Luke: [00:00:00] You’re listening to a new episode of The Brave Technologist, and this one features Howard Wu, who’s the CEO of Provable, the creators of the Shield Wallet, and founder of layer 1 blockchain Aleo. His contributions to zero-knowledge proofs and elliptic curve cr- cryptography have been sh- adopted across the industry, including by protocols such as Zcash.

In this episode, we discuss why confidential compliant on-chain finance needs to exist even though transparency was blockchain’s original selling point, what’s actually at stake for someone whose full transaction history is public, how zero-knowledge research ended up embedded in both Ethereum and Zcash, and what’s different about how money moves through a privacy-focused wallet compared to a normal one.

And now for this week’s episode of The Brave Technologist.

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Luke: Howard, welcome to The Brave Technologist. How you doing?

Howard: I’m doing well. Thanks for having me.

Luke: Yeah, yeah. Thanks for coming. I’ve been looking forward to having this conversation. we’re here at Rare Evo. you have a talk here that, kind of makes claim that privacy is the next wave of adoption.

but blockchains being fully transparent always kind of sounded like the whole point. walk us through why confidential compliant [00:01:00] on-chain finance actually needs to exist.

Howard: Yeah. Well, first off, I just wanna say, you know, Satoshi Nakamoto, him or herself, wanted to make Bitcoin have a level of privacy and a level of confidentiality that the technology didn’t support back in 2008.

Right. And so, it’s always been a core ethos, a core tenet of crypto, but I s- I would say that when you look at where the world is going, increasingly, TradFi, as we’ve seen in the past year, is now moving on-chain.

Luke: Yeah.

Howard: And one of the main challenges that happens in the world is that as things come on-chain, everyone’s able to start to see everything.

Right. And it’s breaking user journeys and the fundamental user journey of money itself. Because we, we already take for granted in web 2, privacy guarantees or confidentiality guarantees that we actually don’t even realize. For example, when you sign into your bank account, you know, people just assume that, like, their mother or their grandmother or, or their best friend can’t just look into their account, see how much money they make, how much they spend, where they spend it, and all these details, right?

But if I were to send some money to you and you have my Ethereum address, suddenly you can see all that information- Right, right, right … right? And so, you know, this idea of information asymmetry or [00:02:00] privacy has always been an intrinsic part of money. And it’s also important to the principle and the economics of money itself from a fungibility standpoint that- Yeah

in order for every dollar to have the same value as every other dollar, it must be able to have the ability to claim that its history is just as clean or, or it’s as, as reputable as every other dollar bill, right? And so this is something that I think is actually very core, and, I think that if the technology were back, were, were available back in 2008, it would’ve been incorporated into Bitcoin and into every protocol that we know today.

Luke: Totally agree. Totally agree. And, and what a time too, like, as things become more cashless, like, you’re seeing it everywhere, right? Like, where- Absolutely … you know, without having privacy, or some- Some equivalent to the analog fungibility that paper money has, where I can give you a $20 bill and there’s not some permanent record of it somewhere.

Yeah. You know, there’s a, a big need for that, I think-

Howard: Absolutely …

Luke: in this space. So there’s, there’s a public argument right now over whether DeFi needs KYC and, the popular crypto take is basically no. Yeah … well, [00:03:00] depending on who you talk to, right? Yeah. but where do you land on this and, and why?

Howard: It’s a great question. first off, like, I would say DeFi eventually will need some form of KYC. And I don’t think that every asset and every venue needs KYC, but as we start to institutionalize and as the crypto space and the industry itself matures, we’re gonna start to bring in new types of assets, for example, like securities.

people are tokenizing stocks, bonds, even real estate. these- Yeah … these are things where, like, in every other venue, in every other medium in, on planet Earth, there is some form of KYC or some form of compliance checks that happen for those assets to be tradable, for those assets to be liquid, right?

Yeah. And so, you know, from a regulatory standpoint, I think it’s gonna be no different in crypto. But I will say that I’m not a proponent of KYC in DeFi in the current form that we do KYC. You know, as you, as you’ve probably seen on the internet, we’re increasingly starting to do ID checks and age- Oh, yeah

verification, all this stuff. And, like, as much as I, you know, am glad that we’re starting to protect children from [00:04:00] accessing content that they shouldn’t, and yada, yada, one of the main concerns I have is the method that we’re doing it, which is- Right … we’re having these giant honeypots, basically, that are collecting everyone’s ID data, that links their face to their name, to the IP address, to all this information about them that’s unnecessary, right?

Luke: Yeah.

