On Tuesday, August 28th, the Eden Labs team hosted an Ask Me Anything (AMA) via the Eden Labs community channel on Telegram. A variety of questions were pre-submitted and live questions were answered as well. Participants who provided answers to questions raised include Noam Levenson (CEO of Eden Labs), Daniel Lobel (General Manager of Eden Labs), Anaïs Urlichs (Head of Research of Eden Labs), and Javier Alaves (Chief of Operations of Eden Block).
Q) What does Eden Block think about ZenCash?
Daniel: Thanks for the question, @zulvke. Horizen (formerly ZenCash) is a derivative of the Zcash project which utilizes zk-SNARKs for zero-knowledge proofs in the network. The project is also working on a number of other privacy enabled products for the Horizen ecosystem. The team behind the project is extensive and seems capable, they all have relevant education and experience in technology. The benefits Horizen offers over the competition are the added products the team is building on Horizen, the integrity of these side products is yet to be determined.
One alarming piece of information was the successful 51% attack on the Horizen (ZenCash) network. The attackers successfully gained control of the network and made various double spends allowing them to make off with approximately $600,000 – $700,000. This information is damaging to the project’s reputation and might be keeping investors away. However, Horizen is an interesting project with a strong team, and it is one to keep track of especially since its technological improvements allow for enhanced privacy enabled capabilities unseen in other privacy projects.
Q) Do you think decentralised protocols will be more successful than their current equivalent? (Steem vs Facebook, Exchanges, Filecoin vs Dropbox)
Daniel: This is indeed an interesting question that I am sure many of us have asked ourselves. Will this project/platform be the next big thing? The next global social media giant? The next YouTube?
Since the rise in popularity of decentralized ledger technologies, new decentralized apps and protocols have been steadily coming into existence. Anything from games, social media platforms, gambling, and financial applications have been implemented as decentralized applications so far. Each of these categories mentioned above benefits from decentralization differently. For example, online gambling platforms are prevalent today. Decentralizing such platforms creates transparency for users which can take comfort in the integrity of the information on the blockchain that they are not being swindled. In this situation, users would be more inclined to join such a platform over one which shrouds their internal operations.
As another example, decentralizing exchanges might be both beneficial and detrimental. Centralized exchanges run the risk of getting hacked; this is a significant issue which every exchange will try to avoid. Decentralized exchanges are less vulnerable to hacking due to their distributed nature which ensures funds are not centralized and vulnerable to attacks. On the other hand, centralized exchanges offer features which are currently unavailable on decentralized ones. Margin trading is such a feature that is currently unavailable at most decentralized exchanges due to the technical challenges it puts forth.
Generally speaking, decentralized protocols/platforms have the potential to become more successful than their current market equivalent as long as decentralization offers enhanced capabilities with could not have been achieved otherwise
Q) How does blockchain affect anti-money laundering?
Javier: In our view, blockchain will be most useful for anti-money laundering as we work towards an economic system where every identity is verified before transactions are even allowed. Doing so, AML professionals would theoretically count with an immutable, auditable electronic record of all economic transactions at their disposal. Right now, most efforts to gather this data are siloed per country and highly obsolete.
Instead, consider the idea of an international, decentralized platform for AML. A platform that counts with cross-industry participation, regulatory authorities, banks, and other financial institutions; and interoperable with a wide variety of marketplaces where the transactions take place, and where identities can be traced to ensure that decentralized networks are not used negligently.
These types of use cases are where blockchains excel. DLT is essential for establishing decentralized networks between entities, allowing collaboration is a setting where no one entity can act maliciously.
Q) Will smart contracts and blockchain technology end the need for legal professionals?
Anaïs: We believe, based on our research, that smart contracts will not replace legal professionals any time soon. There are projects, which provide smart contracts for dispute resolution. However, these projects do not express the settlement in code, instead, they rely on ‘the wisdom of the crowd’ and can therefore never be completely objective. For example, Alice wanted Bob to build her a nice website for 100 X tokens. However, Bob is only half finished and unwilling to create the last subpages. Resulting Alice is unwilling to pay Bob anything. Both of them post the conditions in a smart contract and let other users decide on the settlement. The main problem is that no one can tell if Alice or Bob tell the truth. If network participants receive further information to the website, they might be able to check to what extent Bob has finished building it but other than that, everyone has to rely on information provided by Alice and Bob. We call this the ‘oracle problem’. It is highly difficult to ensure information from the real world are provided to blockchains accurately. Therefore, current solutions can only find dispute resolutions on on-chain generated data. We think that it is far more likely that data, posted on-chain, will be used in legal cases. Ultimately, it could make the work of legal professionals easier.
Q) By when do you foresee blockchains acting as store of identity records?
Anaïs: Identity records are, like legal data, dependent on an oracle, which provides the information to the chain accurately. Currently, blockchain identities are connected to the user’s wallet address. There is nothing, which prevents one user to have several addresses and thus multiple identities. UPort is one of many applications, which experiment with that problem and is currently tested in Zug. The downside is that it relies on the City of Zug website to receive the user’s identity information. Ultimately, we think that the first solutions will provide decentralised trusted identities, which is an identity that is provided by a decentralised service that proves the validity of existing trusted credentials e.g. governments issuing digital passports.
Q) To what extent should projects facilitate confidentiality in transactions?
Daniel: Confidentiality in our finances is a property we all take for granted. Of course governments and regulators are allowed to peek, but generally speaking, I am not able to take a look into my shopkeeper’s bank account and scrutinise his transactions. Why should I be able to do this when using blockchain technology?
