and best practices that you can do which is inclusive of like not oversharing online >> um you know or oversharing only sharing what you're what you're comfortable everybody seeing and everybody seeing forever um when people share online and it's part of the part part of the problem with AI. So AI now it's not just a human looking for information now you have a aggregators that are able to aggregate all this data now aggregating onchain data. So, I'm able to take all this information I know about you, pull it in with your financial, you know, your trans transaction history, with your balances, with every financial interaction that you've ever done online. Um, I can do very rich uh searches and queries on you or sets of people in order to try to manipulate people to get to certain outcomes. Um, it's very very scary. And so, by default, we want to have privacy so we can have a transaction. I can pay you that uh uh that money for a bike and um it's between you and me. Um it's not then part of this graph that gets captured for for this big machine to to own, you know, forever. Um so I think people just I think you need to use use the tools that are there and that easy to use. We need to make it easy to use and accessible to everybody.

[00:56:21]>> Josh, thanks for coming on the show today.

[00:56:23]>> Thanks for having me on. Bank, you guys know the deal. Crypto is risky. can lose what you put in. But if you use Zcash, you can make it private. This is the frontier. It's not for everyone, but we are glad you're with us on the bankless journey. Thanks a lot.