Building and Fighting for Tomorrow's Technology w/ Alan (Railgun)

**Speaker A:** Hello, and welcome back for the fourth episode of the Strange Water podcast. Thank you for joining us. Today's conversation is with railaluya AKA Allen, one of the founders of the Railgun Protocol. In this episode, we go deep into Alan's background, his journey to Railgun, and how Railgun is providing some of the functionality needed to transform Ethereum from a speculative investment into the financial rails of the 21st century. But the meat and potatoes of this conversation is much less about founding a successful Defi protocol and and much more about building in an environment that is increasingly more hostile, not only to a specific project, but to this entire industry. This is a conversation about fighting for the world you believe in, about democracy and about change and about making things happen. And this is a conversation with one of those special people that are called to action when they see something that needs fixing. The type of person we should all hope to be. One final note. Please don't take any financial advice from this or any podcast. Ethereum and decentralized finance will change the world, but you can easily lose all of your money in the process. All right, let's get started. Welcome back and thank you so much for joining us. Today we have a conversation with a Defi co founder, probably one of my favorite protocols. And that's both because of, like, what I understand what Railgun and what Alan are doing and building, but more importantly because I think that what Railgun is building is actually relevant to, like, the core technology we're building and actually relevant to making crypto something usable in real life. So super excited to have this conversation. Super excited for you to join us. And Alan, thank you so much for joining the Strange Water podcast. **Speaker B:** Yeah, yeah. Appreciate you having me. Look forward to an interesting conversation. **Speaker A:** Thank you. Thank you. Before we get started, would you just like to give a brief intro and background about yourself? **Speaker B:** Yeah, yeah, sure. So I'm Alan, one of the co founders of the Railgun Privacy project. I guess my background is more in, like, the traditional finance space, specifically in reinsurance, so helping set up and maintain insurance finance funds in like, the Turks and Caicos and Cayman Islands and things like that. I got my start in crypto in about 2017 and, you know, tangentially heard about it from different friends in college and things like that well before and, you know, I thought they were kind of crazy, but my background with crypto was really more on the trading side of things. I was really interested in trading my own money and was after more beta and came across crypto because the moves were pretty violent as we all know back in 17, yeah, there's still chucking and jive and. But yeah, I ended up going down the rabbit hole pretty aggressively. Found myself in a bunch of different like you know, telegram groups and discords and things like that and was always really fascinated, I guess about like the teams that were like founding these projects and stuff. And I can still remember like being in like protocol chats and being like, oh man, like these are the guys that made this protocol and they're in here like answering my questions and was always, you know, kind of like starstruck I guess from that. And yeah, I guess I finally got the opportunity to be part of founding a project and that's, yeah, that's railgun. So I guess my character arc is, you know, finance turned full degen and now co founder of a protocol. **Speaker A:** I think something that is not well appreciated by people that are entering crypto as their first industry or first career is how you actually can just get in a group chat with like a co founder of perhaps like the most important protocol or the most exciting protocol and really engage with them. And for those of us who like reinsurance is one of those like huge closed off, kind of, you know, faceless until you're behind closed doors businesses, the, the true at scale beer business, which is where I came from, is exactly the same. And you know, for people like you and me, this moment where you walk in, you know, you enter the a discord and you want to talk to like the core developer, like they want to talk to you and that's something that's like really, really, you know, treasured about this space and I, I hope it just lasts forever. **Speaker B:** Yeah, it's certainly, it's, it definitely comes with its challenges, you know and. Yeah, yeah, for sure. Like it's, it's, it's definitely challenging, you know, because people will at you, you know, random times, I guess it's kind of like, I don't know, it's like building naked in front of a bunch of people, you know, like the open source technology thing, it's really, really cool. It's a very fascinating pursuit. You get a bunch of people who come up and like want to contribute and I think that's really cool in itself, you know, so it has its advantages for sure, but it's definitely, it definitely comes with its own challenges, you know, especially if things are, you know, difficult. You know, the whole cliche like devs do something thing is always really, it's difficult to deal with, you know, devs are always doing something. I Guess if you will. You know, there's. There's ever research happening and people writing code and contributors coming in and out of the ecosystem. And so it's. It's certainly exciting. And I think one of the things that's always been really weird about it for me is like, you become like the oldest guy in the room, like, really quickly. It feels like, you know, I'm in my mid, you know, mid-30s. Yeah, yeah, yeah, yeah. You know, I'm like a. I'm a pensioner in like, the world of like, crypto, you know, and some of these kids are, you know, really, really, really young, which is. Which is really cool in its own right. And so, like, yeah, some people just come and have crypto as like their first job, which is pretty. It's pretty rad. **Speaker A:** Yeah, I. That word you said, like, it. It can feel really naked. It just is like bouncing around in my head because, like, that's. That's absolutely true. And. And like, the thing about being naked is it's like incredibly vulnerable and it's incredibly scary. But it's also like the moment matters because people are looking at you and people are like, care what you do. And I think that that is kind of like a dynamic and something that's crushing to a lot of people. But especially for those with the entrepreneurial streak and those who are really passionate about this space, I mean, it really just is opportunity and it's opportunity to sink and opportunity to swim. But that's not something that really exists out in the traditional world today. And so, like, I think that's what's exciting for me. **Speaker B:** Yeah, I mean, it's, It's. It's the kind of thing where like, you can. Yeah, you could really kind of blaze your own path. I mean, like, with Railgon, it's been really exciting because, like, we're. I mean, we're building some pretty complicated tech. Like, it's. **Speaker A:** Before you jump into the tech, how did you get in from. Like, most of us entered the space trading our own, losing our own money. But how did you get from there to like, passion about privacy? **Speaker B:** Yeah, I guess that's a great question. So, yeah, like I mentioned, I was in a bunch of telegram groups and if you're a real degen listening