The usual argument is that if you have nothing to hide you should have nothing to worry about. Though that statement might hold some truth, it is not the whole story. Due to blockchain technologies current level of transparency, many companies scour the networks and work at analysing blockchains for illegal activity. Once they identify coins used for malicious purposed they are flagged and blacklisted. This means that exchanges and retailers are unlikely to accept such coins which decreases their inherent fungibility.
If a shopkeeper were to unknowingly accept a Bitcoin transaction which can be traced back to a malicious incident, their new coins would become blacklisted and un-transactable without any wrongful doing on their part.
For this reason, blockchain projects need to consider implementing a certain degree of confidentiality to protect their users from unwanted snooping and the coin’s fungibility.
Additionally, because of blockchain’s inherent transparency, it will be extremely important for privacy and confidentiality to be implemented beyond just simple transactions. Data being stored on blockchains (think healthcare records) cannot be seen by everyone. Digital identities must remain private. Blockchain is about ensuring immutability and trustlessness, not necessarily transparency. Some applications certainly need transparency, but immutability and trustlessness can be achieved without transparency.
Q) What are the biggest obstacles to adoption of blockchain today?
Noam: I think some of the past responses have touched upon this question already, but I’ll summarize our thoughts here. There are definite obstacles preventing mass adoption of blockchain tech. I think people underestimate how early we actually are in the lifecycle of this technology. The primary concerns right now are surrounding ease of use. Ease of use is incredibly broad, but ultimately, everything contributes or is detrimental to ease of use. Additionally, ease of use is the fundamental factor. It’s easy for all of us to theorize about the potential of blockchain technology. Whether anyone actually uses it depends almost entirely on how easy it is to use.
Virtually all applications today require pretty sophisticated knowledge to use, either because one must purchase crypto, maintain security over their wallets, or interact with terrible UX designs. The issue is, the underlying technology – i.e the platforms and architecture that will support dApp development – is still very novel. We really need to establish platforms that are scalable and secure before we can even think about dApps supporting mass use.
Thus, bridging the ease of use hurdle is the most important. This means enabling compliant exchanges with enough liquidity. It means establishing easy ways of purchasing crypto with fiat in automated formats (through dapps for example); decentralized exchanges will be critical for that. It means creating interoperability solutions so that people can easily switch between applications. It means creating wallets and storage systems for crypto that are far easier to use than today’s standards. It means changing the global stigma regarding cryptocurrency and blockchain. It means that we must start thinking about blockchain in the context of the real world and not just what everyone else is doing within the DLT industry. Only after we accomplish these aspects might we see the emergence of real blockchain adoption.
Q) What will be blockchain’s killer app?
Noam: It is interesting to examine this question in the context of the internet. The internet was largely theoretical in its potential applications. It’s easy to appreciate the world-changing potential of the internet with the perspective of hindsight. But the early applications of the internet were largely confined to pornography or other highly specific uses. We all know the quote by Paul Krugman about the internet (given, he was trying to be provocative and the quote is slightly out of context, but the point remains) “By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.” The internet’s killer app was email. Email was the application that made sense to people and justified their purchase of a personal computer. After email, the rest was simple. After everyone committed to purchasing and learning to use a PC, the wave of development for the next applications was far simpler. The most difficult task for both the internet and blockchain is how to go from 0 to 1. 1 to 100 is always easier than 0 to 1.
Thus, the question, though incredibly speculative, is which blockchain application will be the killer app? Which application will create the snowball effect that will facilitate blockchain adoption. Recognize that this response is entirely our opinion. Recognize also that while gambling applications may be one of the first to benefit from blockchains, they will never be a “killer app.” Not enough people are interested in online gambling for that to facilitate mainstream adoption. I think an interesting application that could spur adoption might be social media and digital marketing.
The potential for blockchain to enable micropayments could be instrumental to the development of a decentralized instagram or other applications. In addition, digital marketing today is highly skewed. Advertisers pay significant money to platforms like Google and Facebook and none of the money trickles to the end user who is actually engaging with the advertisements. People turn on adblockers as a logical response. Projects such as BAT and KindAds offer interesting solutions that would allow people to monetize their attention as they browse the web.
I think the common thread between these themes is that once people understand that they can monetize their content and attention, they won’t accept anything less. Today, the expectation is that you post Instagram, Reddit, and Facebook posts and make no money from it (unless you gain sponsors). This data is worth something, but there isn’t a clear way of monetizing it today. I think as it becomes easy to make money of it, people will begin demand ing and expecting it.
Honestly though, I think once the ease of use issues surrounding blockchain are overcome, then the killer app will develop. We will see the emergence of dApp stores and OS systems that can support blockchain applications. At that point, it will make little difference to people if they’re using Uber, or the decentralized variant.
Q) Thoughts on TE-Food?
Daniel: Thank you for the question, @NekoBenLouie. I can’t say we have looked into TE-Food yet, but after a quick review, it seems like a solid project servicing the food supply chain industry. The team is extensive and technically knowledgeable, although at a quick glance I did not find anyone with expertise or experience in supply-chain businesses. The project has managed to accrue some substantial partners including Deloitte and has impressively already begun production and servicing clients.
One thing to consider when looking into these projects is the current state of the IoT industry. Many of these supply-chain projects heavily rely on IoT technology and hardware to run their operations. In this case, it looks like TE-Food implemented the current industry standard, simple yet popular RFID chips. If any other device were being used it would be a cause for concern as the infrastructure which is needed to support new IoT tech can be so extensive it wouldn’t be worth it for such big operations.
End of AMA.
Readers are urged to pay attention for future AMA and Q&A sessions to be hosted by the Eden Labs team. Additionally, readers are encouraged to submit questions to Eden Labs at any time at our official Telegram channel. To learn more about Eden Labs, visit our Twitter, or website for latest developments and announcements.