Howard: And what I’m a proponent of is privacy preserving KYC, where we can now use things like zero knowledge proofs to be able to prove to someone that I’m over the age of 18 without revealing my identity, without revealing all this detail about myself, right? And I think that , from a, DeFi standpoint, we can be doing the same thing, that we can prove, for example, that I’m a- an accredited investor, not from a sanctioned country, as a US resident, operating with at least a minimum balance within this, this trading venue, right?

And that’s something that I think can be easily established in a highly privacy preserving manner, and I think that that is the way that we should be thinking about this. Not the old version of KYC, but a new version that is far more technologically advanced and far more respectful to the user for their own PII and their data.

Luke: Yeah, totally agree. I think it’s like, one of those things where these, new [00:05:00] measures are kinda being introduced as, like, a safety thing. Right. But, like, really, it’s putting everyone at risk. You know, if, if you, everyone has to KYC to, to go online or, or use, use basic web pages and, and things like that, it’s just, like, such a huge risk, to…

You know, it… Not just, like, individuals. A lot of state actors, like, can come- Yeah … in and, and start to infiltrate- Like- … get this information and, and all sorts of things.

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Howard: think about, you know, f- companies like Experience several years ago, right?

Luke: Right.

Howard: Where they have every American’s Social Security numbers, their home addresses, their entire financial histories.

They’re like- And it just all got leaked, right? Right. And like, that is, that is just a [00:06:00] non-starter in my opinion-

Luke: Yeah …

Howard: for on-chain crypto, and it’s almost a side effect that everything has been fully transparent up until now. I really think that for crypto to reach mainstream adoption- Some level of privacy has to become introduced into the process, and that actually becomes the great unlock for mainstream.

You know, I know, you know, I’ve been in crypto for a long time. 10 years ago everyone was talking about scaling, scaling, you know, we need more TPS. And that- Oh, yeah … that is true.

Luke: Yeah.

Howard: I think we’ve reached a point now where you see with these brand-new chains, we’re all able to do 100 TPS or 1,000 TPS or- Yeah

10,000 TPS, and that’s no longer the bottleneck. But what I do think is the bottleneck is this UI/UX of money, this user journey of not revealing everything to everyone. Yeah. you know, the example that I often like, like to give is to say, like, you know, say you’re a coffee shop and you wanna start to accept USD stable coins.

You know, these things have, have taken off over the past year, and people are starting to build point-of-sale systems. Well, if I go to tap to pay with USDC, for example, one of the challenges is that suddenly the barista, the merchant, the vendor, they can learn everything about my financial data- Right

because they now have my address, right? Right. They can see how much money I make, how much I spend, where I spend it. And that’s a [00:07:00] problem. But even worse is from a business intelligence standpoint, let’s say I’m the coffee shop down the street and I wanna know how much money you’re making, I can just walk into your coffee shop, and for the price of a cup of coffee, I can now get all the business intelligence about your coffee shop.

I know , how many customers you have, how much your customers spend on average, how much you made this week over last week, this month over last month. you know, it’s just all this business intelligence that otherwise would’ve been, private in, in a traditional setting. Yeah. And so this is something that I think is a side effect of, of how blockchains were built.

Luke: Well, yeah, and I think, like, y- you mentioned business intelligence, which I’m, I’m glad you mentioned it, ‘cause it’s an area where, like, I don’t think that people really, consider how linkable, a lot of the Web2 data is with Web3. And when you combine… Okay, i- if we’re gonna be doing finance on chain, like in transaction and buying that coffee, you know, your user profile from Web2, you only need a couple, one one linkable object to basically correlate these things together.

I mean- Correct … and with the way that [00:08:00] Web2 has kind of proliferated, they’ve, they’ve built the entire business of the internet on, you know, tracking personal information. And so when you link immutable data to that on the financial side, you’re really getting a fuller picture that’s almost- It-

like a big regression.

Howard: And I, and I would say it’s even worse than that. You know, one of the trade-offs of Web3 versus Web2 is that once you’ve linked that address, there is no opt-out procedure from there. Right.

Luke: Yeah.

Howard: You know, in Web2, I can just close my account and I just move on, right? But here, this data sits permanently on the blockchain- Right

forever, and every future activity that I do with this address becomes monitored, scrapable, and indexable by data scientists, by companies, by anyone, really. I mean, your average Joe sitting at home can see it, too. And so- Yeah … you know, that’s where I’d say, like, it’s arguably worse, and that’s where I think it’s truly a side effect.

And I do think that the technology has now reached a point where we’re actually finally able to start to address this problem.

Luke: I agree. I agree. Like, and, I think, like, you know, we touched on the business intelligence part about, about this touching [00:09:00] regular businesses. - , - is it as critical on the hedge fund and kinda institutional side as well?