to this, you'll know about collab, land bot and like token gated, like telegram groups and things like this. And. And so I, I really wasn't big on privacy before, you know, I guess a particular event happened, a bit of story time, if you will. And so I was In a group and it's a bunch of people who share alpha, right? And everybody's like, oh, I'm getting in on this token deal or I'm getting allocation for this token or I heard this new coin is coming up and it's going to be cool. And people talk about the interesting things that they're in. And so at the time I was really into on chain options. My thesis at the time was like, you know, crypto is going to take over all rails of like finance and people are going to use like crypto for everything, including hedging, right? And so like we're all like sharing all these ideas and then I get a random DM from somebody in like the group and you know, it's like something to the tune of like, oh, hey Rex, how did you get into Token X? And I was like, that's really weird. Like I've not told anybody that. Like I'm in Token X, right? I'm not in that position, you know, as far as the world knows. And I'm like, man, how'd you know that? And you know, of course, you know, Etherscan was shared with me like, this is your wallet, right? And I'm like, whoa, you know, so I guess I had that second epiphany of like how I think you have like two big moments in crypto. You know, I started out in the centralized exchange world and was trading on centralized exchanges basically just doing a pretty boring trading strat. For better or for worse, I should have just held the tokens. I was trading Ethan bitcoin at the time. I'd have made significantly more money than trying to buy up and down. But yeah, you have this big moment where you finally hold your own keys to your crypto. And that's a really, really big moment. And then I think the second big big moment is when like you go and like you look at your like address on Etherscan and like you could just see like everything that you've done since like the beginning of time. And like I had that happen to me. Not like me having that realization. I was pretty dumb at that time admittedly. But that's, that's kind of where I really got aware of like how like, you know, crypto didn't have a lot of privacy. You know, naturally there's things like zcash and Monero and things like that that existed at the time. But yeah, like the place that I was doing business, if you will, Ether scan, you know, docs me pretty readily. So yeah, I think that's that's kind of the story there. **Speaker A:** Wow, that's. That's pretty cool. You know, I think we've all had that similar story. For me, it was spending a year thinking I, like, was smarter than either Ether, you know, and, like, was maintaining these different identities. Well, and this and that. And then actually at ETH Denver last month, one of my, like, very close friends who has, like, is an Anon, and I met him in person, and the first thing he says is, you are so sloppy on chain. And it was just that moment where it's like other people are watching, you know, and. And whatever, for whatever reason. Maybe they're, like, just trying to find Alpha. Maybe they're bored. Maybe they have something against you specifically. Like, it doesn't matter. The point is that it's there. And more so than that, that is not a bug. That's a feature, at least of Ethereum. And so I think we've all had that moment, but it's pretty incredible. But you had that moment and your response is, I need to do something about this. **Speaker B:** Yeah, well, it was kind of like this weird serendipity, you know, like, it's so like the team getting together, right, you know, of, like the initial, like, core contributors, if you will. You know, there's naturally some. Some pretty. Yeah, some pretty smart people in that group of people. And one of the things that they didn't really have was someone who had, like, soft skills. And so, like, I was basically approached and, you know, people were like, hey, you know, you like talking and like, you should. You should be on, like, the, you know, the soft. The soft skills side of things, you know, so, like, you know, kind of telling the story and, you know, giving the. The why behind what we're doing and, you know, being that, you know, sort of, you know, liaison to. To the outside world is really how I ended up getting on the team. And it was like. It was really quite funny because, like, initially, whenever, you know, this was all coming together, you know, I was. I was, you know, being courted, if you will, to, like, quit my day job. I was, you know, I had a baby on the way and everybody thought I was, like, absolutely insane. And, you know, my mother especially is like, what are you doing? You know, which is a bit of a classic story, really. But, yeah, I guess the thing that kind of like drove me to it was like that privacy from like a. Just like a pragmatic standpoint of, like, will crypto make it is. Is just super important, just from like, the pragmatic, like, business perspective. You know, if we take in like we reframe like the crypto wars and the whole like going dark problem and all this around encryption, like privacy just has to happen in crypto. And then like the more I looked at like, like the ethics of the project and like how we were going to like, you know, I guess like contributors were going about it, I was like, yeah, this is like the coolest way and like this is to me like what resonates with, with like my ideals of like, you know, no L2. Like at the time I was like, no L2s, you know, no side chains, no roll ups eth only, you know, really ride or die on Ethereum. And so yeah, I decided to quit my day job and you know, work full time on like contributing to this open source project. **Speaker A:** Wow. So before we really dig into Railgun, can you just talk about like your personal journey from being an employee at like one of the like most sleepy stable. Just like, like when you talk about reinsurance and, and for anyone who's not familiar what reinsurance is, is like when an insurance company insures against an event, they don't want to hold all that risk. So what they do is go get insurance against the event. So. And Alan can give you much more reason about how that or much more information about how that actually works. But the point is, is that this whole construction comes out of like, I don't know, really out of like the age of discovery in the 1500s and like Long treasure voyages and, and so it's like very developed and institutionalized and like that's what Alan said he was working on, I don't know, let's say 2015. And now eight years later, you are as you like to say, the chief janitor, but as I'll say, like, like a huge part of the heart and soul of this like super important defi protocol. And like part of that required you to take like a huge leap of faith in both the protocol and yourself. And so to sum that all up, I just. Can you talk a little bit about your journey and how you were able to take that leap? **Speaker B:** You know, it gotten to the point, you know, it's like reinsurance is really interesting space and it's, it's very sophisticated, like old school financial engineering. Right. Like, and you know, the actuarials behind a lot of this stuff is really exciting and interesting. Well, okay, maybe it's not exciting, but it is interesting to me. You know, like, I really love statistics and you know, I really, Yeah, I found it to be really Interesting, right? Suffice it to say, but I'd worked on