Bitcoin "Incredibly successful as a store of value," says David Chaum [Interview]


The legendary cryptographer and pioneer of digital money David Chaum explains to Bitcoinist because his new project, Elixxir, is focusing on a scalable digital money focused on privacy and because Bitcoin is unlikely to provide similar privacy despite being "tremendously successful as a store of value".

Bitcoinist: as a pioneer of anonymous communications and digital money, do you think that privacy has improved or worsened in the last decade since the invention of Bitcoin?

David Chaum: Privacy has significantly decreased over the past decade. Because machine learning algorithms continue to function against the background of our devices, homes, and workplaces, the metadata they capture infiltrates every aspect of our lives, we must make a decision: confidentiality or convenience.

2018 has taught us that privacy policies have also fallen dramatically from their promises, as metadata and even our private messages are a fair game with giants that promised convenience and connectivity. Although Bitcoin is a pseudonym and a step in the right direction towards legitimate privacy, it does not yet protect from metadata analysis, ie monitoring the parties in a transaction by monitoring the network and, given a person's portfolio, is You can easily view that person's balance and track all payments in and out of it.

It is possible to reverse this trend, and that is exactly what we are trying to do with Elixxir. By giving people control over their digital lives, we can regain privacy in our daily lives.

Technologies like Private Transactions, Bulletproof, MimbleWimble, etc. Can they make Bitcoin transactions more private?

It's nice to see the interest in privacy. There are compromises for each approach, but we see these technologies as a step in the right direction. I am confident as the world begins to realize the value of privacy that we will continue to see progress in privacy and confidentiality.

Do you think Bitcoin has an advantage – not only as the first-mover – but also since the founder Satoshi Nakamoto is unknown and has probably disappeared forever?

Bitcoin has been a huge success as a store of value, but it lacks some key features that would classify it as peer-to-peer digital money: time-to-finalality and unlinkability. Cash transactions reach their goals almost instantly, once you have control in your hands. Bitcoin does not and probably will not be able to get this for a while, if ever. In addition, a cash payment is a largely anonymous transaction when it is carried out privately and it is impossible to track individual invoices on multiple transactions.

See the cryptocurrency space as a winner takes all or many coins can coexist for different use cases?

Bitcoin has proven to be a reserve of value. We believe that Elixxir solves the scalability and speed problems experienced by other platforms and, therefore, would allow the creation of large-scale dApps that can create their own tokens. Furthermore, as we begin to see the emergence of security tokens between asset classes, real estate, art, and beyond, we will probably see a steady growth in the existence of such coins and tokens.

Why did you decide to launch Elixxir? Give users more control over their privacy than Bitcoin?

The thrust behind our team's work with Elixxir is to provide users with complete control over their keys, transactions and digital worlds. Elixxir also undertakes to keep all the properties of the cash: it is a supporting tool and a peer-to-peer exchange mechanism, as well as free of authorizations and confidentiality. Bitcoin has proven itself to be strong in the first three features and Elixxir aims to also understand the same kind of confidentiality we have with paper money.

I believe there are four needs for consistency:

  1. The current blockchains are not able to scale as would be required for mass consumer adoption.
  2. They do not have a level of privacy that consumers would expect in the least.
  3. They do not have the transaction speed necessary for consumers.
  4. Messaging and payment systems that are resistant to the invasion / surveillance of the national state. (It means that one country is resistant to another country that can read and analyze all the activities of its citizens)

Elixxir solves all this.

Why Elixxir? What inspired the name?

Elixxir has several important meanings for our company. I am personally interested in the history and longevity of cryptography. Many alchemists used cryptography as a tool to communicate and were also looking for longevity.

Commonly in myths, a hero returns from a formative adventure with an elixir of knowledge, obtained from trials along the way. We called Elixxir because we took from the teachings of ourselves and others, and we intentionally created Elixxir as the cure for problems that prevent the blockchain from becoming a mainstream technology.

What disadvantages does Elixxir have besides a delayed start (compared to Bitcoin)?

The delayed start of Elixxir may seem like a disadvantage, but it allowed our team to solve real problems with today's blockchains. Before our cryptographic discoveries, we would not have been able to develop a platform that would offer unprecedented speed and privacy to blockchain technology, and we would be afflicted by the same problems that many of our peers are experiencing.

Learning from the difficulties others have experienced has been crucial for us by building a platform that solves these problems at the beginning. We are thrilled to share this journey with the blockchain community and we are not looking forward to working to evolve the space together.

A key issue in all current blockchain projects is that they do not functionally meet the 4 basic needs required of people to actually use them. A blockchain adopted by consumers must be enormously scalable. Must have a minimum level of privacy expected by consumers (ie that literally everything you do is not open for public analysis)

It must have transaction speeds similar to the apps they currently use. And, for international growth, it must be resistant to the invasion and to the surveillance of one government against the citizens of another.

Because of our timing, we were able to learn from other platforms that lacked these needs and we built our platform to solve these problems from scratch.

Over 8.5 million dollars in Bitcoin seized by the Israeli police

Are you in Israel for Israel Bitcoin Summit right now? What are your thoughts on the country as an obvious reference point for Bitcoin activities?

In order for a truly distributed system to work, a global network of operators and developers is needed to support it. This helps mitigate the risk that specific internal issues such as energy supply, regional conflicts, government censorship, etc. May they have an impact on the global network. Israel has proven itself to be an innovator in space and with a handful of other nations provides the essential foundation for supporting a globally distributed network.

In many ways, Startup Nation embodies features similar to the blockchain community. Talented and motivated entrepreneurs, with networks around the world, have worked together to bring blockchain technology to people in their daily lives. I do not see why Israel will not continue to be influential in space, as evidenced by the success of the Bitcoin summit in Israel.

What are the prospects for Elixxir?

As we begin publishing our platform to the public in 2019, we will announce when applications will be open to become a node manager. We currently have an e-mail group for potential traders who can receive updates on node development, which people can subscribe to we will soon have more information on how the alpha-net and beta-net operators will be selected.

For more information, please join our telegram and Twitter communities to find out more.

What do you think of David Chaum's privacy and Elixxir opinion? Share your thoughts below!

Images courtesy of Shutterstock

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