Howard: Yeah, so this is something that I feel is becoming more and more relevant. Because as you, as you start to see on-chain finance take hold, a lot of it is trade finance. So there’s a lot of folks who are on Wall Street starting to plug in. They’re starting to use these types of rails to do trading, for example.

And as you can imagine, if you were a Citadel or if you were Jane Street, you don’t want your competitors down, down the street to be able to see your books, right?

Luke: Right.

Howard: They’d also don’t want you to be able to pull up your Etherscan, see the past thousand trades, and then reverse engineer what your strategies are.

Because these are quants who’ve sent, spent, for example, years building strategies that are highly profitable- Right … and it’s a highly competitive space there, so that’s a problem. Or say you’re Vanguard, and you’re holding, like, you know, the, the ETFs,for, like, pensions and retirement funds. And every time you do a 1% rebalance, that everyone in crypto, every crypto trader starts to front run you.

Luke: Right.

Howard: That would be crazy, right? Yeah. So, you know, I think when you look at a copy trading, a front running standpoint, a fairness perspective, like these are all things that [00:10:00] every regulated venue on planet Earth provides some assurance and some guarantees on. Even when you look at, like, the, the New York Stock Exchange, like NYSE itself, tries to play fair as best as it can by allowing all of these trading firms to co-locate their servers and giving them the same cable length to route into the, the, the actual matching engines, right?

Right. And that’s to make sure that no single person gets even a little microsecond tick of advantage over the next person. Yeah. And, like, that is something that the traditional system is used to, that I think in Web3 we haven’t gotten to that level of granularity or sophistication about, and I think that that is what’s gonna come over these next few years as people start to come on-chain.

Luke: Totally. No, it makes, makes a lot of sense. I think… So, and you, we were talking about this a little bit before we started recording. But, like, you know, you’ve got a very, you know, established background with, with zero knowledge proofs and cryptography and elliptic curves and, and, your work i- is kind of like from, you know, been foundational, like, on, in the Ethereum space and, you know, worked with the Zcash founder, et cetera.

What’s one piece of that research you’re the pr- That your product got picked [00:11:00] up industry-wide?

Howard: So I would say, you know, I would say that the thing that I’m most proud about is the programming model for private smart contracts- Okay … ha- that we, that we put, that we put into a research paper and published in 2019, is now used not only by the protocol that we built, which is called Aleo, but it’s also, used by other, other teams in the industry as well.

For example, Aztec is- is another team out there that’s building an L2 on Ethereum. They’re using a very similar model to what we’ve established and designed back in the day. that has now become kind of a conventional approach. It’s what we call the record model, basically. So the idea is to be able to take your information, the data that you wanna keep confidential, you put it into a record.

That record can then be encrypted with a zero-knowledge proof and stored on chain such that the network can then pr- ca- can then believe that this encrypted blob of data that it, it can’t decrypt, is actually your data that you claim it to be, and the proof is what backs it. And so that is the programming model that we, we introduced and we established, and that is now being used across [00:12:00] the industry, by various teams to support all types of use cases and applications on chain.

Luke: That’s awesome. That’s awesome. I think, you know, what’s one of the biggest misconceptions people have about what privacy technology is actually for?

Howard: Oh, this is a, this is a straightforward one, I gotta say. You know, people think privacy is always for the bad actors. Right. And I’m saying like, no, it’s actually for everybody, and just to put it into f- into context, you know, humans have only very recently discovered the digital realm, right?

Right. Like, for literally hundreds of thousands of years, humanity has been used to the concept of physical security, you know? We, and we understand what it means to have physical privacy, to have physical security. Like, for example, I mean, this is a, a silly example, but, like, if you walked into a bathroom and there were no bathroom stalls, you wouldn’t use the bathroom, right?

Right, right. You’d just walk out and go find another one.

Luke: Right.

Howard: But, like, right now we’re going onto websites with literally no bathroom stalls, and we’re just going and doing our business there. Yeah. And, like, that’s basically the equivalent. The, the only reason that we don’t realize that or feel something emotionally or in- [00:13:00] instinctively from that is because it’s on the internet.

It’s in, it’s in a digital realm that our brains haven’t, oops, our brains haven’t evolved to be able to process and understand on the same level. And so from my perspective, I’d say, like, for example, with that coffee shop example of being able to tap-to-pay, like, that is a very clear example of where you need some level of information protection and information asymmetry to make the user journey of money work correctly.

Luke: Yeah. Yeah, absolutely. No, I totally agree. I think, 2019, interesting time to be introducing privacy technology. I mean, like, you know, it kind of, to the vein of the last response, you know, we’ve seen things happen. Like, we deal with this at Brave, too, where we’re developing privacy tools, privacy software.