it, I'd worked in the space for, for many, many years and kind of had run to, I guess run into the highest echelon that I felt like I was going to get in that space. Right. And that, that kind of comes with like a. Oh, is that, that's it, you know, like, oh, I've kind of like maxed out my career and in what I'm doing, which probably wasn't the case. You know, maybe, you know, I would have, you know, gone on and been, you know, who knows what. But I had kind of grown like, I guess a little bit like disenfranchised with like working in that space. And you know, I've become like more and more interested in crypto, I think, as we all do. People who like go like full, like heads, heads headlong into the space, you kind of grow like more and more interested. And I started reading like more and more white papers and found myself like reading the boards about like various EIPs and things like this and like was dedicating more of my time learning about this new like crypto thing than I was like invested in learning about like controlled foreign companies and non controlled foreign companies. And so like my interests in reinsurance just kind of waned and it just, it got to the point where I'd realized that I was more into it or I guess more into crypto than I was into my actual day job. And you know, I'd known some people who were in the space, you know, working full time and it kind of was just a. I guess I won't like. Yeah, I really won't. Yeah, I won't really rule out like how much serendipity was at play there. It was just like weird timing and like I was a bit of an opportunist and I was thinking, why not, you know, why not do something different? The challenge with it is, is like it's a totally different, like it's a totally different business. You know, you're, you're working in Telegram with a lot of different people dispersed around the world. Like you're on, you know, discord, you know, chatting with people who have like, you know, really weird names. You know, like, it's a. I don't really know how to like, it's really ineffable. Like the stark differences in between, like working, you know, structuring pretty sophisticated, you know, reinsurance positions for people, you know, versus being on the Internet, working on a DJ protocol. But suffice it to say it comes with its own challenges, but it's really exciting. **Speaker A:** I find you got to be like, honey, I can't help with the baby squiggle butt needs to talk. **Speaker B:** Yeah. Or I still remember like, you know, my parents were always like really giving me a hard time about like, you know, I'm just a pretty boring person, you know, have a mortgage, a lease and things like this. And so like, you know, I got, I got a lot of like funny pokes at me like, oh, you're not going to be able to pay your mortgage in, you know, fill in the blank satirical token name. So you know, I guess it's, it's kind of a classic story, isn't it? You know, it's, it's someone, you know, I think everybody who like leaves finance and goes and works in like magical Internet money land gets a little bit of that, that, that jab. But I for one have always been a bit of a countercultural, you know, counterculture type where you know, going against the grain is potential and more interesting than the path of, you know, the well traveled path. **Speaker A:** Well, I've only known you for what, a little under a year now and the idea that you're boring is laughable to me. But let's move on and let's talk about Railgun. So just for the folks at home, it would be great if you could just give like a super brief elevator pitch on what Railgun is. **Speaker B:** Yeah, I think, yeah, for sure. I would totally suggest having like a hyper technical guest getting to the weeds of like EVM and like how the computation and all of that works. But you know, suffice it to say, you have the Ethereum virtual machine and you pay in ether for people to do computation on your behalf, like in this decentralized virtual machine. Now the, the problem with that is you have a, a decentralized public ledger of like all transactions that happen on Ethereum. And we could view this at least as plebians, I'm sure. You know, some people call and you know, view the blockchain directly on their laptop or something like this, but you can go on Etherscan and you know, arbitrarily look at everything that's happening on that public ledger. And it's pseudonymous in the sense that it's all like 0x addresses happening to be doing these things. But as we all know, we fast forward to today, Ethereum is being used pretty regularly and pretty aggressively by a bunch of different actors to do a whole bunch of different things. Whether it's simple Swapping of assets, sending tokens back and forth to each other, all the fun dgen activities that we enjoy. And we kind of have created an ironic perfect surveillance machine. And I think that that comes with its own challenges. Right. Like I can go and look at aave a lending protocol and verify that the loan to value of like the contract is what I expect it to be and that the collateralized nature of a, you know, a back stable coin. Like I can go and look on chain and verify that. Yep. You know there's the eth, it's backing it, it's in the contract that I'm expecting it or it's not only that. **Speaker A:** You can look it up, it's. That is the cool, incredible different thing about Ethereum. Like we can't have these bank runs that are happening in tradfi on Ethereum because like there's no panic created by this like shadowy assets or whatever. It's all on chain, it's all audible. **Speaker B:** Yeah, yeah. But this comes at like a. So there's like this severe disadvantage to that and that there's like wholly transparent like insight into your individual interactions with these and ultimately your balance of tokens. Right. So you could think of this as like a, you know, so for example, if you were to, you and I were to make a transaction, um, like let's say that you and I we go out for drinks or something and or we go out for a dinner and you're like yeah, no problem, we can split the bill. I swipe my card and then you send me tokens on ETH for you know, maybe I'm you know cool. Just pay me an Ether DAI or usdc whatever it is. Right. I could then go. It's not, I could then go. I will then go to Etherscan and proceed to judge you off like all your, all of your transactions, you know, like oh, okay, yeah, he's into this man, you know, he holds these tokens. **Speaker A:** And this lot of miladies, isn't it? **Speaker B:** Yeah, exactly. You definitely do. I, I, I don't do you. I certainly do that. Anytime I do a transaction with another individual I can't help myself but like peruse their transactions and like Snoop. **Speaker A:** I know true that like every single. Especially when I find out a real life friends like Etherscan or ens like I, I go back, you know and I figure out like how sophisticated they are, how much they're worth and you know like that's everything from a privacy like embarrassing problem to like a real life safety issue. **Speaker B:** Right, exactly. You know which creates a whole like it's encryption is security, right? And without it, you know, when you have like wholly transparent access to somebody's bank account, because that's effectively what your Ethereum address is, is a bank account, you store value there. When you have like whole like transparent auditability of that, there's, there's a lot of inherent risk involved. You know, you have a lot of like, even when it gets to like the sophisticated part, not