I think that we should always push for adoption, but not only from the user base. Why don’t we start to work with industry and institution?
Central banks all around the world are already developing their CBDC, sometimes with privacy in mind. Also a lot of talk about stablecoin took place in these days due to the Luna fiasco. What better opportunity for ZSAs? So let’s take the two things and see it as an opportunity for the world to have private and decentralized stablecoins / CBDC.
Put up a round table with Fed and discuss how a CBDC should be and think how Zcash could fulfill it. Transactions can stay private and at the same time be compliant with the memo feature, but there are many other aspects to be defined.
- From Fed CBDC paper: The Federal Reserve’s initial analysis suggests that a potential U.S. CBDC, if one were created, would best serve the needs of the United States by being privacy-protected, intermediated, widely transferable, and identity-verified. As noted above, however, the paper is not intended to advance a specific policy outcome and takes no position on the ultimate desirability of a U.S. CBDC.
- Zcash doesn’t tick on the intermediated and id verified requirements but fulfills very well other points.
- Once approached Fed also ECB and BOE would onboard, since they are already in talks for interoperability of the respective CBDCs. Which better settlement layer than a public blockchain with the best privacy tech?
Put up another round table with major stablecoin players in the cryptocurrency space such as Tether (USDT), Circle (USDC), Maker DAO (DAI), Paxos (BUSD, USDP).
The point is trying to be pro-active and try define together with the industry and institution how CBDC/stables should be and how they could fit on Zcash:
- How do they imagine a CBDC/stables running as ZSAs on Zcash?
- Which privacy features do they imagine and how should they be deployed?
- Should the emission be transparent or shielded?
By involving relevant actors in due time we can design ZSAs in the best possible way and have major players onboard from the beginning.
Key people that could be of help
Having institutional people onboard would be of great help in putting up the talks with Fed. Chair of SEC Gary Gensler is a strong advocate of Zcash technology. I guess it should not be too difficult to involve him and push our case.
Regarding major stablecoin issuers, a dear friend of mine has direct contact to Paolo Ardoino and Giancarlo Devasini (CTO and CFO of Tether), and we can provide their mobile to @zooko . We don’t have contact for other mentioned stablecoin issuers but getting their attention for a business proposal shouldn’t be hard. CZ from Binance is always keen on developing the blockchain space, as well as Maker. Circle is probably the most institutional player but that would just add more value to the talks.
These enablers are already in place or being developed. Let’s take the opportunity to do it with the industry.
Risks and caveats
As already discussed in ZSAs and Zcash Economics ECC blog post, there are many concerns regarding security. The Top-heavy problem would be particularly relevant, and this discussion should go together with the PoS consensus.
Risk of not acting
Competitors: awareness about the need for privacy in monetary transactions is slowly increasing and new products are going to be on the shelf. Aztec.network is releasing a permissionless private payment protocol on Ethereum, which could allow users to send tokens in a private manner directly on L1. In case major DeFi protocol would implement Aztec users would also be able to use AMM, PERPS, etc . privately.
And here I come with the second major risk for not taking action
Loss of first comer advantage: Zcash has arguably the best tech for private transaction, with the advantage of voluntary disclosure of information with the encrypted Memo feature. But it already happened in the past that projects with the greatest intuitions ahead of time have been forgotten.
For example, my friends and I closely followed Spell of Genesis (SoG), a card game based on Counterparty (a Bitcoin sidechain). BitCrystal, the game platform, conducted an ICO in 2014 to develop the card game, inventing collectibles on the blockchain, AKA NFT technology. TL;DR in 2017 Dapper Labs came with Cryptokitties and stole them the scene; ERC 721 Specs were first proposed in Jan 2018. Where is SoG now? They moved to Ethereum but most of the crowd never heard about them.
If you want to read the full story, here is the research that I wrote for The Cryptonomist at the beginning of last year.
Value Creation for Zodlers
The above suggestion is intended only to create value for Zcash hodlers and supporters. I know that this is highly improbable, but ECC could choose to develop a specific technology or add an exception for licensing. That wouldn’t clearly be in the interest of the Zcash community.
If Zcash becomes a settlement layer for stablecoins and Fed CBDC (yes I know it is a wet dream but not impossible), BoE and CBE would follow. It would create a huge transaction volume and Zcash adoption.
Call to action
Do we want to create the tech for other projects’ sake and miss every train, or shall we start to push for players to start to use it? I agree that our great devs should always be funded so they can fuel innovation on the protocol, but there must be a right balance also with marketing and IMHO effort to start talks in the industry. Otherwise we risk being remembered by few as the project with the best tech that never went to market.
Hope this post will trigger some discussion / action! Next week Zooko will be at the SNB-CIF Conference on Cryptoassets and Financial Innovation in Switzerland, taking a keynote lecture in front of the guys of the Fed so maybe the chance to start a talk is already there.