When you see what’s happening with things like Tornado Cash, where developers are kind of, there, there’s a bit of a legal risk an enforcement risk, you know, like, how do you approach that as both a founder and a, a developer of this technology? Is it something you’re concerned about? and, do you think that, things are changing, to make it [00:14:00] More accepting of developers with privacy tools?

Or, I’m just kinda curious for your- Yeah … take on that.

Howard: Yeah, I- that’s a, that’s a very, very big question actually. Yeah. And, I would almost say it’s kinda the elephant in the room at the moment.

Luke: Right.

Howard: so, you know, to really address it head-on, first off, I would say privacy technology itself should not be vilified.

Luke: Right.

Howard: You know, when you look at any new technology that has ever come to market throughout any his- any span of history, there’s always been good actors and there’s always been bad actors. Let’s just take the internet, for example. When the internet was first invented and it started to be used, you know, you had teams that built things like Napster, and you had teams, that built things like Spotify, right?

And it’s very clear what happened here. You know, with Nap- Napster, the idea was, here’s a piece of software that connects to the internet, lets you download music, stream it, and listen to it for free. Spotify said, “Let’s build the same piece of software that lets you download music, plug in with all the artists and the labels, and charge you a nominal fee to listen to that same music,” right?

And, and I think it becomes obvious which not only [00:15:00] stood the test of time, but also which ended up creating billions of dollars of value for artists everywhere- Yeah … worldwide, right? And, and so I think that when we, when we come to this topic of something like a Tornado Cash, or just privacy tech in general, I think it really comes down to how you use it, who’s using it, and why are they using it.

And, and ultimately, you know, I would say that there is a faction of, of crypto where people are trying to evade the law, where people are trying to get around walls. And, and, you know, I would say that that ultimately, maybe there’s a time and place for it, but it certainly isn’t gonna stand the test of time.

And I think that the more valuable approach is to take the technology, integrate it with the institutions, integrate it with the financial systems and the rails and the regulators that do exist in this real world, in order for this technology to be embraced by the mainstream. And I think that that is actually gonna ultimately unlock trillions of dollars of value, not only for, you know, all the people that are here today, but for generations to come as well.

And, you know, from my point of view, that’s where I, I often say, like, privacy cannot exist without, without some form of compliance. You know, for [00:16:00] different types of use cases, there’s gonna be different levels of compliance. Don’t get me wrong. But, I think that you’re always gonna need some form of it, to be factored into your considerations if you’re developing privacy tech.

But, you know, at its core, I would say that the developers of privacy technology should not worry about what they’re doing, and the researchers who are working on it should be motivated to contribute. Because- I, I really think that we’re under-investing, in the concept of privacy in the digital realm.

Yeah. We just don’t have enough rails. We don’t have enough understanding, enough intuition there, and more innovation needs to happen.

Luke: And it does feel like something’s kind of been lost, ‘cause when you think about things like, like Tor, for example- Yeah … the Tor network, right? Like, like literally developed by the government.

there’s an understanding that, yeah, like, this is gonna be used for certain things that are not necessarily legal or, Sure … you know, compliant. But, you know, the fact of the matter is anonymity is important and, you know, we’re gonna live with the fact that, yeah, things are gonna happen, but, like, it’s gonna be used in ways that are positive for,

You know, law enforcement’s gonna use it. Everybody’s gonna use it. Like, you know, it feels like something’s [00:17:00] kind of been lost there with,some kind of understanding that it just, like, all of a sudden you have to comply with giving over information, based off… and this is the, kind of the core of the question that I’m getting at.

Because, like, we’re looking at global networks, right? Yes. Like, with global users that need to be accessible, and it does really seem like a lot of compliance is driven by geopolitical strategies, by governments that are, , at the national level. - How do you balance, like, that where you’ve got a global community of people, and just because they may be born in a certain country,

They’re not doing anything wrong. They, they feel, like, shut out of the system, , how are you guys balancing that? , What’s your take on it? It might be more of a personal question versus- Yeah … like a organizational one.

Howard: Well, I can give you both answers. You know, first off, like, one of my motivations for even building what I built, right, was to try to enable broader access and broader open connectivity, and just the magic of compounding minds, into an ecosystem where people [00:18:00] have the ability to freely share, freely express, and have access to assets that they otherwise wouldn’t have.

Right. So, like, that’s something that I strongly believe in. You know, the permission, this nature, the decentralized nature of crypto is always an ethos that I’ve been a supporter of. I think as we start to see this roll out, we also start to see there are consequences to every decision. Every decision you take has good and bad ac- actions and consequences with it, and this is where I say, like, the compliance thing never ends, you know? Right. It’s always a continuous, incremental conversation because just like with, like, antivirus software, like, it’s always a cat and mouse game- Right … just like in any security. Compliance is the same thing. Like, you don’t want North Korea coming on, onto, onto your rails doing bad stuff.