like, you know, oh man, Rex has a lot of money, I'm going to rob him for his cryptokitties. You know, something, something like financial engineering side, you know, like being able to look and see that someone has a loan and know exactly, you know, where they're going to get liquidated and try to push the price against them. Like this kind of thing happens. There's certainly a lot of challenges involved when you have like wallet side transparency. And so I guess like, if you think about it just from like an overarching ethos of privacy, the point or like the pain point that Railgun is trying to solve is a really kind of like tough balance because like we want to be able to provide like wallet side privacy for crypto users, but also like maintain that like third party auditability of different DApps that exist on the ecosystem because that's, that's really important, like the auditability of like money supply, if you will. Like this is, this is really, really important. Like can I go and look and verify that AAVE is acting as it should? Can I go and verify that when I want to swap my tokens on uni swap like that they're going to, they're going to happen, it's going to happen in the way that I expect like this sort of thing. Like, so being able to maintain like that DAPP transparency along with like wallet side privacy is definitely really a really difficult balance. But that's ultimately what Railgun is trying to do, which is, you know, build wallet side privacy. **Speaker A:** Incredible. So that's a perfect segue. So can you just like briefly talk about like just real basics, like what is Railgun, how does it work, how does like a user interact with it? And then maybe with a special focus on how is Railgun built to provide privacy but also maintain the transparency and auditability at the application layer effectively. **Speaker B:** Railgun is a suite of smart contracts that exist directly on chain that are designed to allow users to deposit assets into a private address and then transact those arbitrarily in defi. So if I want to take and swap tokens If I want to stake tokens or buy NFTs, whatever it is, you can perform arbitrary actions in defi using this private balance of tokens. And so the, the way it works, just from like a high non technical view, if you want to learn more technically about it, you know, go at Kai and you know the different people contributing to the code. But from a high level what you do is you deposit funds into the Railgun smart contract. Those can then be transacted by generating a snark proof. And you basically verify anonymously that you own these tokens and have the right to spend them. And you could have additional transaction steps on top of that. So you could generate a snark proof that I own these tokens and I want to transact them in this certain way. The smart contract verifies your snark proof is true and then you can and then those are transacted in defi how you desire. So for example, if I want to send tokens from my private balance to Urex, I could do that so I can generate a snark proof that I own at least 100 Dai and then I could send that to you privately. And so the cool thing about that is Railgun effectively. So another smart contract sees is just another smart contract on Ethereum. Right. So we don't like hide like that. There's someone swapping tokens on, you know, uniswap, let's say it just hides who the actor is. And so you could verify that like there wasn't some sort of like malicious attack. Like it doesn't like make that transaction, you know, private. You could see that if 100 DAI goes in, 100 USDC comes out and you know the, the transaction happened as it was supposed to. Right. So you still have that auditability of the dapp, but you just don't know who the end actor was. And I think that that's a really, really cool thing. And I think the other thing that's really interesting about Railgun is that you have like the third party audit ability of your transactions if you so choose. It's all just encrypted to your private key. You can take and you know, docs those to people if you so choose. Right. And that's, that's really where the ethos is of the project, like giving people self sovereignty over their transaction data. **Speaker A:** Yeah. And so just to walk through what it actually looks like on chain, like let's say that Alan and me and let's say tetra node are all interacting with the railgun Contract. Right. And alan puts in 1 ETH. I put in 100 USDC. And Tetra Node puts in 1000 ETH and 1000 USDC. So from on chain perspective, you'll see one smart contract or maybe a suite of smart contracts that contains 1001 ETH and 1100 USDC. Allen, you will be able to send in a snark, which is really just a digital signature that says, I own this one eth. I want that one eth to be sent to this address. And the Railgun contract will verify that. And then send your one eth. And now like your balance according to Railgun is zero. But that cannot be like, understood or figured out by anyone on chain. All they can see is that the master Railgun smart contract dropped one eth. Is that. **Speaker B:** Yeah, exactly. Yeah, exactly right. So Railgun effectively is a. You can think of it as like a multi actor smart contract wallet. So very similar to how, let's say something like a Gnosis safe. Right. This is effectively a smart contract wallet where you have a special program where people can do a multi sig. So we can take an all sign to do transactions. Well, this is a very similar concept. **Speaker A:** Yeah. So maybe if in our future world where defi is finance, maybe a Gnosis would be a type of like special institution that is about creating like coordination at the wallet level, where Railgun is like a similar kind of institution, but is focused on creating privacy at that level. **Speaker B:** Exactly. Right, yeah. **Speaker A:** Just to follow up on your comment about how you can share your private keys if you want, I think one of the things that a couple months ago I reached out to you to ask you about is that you've created something akin to like accountant or like viewer keys where you can share like read only keys into your smart contract so that you know, people like accountants or like financial institutions or the government, who needs to be able to verify what you have, can do that securely without leaking all your information or giving them access to your assets. Is that correct? **Speaker B:** Yeah, yeah, exactly right. Giving them the right to transact, which would be really bad. Right. So. Yeah, yeah. In the code base there's a thing known as a view key that you can take and distribute to people, which is a. And it's an immutable right to view the transactions. So like you said, for example, maybe you want to give your accountant, you know, the right to view your transactions. Or maybe you have like, let's say you're a fund and you want to trade privately. You can give it to your risk team and they can monitor the transactions and making sure that you're, and make sure that you're going to, you know, you're trading appropriately. Not 2degen for their liking, but we're going a little bit more sophisticated than that. Actually. A lot of the contributors have been working on like compliance is a pretty big focus for the protocol. So making sure that people can. Because ultimately what we're after is like a real world adoption. You know, institutions and you know, businesses and you know, real people wanting to use this and you know, so real people for example, want to take and file their