Recently, David Hoffman, former co-founder of Bankless who just publicly declared his divestment from Ethereum, and Tushar Jain, co-founder of Multicoin Capital, along with Mert Mumtaz, CEO of Helius, conducted an interview discussing the so-called narrative of "private Bitcoin."
There’s no need to elaborate on David Hoffman's background, as I introduced it a few days ago.
I've also mentioned Multicoin Capital in previous articles; this fund initially bet on EOS and later on Solana, and all the projects they invested in fundamentally reflect their understanding of layer one blockchain: scalability and speed.
I believe if this capital had kept up with the times, they might have been more interested in investing in Amazon Web Services, Alibaba Cloud, or Tencent Cloud than in blockchain.
The topic of this interview—"private Bitcoin"—is also a narrative that can easily grab attention.
Upon seeing these backgrounds and this concept, my interest was piqued, so I read the interview quite carefully (for details, see reference link 1 at the end of the article).
Before sharing the highlights of the interview, let me share some basic background knowledge.
In the early development of the crypto ecosystem, privacy coins were a quite popular category, with three of the most well-known varieties being, in order of their creation time:
DASH (launched in January 2014), Monero (launched in April 2014), and ZCASH (launched in 2016).
Among these three coins, DASH and ZCASH are both forks of Bitcoin, while Monero is built on different technology; DASH was created first, and ZCASH was created last.
After briefly introducing the backgrounds of these three coins, let’s share some core points from the interview:
- David asked why they chose ZCASH instead of the now more privacy-efficient Monero?
Mert responded:
“Because Monero uses 'ring signature' technology, which is a kind of 'sleight of hand' (1 real transaction mixed with 16 fake transactions). In the face of AI and powerful computing power, this sleight of hand will eventually be cracked.”
His statement clearly confuses concepts and displays a significant misunderstanding of ring signature technology.
“Ring signature” technology is not sleight of hand, but a rigorously validated cryptographic algorithm.
In simple terms, cracking “ring signatures” using just the so-called “AI” and “computing power” is impossible; new technologies (like quantum computing or others) are also needed.
Can AI be used to increase the success rate of cracking “ring signatures”?
Of course it can.
But how effective is it? Let's look at the actual data:
When there are 11 members in the ring signature, using a blind guessing method (without any technology, relying solely on primitive methods similar to rolling dice), the success rate of cracking is 9%.
When using AI-based machine learning to assist with guessing, the success rate rises to 13.3%.
This means that with AI assistance, the success rate increases from 9% to 13.3%. Although the success rate has improved, it is far from the narrow, ultimate cracking he describes.
At the same time, Monero continues to iterate its privacy technology—now the number of ring signatures has increased from 11 to 16, significantly reducing the effectiveness of AI.
- Strengthen the argument for choosing ZCASH
Mert believes:
“The maturity of ZK (zero-knowledge proof) technology. People in the industry know ZK, but for many years it couldn't be applied on a large scale; it was slow and had a poor user experience. Only in the last two years has ZK really become usable. Zcash is the pioneer of ZK technology; it suffered a lot early on due to immature technology, but now it has finally come into its own.”
I completely agree with his statement.
However, his description is quite different from reality; the reality is rather contradictory and awkward (see reference link 2):
In actual on-chain transactions, the vast majority of ZCASH transactions do not use privacy technology but instead use fully traceable transparent transactions.
ZCASH provides users with a choice mechanism where users can opt to use privacy technology when conducting transactions or choose not to.
When users don't opt for privacy technology, all transactions, like Bitcoin, are transparent and traceable. Only when users choose to use privacy technology is transaction information concealed.
Why, in a completely voluntary choice situation, do users clearly have the option for privacy but choose not to do so?
Because some large holders (like exchanges), to avoid being suspected of dubious transactions, often proactively forgo privacy in favor of transparent transactions. Under this inertia, other users also default to choosing transparent transactions.
Thus, the problem with ZCASH is not that it cannot provide privacy, but that a habit has formed among users—despite providing privacy technology, people have actively given it up due to concerns about regulation and the objective environment.
Therefore, even if ZCASH is truly used on a large scale, I am still not very confident that this established user habit will change. If it doesn't change and everyone continues to default to using transparent transactions, then the significance of choosing ZCASH might be very limited.
Moreover, in my view, the future of the crypto ecosystem is certainly not limited to simple transactions of you sending me coins, and me sending you coins; it must be capable of supporting complex logical applications.
To support complex logical applications (like issuing tokens, conducting financial activities, etc.), it must be able to support smart contracts.
And to support smart contracts, ZCASH faces systemic upgrades and ecological construction, resulting in it inevitably competing with existing smart contract public chains and ecosystems.
Once it enters into this competition, how the outcome will be is something I cannot fully share today.
Let’s take a step back; even if ZCASH does not enter into the competition mentioned above and develops purely as a privacy asset as described in this interview, it is still too early to call it "private Bitcoin."
In terms of time, it is not earlier than DASH, and in terms of technology, it cannot compete with Monero; why should the title of "private Bitcoin" fall upon it?
Moreover, in the crypto ecosystem, creating an asset like Bitcoin that can exist purely based on narrative rather than function and still maintain consensus is very challenging to replicate.
Even Litecoin is now quiet.
The descriptions in this interview certainly have many aspects worth examining and scrutinizing.
Reference links:
1 https://x.com/PANewsCN/status/2057649466426188261
2 https://x.com/PANewsCN/status/2059162909436162159?s=20
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