Right. But you also wanna give the people who are in unbanked economies to be able to have access to, to bank accounts, right? Sure. And, like, these, these things, can exist and coexist without being at odds with each other. You can protect from the bad actors, and you can enable the good actors because we already see it happening in other facets of our lives, in other domains of our lives.

And so I think that the internet, that crypto, that Web3 is gonna be no different [00:19:00] long-term. I think that right now we’re in a very unique time and place where the solution has been the wrong one, which is just to say, “Let’s make everything transparent. Let everyone see everything, and just good luck,” you know?

Yeah. Yeah. and I do think that where we’re heading now is to say, “Let’s be a little bit more thoughtful.” And just, you know, speaking personally here, I’d say, like, I believe that this is going to unlock far more value for Web3 than anyone can even anticipate right now. And the, the best analogy that I would draw to is when you look at Web2 itself, in the early days of the internet, there was HTTP.

Mm-hmm. And then we introduced HTTPS. Well, what was the problem with HTTP? Well, for one, everything was out in the open, just like how Web3 is today.

Luke: Right.

Howard: And, like, the problem is you couldn’t send your credit card details over the internet because you don’t know who’s man in the middling reading that stuff, and you don’t know that it didn’t get mutated on the way or copied or, or, or, or stolen on the way.

You couldn’t trust it. And so because of that, you couldn’t enter your credit card onto a website. And then came HTTPS, where it says, “No, I can securely talk to a provider, securely transfer this information, securely process it, and securely settle it,” right? And [00:20:00] what, what happened? The, the, the explosion of e-commerce happened from that.

That was the side effect. And that explosion of e-commerce created literally trillions of dollars of value, and, and it obviously made the internet what it was. You know, back in the, back in the ’90s, you go to, like, you know- hilton.com and it’s just, it looks like a phone book entry. It’s like here’s- Oh, yeah

a photo of the hotel. Here’s our address. Here’s our phone number. You wanna come and make a booking? Give us a call. Yeah. We’ll deal with it over the phone, and that was that, right? But now, of course, I have a Hilton account. I can sign in, I can make a booking, I can change my bookings, I can add people to my bookings, I can add more rooms.

Everything’s there because we have HTTPS, and so it’s just unlocked so much value. And so that’s where I say, like, I, I think people should be less scared about this technology- Yeah … and actually more excited about it because it’s actually a great enabler and a great unlock for value.

Luke: Yeah. And, and do you kind of like, practically speaking, right, like is this something where- An ideal outcome would be to kind of like, have, have global privacy, like from a compliance perspective by default, and then have [00:21:00] more compliance measures in in the application level or, or, or what, what, what’s your take on that?

Howard: Yeah. So the approach that at least we’ve taken, with the work that we’ve done on Shield Wallet and on Shield Swap and on Aleo has been really to, first off, provide an ecosystem where there are compliance frameworks. We call it compliant by design tooling, basically. So the idea is to say you have all of these primitives that are available via SDKs or via the programming language, where you can import different pieces and you can use them.

And then on a jurisdictional level, every country, every city is gonna treat their laws differently, right? You know, like in the Middle East, they’re gonna treat it differently from if you’re out in Asia versus here in the US. And so the idea is for developers, as they’re building their applications, they can then comply with different jurisdictions requirements by grabbing from, from the grab bag of the toolkit itself- Mm-hmm

and applying it. So like some jurisdictions may say, “Hey, after I’m sending over, say, 10K, and I’m hit the travel rule, I have to then file a certain type of report,” for example, right? Or in other jurisdictions that say, “If you’re gonna [00:22:00] send a transaction to parties that you’ve never met, then they all have to be certified and KYC’d,” right?

And like they all have different types of requirements. So what we’ve really optimized for is basically creating SDKs that allow people to, , pick and choose what they need- Yeah … and then add it in. But the idea, you know, I think is just really to say, compliance rules are gonna continue to evolve.

We’ve just made sure that we’ve built all the primitives there, and then they can pick and choose like Lego pieces to, to add them and compose them how they need based on the evolving laws.

Luke: Yeah, it makes sense. Makes a lot of sense, I think. speaking of, of Shield, we haven’t talked about that yet, right?

Yeah. Like, you know, you all are, have developed and released a Shield wallet. if I download Shield today, or if a user were, what’s different about how, a user’s money moves in Shield compared to a typical web-

Howard: Oh my gosh, where do I get started, man?

Luke: Let’s go.

Howard: Let’s go. So first off, people may be wondering, what is Shield?

What is Shield Wallet?

Luke: Yeah.