taxes. Right. This is a pretty important thing that people do. And so we're going to be releasing pretty soon a export functionality which will take an export a CSV to Koinly for you to be able to take and just do your taxes like you, you normally do. And yeah, we're also working on some pretty cool. You know, we just broke ground on a scope of a recursive snark based compliance tool where you can arbitrarily prove your balance against like, like different accumulators of addresses. So let's say that there's a particular naughty list that you want to prove that you're not a part of. You can do that with this like new tool. There's a, there's a lot of things that you can do in privacy that I think people probably underappreciate. Right. I think that like there's this like strawman assembled against privacy where it's like bad actors are out to use it. But I think you can really have your cake and eat it too and you know, have like compliance functionalities and things that like prove that you're a good actor and like know that your transaction isn't from you know, some sort of like sanctioned body. I think it's just a matter of like, you know, building those tools and like giving people the capabilities. **Speaker A:** Yeah, well, and I think, I think even on the flip side, like this doesn't only have to be, hey, I'm not a terrorist. It can be, hey, I have passed kyc. I am in this part of institutionalized or accredited investors. And because of this I can have access to these kinds of opportunities without doxing myself. And so yeah, I mean I think it's, I think there's a lot of really important things to do in compliance, like partially because of the risk to you know, the, the builders and the DAO and the team and all that kind of stuff, but also because that's like where the real business opportunity is and like, that's where the real challenges are today. And so I, I want to move the conversation on into that realm. But before we pivot, is there anything else you want to just talk about Railgun implementation? Just kind of like details to make sure that we covered the bases? **Speaker B:** No, I mean, I think that's. I mean, I've, I've probably talked until I'm probably too much on a whole myriad of podcasts on like, you know, what Railgun is and how it works. But, you know, the short and skinny is we basically built smart contracts that mimic zcash in Ethereum and other EVM compatible chains. It allows you to transact privately. I mean, like, uh, there's hours and hours of content on, on like what railgun is and how it works for sure. Um, and, you know, we're pretty easy people to get ahold of, so we can always get in the weeds in my DMs, for sure. **Speaker A:** Cool. For. Yeah. And I'm a big believer. And it's like X for Y. And I think that you put it perfectly right. It's like gnosis safe, but for privacy. And I think that's very clean. So let's move the conversation into something a little more interesting. And I think that is like around compliance and more specifically around the conversation, the regulatory conversation we're having. I think that the second in this industry, because we're like such TSD babies, the second you hear anything about privacy on chain and transaction level privacy, people's minds go to Tornado Cash and like, if something looks like Tornado Cash, we are going to have a problem. And so personally, before you say, whatever you say, I think that's kind of like a small brain take. And I think that there's like a lot of like, nuanced things that happen with Tornado Cash that are worth digging into. But before I just like, let myself go off, I would be like, super curious to hear your take on what do you think are the big takeaways of what happened this summer with Tornado Cash and how are you taking those lessons and making sure that Railgun doesn't suffer, you know, the similar fate to, you know, an equally as impressive and important project? **Speaker B:** Yeah, I think it's really, I think it's really tough what happened with Tornado Cash. Right. It's really, it's, it's really kind of unfortunate because it's a, it's a bit of a bad take. I'm really interested in following the, like, there's been a couple of interesting, like, legal. What's the word? I'M looking for here, like suits, if you will. People are, you know, out there in the world suing on this. You know, so you have, like, Bankless. There was a really interesting legal action taken by Coinbase of all things. You know, like, I think they should change their name to, like, coin based because they're really. They're really pivoting pretty aggressively against, like, the man, if you will, with which I think is really cool. But then you also have, like, the Coin center actions. And I think it's really kind of. It's a really tough, tough, tough question, right? Because we kind of have a, you know, if we look at, like, the precedent, you know, the rules are pretty clear. You know, code is free speech. People can take and talk about encryption and talk about it in an open source way. And, you know, this, this was decided in the early 2000s, right? There was the Bernstein case. And, you know, fundamentally, you know, they decided that code is free speech. And, you know, just because you write something down doesn't make it bad. You know, you can talk about mathematics with whomever you like. And now we kind of have like the. Yeah, and now you have like this. Yeah, yeah, yeah, don't. Don't multiply together. Too complicated of numbers. **Speaker A:** Right? **Speaker B:** You'll get in trouble. So, no, I mean, all funnies aside, you know, it's a pretty serious topic, you know, and I think, I think that the, the overarching, you know, like, if we zoom out from, like, tornado cash, like, we're having a different. We're having a really big moment in terms of encryption. And it's kind of been bubbling up for about 20 years. You know, we have. If not just like, tornado Cash, like, we had, like, you remember that case where like, the feds were, like, saying to Apple, like, hey, you need to, you know, decrypt this phone for us so we can, like, snoop on this guy's files. And so we have, like, a really big question being asked about our right to encryption. Like, can we use encryption? Like, we've totally. We've established that it's fine to talk about it. And now we're kind of on, like, this next. This next question, which is like, yeah, okay, we can talk about this really complex and cool Moon math, but can we use it? And now it's getting even trickier because this question's gone without being addressed. You know, initially, like, a lot of it was based around, like, hey, can we force these third parties to decrypt the, you know, the information that's on the, you know, the Phones that they, they build. And now it's peer to peer. I mean like, never before, like have we been where we are right now, which is like we can spin up really strong encryption as individuals. Like really, really good encryption. Zero knowledge is mighty fine. And so I think it's a really tough question, right? And so I'm very fascinated to see like where this goes, like, does it go all the way to the Supreme Court? I know that law takes a while to sort out, but I'm very fascinated to see like, do we have a right to use encryption, especially in peer to peer, you know, crypto? I think the answer is yes. I believe, like, you know, as a, you know, a sovereign individual, if you will, like a free individual, like we can, you know, transact and do things privately. That's not to say that we should be up to