mert@mert
the last 1,000x thesis
the reason I call privacy the last 1,000x or the last PvE is not just for a soundbite (though it's also that)
it is based on fairly obvious, emergent market asymmetries and gaps, along with the right timing on macro
this includes ZK, but is not limited to ZK, and also includes mixers, FHE, and MPC
a brief sequence of events:
- Bitcoin started as a cypherpunk movement for internet money as a response to the 2008 financial crisis
- it was novel, anarchist, and unproven — no one knew if it would work, and so the race to gain legitimacy was on
- as it gained popularity, there were 2 large criticisms of Bitcoin: the lack of programmability (and scale) and the lack of privacy
- Ethereum was started to tackle the lack of programmability, and then Solana was started to tackle the lack of scalability in programmability
- this is what we have seen play out for the past 5-8 years in crypto, along with Bitcoin gaining legitimacy
- improvements will continue to happen on the programmability/scale branch and the Bitcoin branch, but I'm not sure we'll see another 1,000x improvement
- that is to say, I think future improvements are marginal, not order of magnitude in scale
- on the other hand, Zcash was created to tackle the other branch of criticism. the lack of privacy
- if you imagine the technological tree in civilization, it aimed to progress along the privacy branch
- the privacy criticism was widely acknowledged by the likes of Satoshi (who cited Zooko on the first Bitcoin post) and Hal Finney in public forums
- in those years, you had to get around the big problem in digital cash, the double-spend problem
- to get around the double-spend problem, you had to make sure that everyone saw everyone else's balances
- at the time Satoshi was open to adding ZK to Bitcoin for privacy, but did not know how to get around this problem, the tech was very new. he publicly states this in the early Bitcoin forums that this would allow for a better, simpler Bitcoin
- the tech was so new in fact that Zcash was the first team on earth to ship ZK to production. not just in crypto, but in any industry!
- but again, the tech was too new and hard to work with, and required many iterations to get right and get rid of trust assumptions, so the project struggled
- which brings us to today. where ZK tech finally works. and where the brand of scale/programmability has reached the upper bound of the technological S-curve.
- Bitcoin has gained legitimacy and Solana/Ethereum have proven programmability has PM, the privacy branch is the last piece remaining
- it is also extremely timely. crypto has largely been dominated by speculative and commercial interests as of late, but crypto was started by the cypherpunks and the cypherpunks' aim was to build systems of liberty and privacy using cryptography and code
- we are at that stage now
- combine this with the macro environment of debt crises, the fact that non-state money has clearly been proven to work with Bitcoin, and the colossal abuses and breaches of power and privacy all over the world spearheaded by Europe, this is the time where privacy and ZK will start eating the world as well as newer forms of digital SoV
- specifically a private internet-native SoV using advanced cryptography like ZK
- these fields are also some of the only fields difficult, impactful, and novel enough to suck away meaningful talent from AI; and once this is realized, much more capital will go towards them
cypher/acc