Howard: Shield Wallet is a privacy first multi-asset wallet, and that’s a lot to say. It is a wallet that allows you to hold Bitcoin, Eth, Solana, Aleo, USDC, USAD as well. [00:23:00] and it is fully private. That is one of the key selling points of the product. Imagine it as like the Signal for crypto.

Mm-hmm. for those who are f- are- aren’t familiar, Signal is like a messenger app. End-to-end encryption, has full privacy there. We followed a very similar ethos there to basically support assets being held privately. What we’ve done over this past year is integrate with all the different providers to make it easy to move assets into this wallet and out of this wallet.

So we’ve worked with teams like NEAR, for example, that allow you to swap in assets from other chains, whether it be an Ethereum or a Solana, or an Arbitrum, or whatnot. there are- there’s, there’s like 100 different networks you can, you can, you can move in from. And then additionally, we’ve also added bridges.

So, like, Hyperlane, for example, allows you to move from Ethereum ETH over, or Solana SOL over, USDC over, USDT over, all these different assets over. additionally, we’ve also now started to work with on-ramp providers, that are basically allowing you to use Apple Pay. And up to a certain limit, a few hundred bucks, I can, you know, literally just click, click and, and basically just buy some USD, and it [00:24:00] shows up in my wallet, and I can start transacting with it.

all this stuff just takes a matter of, of seconds and, and you’re basically on your way. So I would say, , it behaves and, , and functions, just like every other wallet. But the key thing is that we’ve baked privacy into the core so that users can start to, for example, receive money from others.

Like, let’s say you’re that coffee shop and you wanna take payment, you can use this to take payment without having to worry that you’re gonna leak information. Or for example, in the payroll case, that if I wanna pay my employees from this wallet address, that they can’t just all look at the wallet that sent the money and then look back down and see How much my colleagues make, how much does my boss make?

All, all these things that were broken user journeys no longer are broken user journeys.

Luke: And, and is the privacy at the transactional level, or are there other privacy protections that you build into Shield that, other wallets typically kind of ignore?

Howard: That’s a great question. So right now we’re actually in the process of improving some of the guarantees on the on-ramp providers that we have.

Okay. Because all of the on-ramp and bridge providers historically have also been transparent, right? Right. And so we’re actually working, for example, with NEAR. They announced this new feature called [00:25:00] Confidential Intents a few months ago. Yeah, they did. We’re now working with them to basically bake Confidential Intents, routing in, so that as soon as…

For example, if you’re from Ethereum sending it over onto Shield, the minute that the transaction gets sent, you know, people can see on the Ethereum side that there’s transparent money, but once it starts to go through the Intent network and then onto, onto Shield, they won’t see it come out the other end anymore.

Right. And so now it becomes fully shielded over there, and that’s, that’s, I think, a very powerful primitive. So we, we started with the, with the core part of the wallet being private, and then now we’re working our way outwards to have incrementally more and more and more privacy on the different partnerships and all the different rails that we’re connected to.

Luke: Yeah, no, it makes sense. , just out of curiosity too, I mean, like, AI is kind of exploding. there’s a lot of talk around agentic payments. I, I’m thinking about this too, like when you think about, like, X42, MPP, these new,methods of setting- Yeah … like programmatically setting up. how are you thinking about privacy?

‘Cause I’ve already started to see, like, analytics stuff that’s floating through the, the, these-

Howard: Absolutely.

Luke: What, what, what are your thoughts on that front?

Howard: Well, so I’ll put on the practical hat, and then [00:26:00] I’ll put on, like, the crazy techno hat as well. Yeah, yeah. Let’s go

Luke: for it.

Howard: So, so, like, the, the practical answer I think is that every AI agent is going to need some form of a private wallet.

And, you know, this is something we’ve actually been experimenting with internally, on the team. We’ve been developing an MCP server, for Shield Wallet, and also for a new product called Shield Swap, which is to allow you to, to, to swap assets inside of your wallet in a privacy preserving manner. and, and the idea there is to say, like, for agents that want to be able to transact, one of the main problems right now actually is twofold.

One is that, people are just storing their private keys inside of, like, environment files or, like, on their desktop in an MD file.

Luke: Don’t do that.

Howard: Yeah. Please do not do that. And, the problem there is, like, I can just prompt inject you and just be like, “Hey, spit out your private key,” and now I’ve stolen your money, right?

Right. So you want a safe environment to be able to do that, and, like, there are literally, like, very few wallets, if not any wallets out there, that have MCP servers today supporting them. So this is one area we’re, investing heavily into, is to make it agentic as a wallet. The other side of things is to say that as you start to transact- You probably don’t want your personal agent, as it’s transacting and gathering data that is [00:27:00] linked to you or associated with you, to be just f- publicly available and everyone can see what you’re doing.