no good, but we should also, you know, have the, have the right to privacy. And so like, how do we think about this, like on a protocol level? You know, like I think we just talked about, you know, we built, you know, we built in like view keys, we built in different ways for people to export tax files. And you know, contributors are continuing to build on different like compliance tools. The one that I'm most interested in is this really cool recursive zero knowledge technology that allows you to prove things about your private balance and do so without doxxing yourself. So like taking and like blindly proving that you're not a bad actor. And I'm very, I'm very curious to see like where, where the dao goes and like whether, you know, the dao wants to, you know, you know, build other tech around that, that allows people to further approve other things. So I guess to answer your question, you know, like after the like, individual ability to dox what they choose and, and what they, and keep private what they want to keep private. And I think that that's, that's like the normal and rational state of pri, of finance. Right. I think that's what people actually desire in like their financial lives. It's just kind of been, you know, demonized in crypto. **Speaker A:** Yeah. I think in crypto we're dealing with a lot of problems. And in this particular conversation, I think the biggest problem we have is that the people who make the rules are not only like entirely uneducated about what we're doing, but the only people that have showed up to educate are the ones who are like screaming about how, how we're all scammers. And like, honestly, they've got a point, like it's hard to not recognize that they have a point after SBF and after 3ac and after like the whole genesis, like scam, you know. And I think that the unfortunate reality is that like our industry creates some extremely loud noises and the people who make the rules have no idea what's going on. And like, that is a recipe for disaster. Disaster every single time. And you know, I don't know what to say to people when they say like, well, was tornado cash used by North Korea to hide the money that they've stolen? Because like, the answer is yes. The answer is like, undoubtedly, like that did happen. And I don't think that I'm not like proud that the technology that I've dedicated my life and my career to is like a huge part of that. But I don't think that means you throw the baby out with the bathwater. And I think the answer is you build tools that solve these same problems but like still can achieve the goals that we need it to. And that's, that's why I'm so like bullish on Railgun and so bullish on you guys is because I think the answer to that is building tools with compliance and opt in levels of. You build like tools with perfect privacy and then opt in like layers that people can peel away based on like the actual real world requirements in that moment. And then, yeah, so I can totally see a world where it's like you have Railgun, the government or your bank or whatever, like might force you to reveal your assets and you can choose to and then things move forward or you can choose not to and then maybe you don't get the loan or you go to jail or whatever. But like I can finally see, which I couldn't see with tornado cash, a construction that allows privacy to exist on chain. **Speaker B:** Yeah, I mean like if you've, I guess you kind of got to appreciate from like the tech standpoint of things like, you know, like Railgun and like Tornado cache are pretty vastly different and like, not only like the architecture but like their use case, you know. So like, you know, suffice it to say, you know, like if you've used Tornado cache before, you know, like that it's basically a one off. Get in, get your secret and then like claim your tokens on the other side and like discard the, the secret. Right. And you know, it's very clear in at least in my opinion that like Railgun's not built for this and you're, you're not going to have like the same like like the same architecture, it's, it's just not efficient if you're trying to, to do that kind of thing, like generating a bunch of different wallets and you don't have that same like, excuse of like, oh, you know, yeah, I deleted my old Railgun wallet and I do this like every day, like, because that just doesn't add up at all. Right. You can have like this private EOA and like live in it and like create like this long term record of like your transactions. And I think, yeah, you're absolutely right. Like some people need to see that and some people don't, you know. So for example, like, you just think about like the areas where you need KYC and you don't need kyc, right? So like, if I am just paying my, you know, I don't know the dude mowing my lawn, like, he doesn't need to have like, you know, full purview of like my entire financial history. You know, he just wants to get paid the money associated with mowing the grass. If I want to get in on a particular, you know, high profile investment deal, there's, there's certain different rigors involved with that. And so like, creating like nuanced privacy is really, really difficult. But that's kind of like the aim that we're after. Like this really flexible, you know, tech stack that allows people to, you know, prove various levels of. Yeah, of like credential, I guess is kind of like the, the ultimate like perfect dream futurescape, if you will, of Railgun. **Speaker A:** Super cool. One of the things I want to talk to you about is, and I guess this is kind of a two track question, but I do know that during the Tornado Cash saga that one of the things that you did was like, got your butt out to Washington D.C. and I know that because like we talked a little bit about strategy and I was able to like at least put you in contact with somebody who does this kind of work for traditional business. But so my, my two track question is like one, as you like kind of engage with the process to make sure that the values that we care about and the, the things that we're building are protected in whatever capacity you can, what are the takeaways that you have of like actually affecting change? And two, how do you think about doing these things when Railgun is not a company in the way that we think of a company? But is this like decentralized dao and at the end of the day you're a contributor of. **Speaker B:** Yeah, yeah. Like so like, I don't I don't control like there is no like railgun team. There's no like control, like there's no admin or whatever. Like, it's just a bunch of people who are, you know, evangelists contributing to like this open source tech. And albeit I don't contribute in code, I do, like you said, contribute in other ways. And one of the other ways that I contribute was, you know, whatever the whole tornado cash thing happened and you know, there was a lot of noise around like privacy and like, you know, like on chain privacy. Is it good, is it bad? I felt kind of compelled, you know, to get involved. And so I messaged some people that I know at, you know, the Blockchain Association. I talked to the guy guys at Coin center, which both of those organizations are very friendly people and you know, they're always willing to, you know, try to engage and educate and that's really, really exciting. And so, yeah, I ended up going to D.C. to talk with a bunch of people. I talked with Hill staffers, I've talked with Senator types, I talked with, you know, some people who worked at the Office of Foreign Asset Controls