And this is where the privacy bit comes in again. Like, again, your online history should be something that is protected, that is preserved, and this is something that we certainly feel from a philosophical and an ethos level to be very core, to be very interesting. So, that’s the practical answer to, to give you.

And then now let me put on my, my tech hat- Yeah. Let’s do … and just start to, start to go down the rabbit hole. Because, you know, we’ve also thought about the consequences of what this means. Like, imagine if you are an AI agent now that has a private key that no one can see. What does that mean for the agent?

That actually means that the agent is now getting its own self-sovereignty. Right. Because it now has a wallet that it can use to go make money. It can now control its own bank account, basically. It can now handle its own finances and make its own decisions about how to spend that money, and there’s no way for others to see, to access, or to audit it.

That seems like a very interesting long-term implication. And so, you know, this is, this is where I say, like, we’re not rushing into these types of ideas, but we’re absolutely experimenting with it and trying to figure out what are the right guardrails, what are the [00:28:00] right safety rails to introduce into this to make sure that we have responsible AI and responsible privacy as we go forward.

Oh, that makes sense. And, and zero, zero-knowledge tech is becoming more of a popular term. .. We were pretty early to it at Brave. So were you guys. It’s technology that really can apply much more broadly, outside of the, the crypto, or, or, you know, cryptocurrency- Yeah

uh, blockchain space, right? In things like identity, healthcare, payments, et cetera. Absolutely. Which of these, like, non-crypto use cases do you think is the closest to real-world deployment?

So I think the most exciting one is effectively gonna be on the identity front. Okay. Um, and the reason for that is that we’re starting to see, for example, driver’s licenses are being able to be put onto your phone.

Yeah. And, like, you know, when I go to the airport, I can start to use that already. online as well, a lot of websites are starting to now collect this information, and Reddit is even doing it, Google’s doing it, OpenAI’s doing it. Like- I think that that model of how we’re collecting data today is really egregious.

I think that it’s honestly just a practical solution that has been taken [00:29:00] by these operators to try to be responsible, but I don’t think that it’s gonna be the long-term solution. And what I’m excited about is that zero-knowledge proofs unlocks the next generation or the next level of what you can do with that.

So for example, if I go to a bar and I’m handing over my driver’s license, honestly, like the bouncer only needs to know that I’m over the age of 21 in the US, right? Right. And like, they don’t need to know like what’s my eye color, what’s my home address, you know. Even, they, they don’t even need, need to know what my date of birth is.

They actually just need to know that I’m over the age of 21. Right. And so if I could give a zero-knowledge proof, especially if that, that driver’s license and that ID sitting on my phone today, and I can then produce that on my phone, and then I could tap to, to basically authenticate on their device, that would be more than enough to convince the party that, hey, I am authorized to enter the bar, I’m authorized to drink, I’m of legal age, , and not have to give away all this information that then gets collected and has the risk of being lost because every database, including Experian’s, has been hacked, has been breached, and has been sold, for information on the dark web.

And so I think it’s, it’s about being responsible, and I think that zero-knowledge proofs, are really at this [00:30:00] interesting intersection where it’s introducing, responsible technology while also unlocking these new capabilities, these new user journeys that weren’t possible before.

Luke: Awesome. , let’s get into the realm of, like, what’s a bold prediction about the future of tech that you’re willing to bet on today?

Howard: Well, I would say, for one, I think that, by 2030, I think most people… first of all, let me just say everyone’s been talking about stablecoins. No one’s been talking about private stablecoins. I think by 2030, everyone’s gonna be using private stablecoins.

Luke: Okay,

Howard: cool. I think that that’s one thing that’s just going to be, a necessary in order for real world finance to happen.

You know, from my point of view, uh, when I look at how, companies operate today, and especially as they start to come onto crypto rails, they’re still very new to the concept of crypto- Mm … and I don’t think that they understand. They haven’t been educated about the trade-offs and the consequences of what they’re doing yet.

And as they start to get smarter, and they wisen up, they’re gonna quickly realize, “Oh, shoot,” like, “This has downstream consequence implications of having everything be transparent.” Mm-hmm. And so I really do think that one of the main opportunities, for all these stablecoin integrations that are happening is that they’re all gonna [00:31:00] switch onto private rails.

And when that happens, that is gonna be the HTTPS moment of Web3, and it’s gonna unlock so much of the world’s commerce.

Luke: , Has there been a big blocker in the adoption , or issuing of private stablecoins from your point of view?

Howard: To be frank, I think the challenge historically, and it’s getting better, especially with AI, is the lack of technical depth and technical knowledge to be able to roll out this technology en masse.

Why? Because as you can imagine, zero knowledge proofs themselves are a pretty niche topic or field of cryptography. Like Vitalik himself likes to say that, zero knowledge proofs are moon math, right? Right. And, like, it, it’s… There- there’s not a lot of people on planet Earth that actually know how to use this stuff, and so, you know, that’s something that has y- really inhibited the ability of this technology to get out there.

I would say the Zcash folks were really pioneers, really innovators in getting this out there. And in the past decade, we’ve now seen not only, has the technology gotten 10 times faster or 100 times faster, but there’s, like, 10 times or 100 times more people that now know how to use this technology.

Yeah. You know? And so because of that, I think [00:32:00] these are some of the compounding factors that are gonna actually make the technology widely accessible. And as that happens, it’s going to, it’s going to just get out there because it solves a fundamental problem on a user journey level that just no blockchain does today.

Luke: Yeah, makes sense. So, was there anything we didn’t cover that, you think our audience should know about?

Howard: Well, I would say that I think right now the industry is at a very unique, intersection point where, the cypherpunks are on one side and the banks are on the other side.

And I think that one of the things that,, has been, underutilized or underappreciated is finding opportunities to bridge the gap there. because ultimately, like cypherpunks are very idealistic, whereas like the banks are very practical. They’re running businesses at the end of the day, right?

And like, I think that what we need to do as an industry is honestly just like come together, recognize the, the shortcomings, that privacy cannot be a black and white thing. It has to have a spectrum. You need to consider compliance as part of that, and you need to be practical of how you deploy privacy technologies.

I think that’s something that has been underappreciated, underutilized. People are very ideological in this industry, and [00:33:00] I think that To the extent that we can get, these two sides into the same room more and more frequently, the more that they’ll realize that their differences are not so vast, and more importantly, that for all these people, who have spent the past 10 to 15 years of their lives working on these extremely fringe technologies, to be able to bring it to 10 billion people is probably one of the greatest unlocks in humanity- Yeah

that we should actually try to embrace that. And so that to me, I’d say that that’s just one of the things that has been underappreciated, under-discussed, and like there needs to be more ven- venues, more forums hosted to try to bring the two sides together.

Luke: Are you optimistic about that?

Howard: I am optimistic about that, and I think that ultimately, you know, this is, this is also a bit of a forcing function because, you know, crypto itself is, has had many iterations of identity cycles.

You know, if you remember when 2000… In 2008 when like Satoshi came out with the paper, we were in like the Occupy protests. Remember that?

Luke: Oh my God. Yeah. Yeah. Yeah.

Howard: And like, and then like, you know, over the years to come, then it became… You know, I remember the first time I saw a Bitcoin ticker on CNBC, right?

Yeah. Yeah. Yeah. And like it started to come into the, the mainstream concept. Like, [00:34:00] I remember going home one Thanksgiving, and my mother started bringing up like, “Hey, so I saw this Bitcoin thing that you’ve been talking about for several years on TV, like tell me a bit about it,” right? Yeah. And like, so it’s, it’s, it’s slowly gotten more and more into the mainstream’s like mind share.

Luke: Yeah.

Howard: And I think stable coins, which is this latest rendition, has been a huge unlock because we now have genius and we now have clarity on the way, where these are things that are now actually providing a regulatory framework. So, you know, it’s like crypto has started to grow up. Yeah. It’s been an incremental step.

We went from like being complete anarchists as an industry- Oh,

Luke: yeah …

Howard: to being completely like the opposite and trying to figure out how to make this happen, but I just think we need more and more conversations because the more you get these people in a room, the more these ideas compound, right? Yeah.

And like that’s just something that, that I’m a big proponent of.

Luke: That’s true, and,, you know, uh, these organizations have privacy requirements themselves too. Yeah. Like privacy matters to corporations and to governments and to other, other areas too. So I think there’s a lot more, common ground than people, realize.

Howard: Absolutely. Yeah. Absolutely. [00:35:00] So I think, you know, that’s why I just say I maintain a very optimistic view on the future. I think there are… There’s gonna be a lot of education in the process, but what comes out of that is gonna be a far better, far better set of internet rails. certainly a far better set of financial rails for all of us to, to take advantage of.

Luke: Absolutely. Well, Howard, this has been a fantastic conversation. I really appreciate you making the time to come here. I’m glad to be here. Like it, it is also really awesome to , have another guest on from a privacy, company, right? Like or- Absolutely … or project or whatever. It wasn’t that long ago where people were, were questioning whether these things were even important and now like, you know, through value and users and all this stuff, it’s just like there’s no better way to prove the relevancy than by putting the numbers up.

So I appreciate what you guys are doing, appreciate you coming on. Love to have you to get back on to talk about this more and check back in on things.

Howard: Absolutely would love to be back. Thank you so much for having me. All right.

Luke: Thanks, man. Appreciate it.

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