and people who worked at FinCEN. And the, the key takeaway, I will say is that, you know, we very frequently see these people as like adversaries, you know, like in this very like head butting kind of way. And so like, frequently the conversations are like talking past each other. And I don't think that's any good. I don't think you win anything by doing that, like talking at someone. Right. You know, this is, this is a very big problem, I think, in like our just like broader ecosystems, engagement with people, you know. So I think that riles them up, you know, and that's why, like, I think, am I going crazy that I see like on Twitter that like Elizabeth Warren is creating an army against crypto or something. **Speaker A:** I have to say, because this episode will be out in like two or three weeks. But what my understanding is that she put out the ad that said that she was doing an army of anti crypto people and then took it down and now has a new one out that's a little less aggro, but. **Speaker B:** Yeah, yeah, definitely. But it's kind of, it expresses like the tensions in between, like this ecosystem. People are really passionate about crypto. Right. And I don't think that, like, I'm very much so not of the mind that like people who work in Washington are like the. I guess I don't know what the word I'm looking for here is like the enemy. Right. You know, I very much see them as, you know, people who need to be engaged and educated. Because whenever you go and whatever, at least in my experience, when I went and talked with these people, they were quite friendly, willing to listen, you know, wanted to try to understand what crypto is about, what we're doing, why we're doing it, how we're doing it, all of these different things. And I think that we've kind of like rested on our laurels as a community and so like, as a just a broad core value call out of. Of crypto, like, I don't know that like, is. There's certainly people involved and I don't want to, like, take anything away from the people who are working really diligently in like, in, you know, D.C. to, you know, talk about crypto in a good light. But like, we've also, broadly speaking, kind of rested on our laurels and let people like, I don't know, SBF and Alex Mashinsky, like, talk about, like, crypto and be like, the dudes in Washington. And so, yeah, I don't really know where my story is going, so. **Speaker A:** But like, that's very much resonate with what you're saying. And I am a huge believer that this industry looked at the story of Facebook and the story of Google and like, took away that. What happened was these kids created technology that changed the world and then it took over the world and then it got so big so fast that the government just kind of had to accept it. And now it doesn't really matter what the government thinks because they're not going anywhere. And like, anything that happens is on the margins. Right. I think that's the takeaway that our industry took. And I think that is such a childish, incorrect takeaway of what actually happened. And I think that people who have been in reinsurance or been in, you know, like beer conglomerates, like, understand that laws are set because, like, people play ground game. And what that ground game is, is at just the very table stakes level is the type of work that you are doing, which is like, you show up, you show up and you explain to people what is happening and why it's important and why whatever they're hearing is maybe not right and you help educate them. But if you're super serious about like, making sure that the government isn't coming after you, you, we have to remember that this is America and like, real people in our roots. And like, what you actually do is like, I'll pick on someone. Frax should just go create Real jobs in a real constituency and have those real people call their real representative. You know, like, we should be showing, like, our representatives not by, like, creating, like, more and more spectacular threads, but. But, like, by actually showing them that their constituents want this technology because it'll improve their lives, but just going out and doing it. And I don't. I think that, you know, it's the nature of our industry. We're all incredibly online, and I don't really have a problem with that, but it is incredibly frustrating to watch the conversation around government and technology and, like, regulation and also then watch that nobody is showing up to play. **Speaker B:** Yeah, you just. It's. It's actually not as. And I don't. I'm. I'm. I'm a nobody, frankly speaking. You know, like, I don't have, like, tons of money. I'm not like, paying senators off or anything crazy like that. You know, I'm just a guy who lives in America who wanted to go and, like, you know, get involved. And I think that that's really, really important is, like, if we don't, like, show that, like, this is something that we're passionate about and care about, then, like, yeah, like, the, like, the. The narrative that, like, the government will push all these jobs offshore is. Is totally true. You know, we're either like a victim of circumstance or, like a master of our destinies, and I just want to choose to be the latter. So, you know, I'll. I'll go and talk to these people, you know, myself and see what happens, you know, is, will something good come of it? Who knows? But I could try anyway. **Speaker A:** And something you said earlier really struck me that your comment was that Coinbase should be called coin based, But I can't stop thinking about it because are there actually any other crypto companies that went public? Genuine question. I'm not sure. **Speaker B:** I mean, like, we get in the weeds of that. Like, there's, you know, microstrategy and things like this, you know, but, like, we're. We're. Yeah. Where do we want to draw the line on that? **Speaker A:** That, like, the one company that did go public and, like, while they built their business on crypto, like, really chose to embrace, like, America and corporate, like, the corporate structures that have, like, created this system is, like, now in this moment of crisis, literally the only actor that is positioned to, like, throw, like, elbows, you know, And I think that there's, like, something profound in some sort of lesson in that, where it's like, by choosing to dissociate ourselves from the system and reject the system. And like, by like embracing daos, it's like, that's so incredible for decentralization and it's like a really good liability shield for those who care about it. But, like, we've also given up our seat at the table. **Speaker B:** Yeah, well, I don't think that's the case. Right. You know, like, individuals still vote, right? You know, like, we could, you know, I think we can kind of as, you know, general individuals go and you know, kind of just. I find it's just important to go and be engaged, like, talk, talk to these people, write them letters and call their offices and leave voicemails. And, you know, it doesn't really take a lot of time. It's not like you have to like pound the pavement like 247 and like, give up your day job. But I think it's definitely worthy to like. And that's just like crypto, right? Whatever. Like, doesn't have to be like, just crypto. Like, what other things do you care about in life? You know, like just broadly speaking in politics? Like, you should remember that, like, these people are public servants. Like, they are there to serve you. **Speaker A:** No, I appreciate the pushback and I'll take it. The point that I was just trying to make was that we don't really have a corporate presence. And I think that is, is felt in our lack of, like, presence on the Hill. But I think you're totally right, you know, like, that's. **Speaker B:** How do you judge how many people are on GitHub? Like, I mean, yeah, there's metrics and stuff like this, but like, you know, how do you even, you know, judge how many people are working on a particular open source project and things like this, you know, it's. It's really quite difficult, you know, because you look at like GitHub commits that get squashed and things like this. So it's like, oh, who's actually, you know, like sometimes you'll see like different projects where it's like there's, you know, you look at the GitHub and it's like, oh, there's like four people, you know, pushing commits. But like, rest assured, there's not like four people writing that code. Like, there's 10 tens and tens and, you know, if not hundreds of people contributing to. **Speaker A:** No, for sure. And I mean, I mean, even on like, you can hit this on two levels and like, one is like, let's pick MakerDAO or any of the protocols that are, you know, over a billion dollars, right? And it's by the time a traditional company would reach that scale, like, they would have government relations, people, especially in a new industry that needs. And so, like, that's, I think, something we're lacking. But what you keep bringing me back to, which is right, is that, like, ultimately the power lies in the individual people. And it's about, like, choosing to use your voice. And honest to God, I would probably roll my eyes at you a couple weeks ago, but I'm currently going through this thing at my. I live in, like, a very large condo building, and they're just, like, making really questionable decisions at the hoa. And, like, what I'm realizing is that no one has called them on their shit for years, you know, and. And I'm sitting around and everyone is, like, around, like, the free cookies and pizza, complaining about how stupid is. And it's just so clear to me that no matter how upset everyone is, like, nobody actually wants to get involved. And I think that. **Speaker B:** Do you think it's, like, apathy or, like, difficult difficulty to, like, sway opinion, which, by the way, defund hoa? I don't have one in my neck of the woods. **Speaker A:** Yeah, Yeah. I mean, hoa I have less of a problem with for, like, actual apartment buildings because, like, I don't want to have to worry about my sewer. But. But, yeah, I. I think that. I think that especially in America, we have this. This frame that democracy is the ideal and, like, everyone participating and voting is the ideal. And honestly, I believe that. I truly believe that. But, like, there's this huge, huge gap between a democracy where everyone participates and engaged and, like, the real way the world actually works. And, like, whether or not it's at the country level or, like, these people that live in my building genuinely care because the stupid thing that started this whole thing is going to result in all of us getting this huge assessment that we shouldn't have to pay for. So, like, they definitely care, but also they don't want to get involved. Like, they barely are willing to vote for me. And that's after I said, like, fine, like, I guess I'll run for the board, you know, And I just. I think that the democracy without engagement, like, might be, like, the worst kind of government. And that is, like, kind of what we have. **Speaker B:** Yeah, maybe you're right. That's true. Yeah, I hadn't really considered it that way, but it does. It does seem to be that way. You know, there's. There's definitely people who are engaged, but, like, you know, maybe it's, like, apathy. Maybe it's you know? **Speaker A:** Well, the real problem is, like, the people that are engaged got engaged because they got mad, you know, and that's why I'm getting engaged, because I'm mad. But. But what does that result in? That the only people that are there to make the rules have an agenda that's fueled by rage, or they're just straight up, like, taking money, you know, And I. I don't like, a lot of the dysfunction in this, like, society makes sense to me. **Speaker B:** Yeah, we've just had, like, We've just solved it right there. That was. That's the. That's the actual truth right there. **Speaker A:** Listen, man, identifying is easy. Solving is a whole nother challenge. **Speaker B:** Yeah, people get that. Used to be a thread on Twitter or something. **Speaker A:** Yeah. So definitely kind of want to wrap this up. I'm a huge believer in keeping podcasts tight. But before we. We. We play ourselves out, just, like, kind of wanted to get your, like, takeaway and your key thoughts on, like, where we are in terms of this society and, like, the regulatory maelstrom that is coming towards us and. And, like, what we should be doing right now, whether that's, like, we as, like, participants or leaders of a DAO or whether that's, like, we as just, like, pers. Like, traders with, like, money in this space or us as, like, Ethereum zealots, like, what should we be doing? **Speaker B:** I think we first have to, like, appreciate, like, why, like, why we want privacy, like, transacting. And I think. I think the. The most important thing to me is, like, making people understand, like, that privacy is totally normal. It's like, the most normal thing, like, if we just steal it, like, forget about, like, dark pools of, like, of stocks being traded or, like, the other sophisticated, like, you know, financial machinations. Like, just, like, think about a simple debit card transaction, right? Whenever you swipe your card, the person looks at the little Ingenico terminal, and they say, approved. Yep. Here's your coffee, right? And you go about your way, right? They don't learn everything about you. You don't learn everything about them or their store, Right. This is, like, Privacy 101 in finance. And that's, like, the most important thing, right, is that we have, like, this firewall in between our wallets and, I guess, our bank accounts, if you will, in traditional finances. So, like, first, like, understanding that, like, privacy is a normal state of affairs and is, you know, expected by rational actors and finances is, like, the first thing that, like, I just want to always stress whenever I meet people. It's totally normal. You should have it, you deserve it. And then I think if we look at like the broader landscape of privacy, I think it's certainly not black or white, it's very much so gray. Because the state of privacy is really bullish when it comes to the tech. Like never before has it been easier to build really great privacy infrastructure. There's all sorts of really cool new and interesting zero knowledge technology that exists. There's Halo 2 that just came out, so now we don't have to have trusted setups. We have all the, I don't know, the myriads of plonk variants that exist out there. Like the tech stack is great, but I think that the, I don't know, I don't want to sound like too tinfoil on the way out here, but I definitely, I guess I will. But like, I think that like the, the, the state of the union around like privacy and like just generally. Yeah, like this, the state of the union around like surveillance, if you will, in like modern society is really bad, right? It's really hard to argue against the attack on privacy because it's justified under the guise of going out and getting the bad guy. And like this sounds like a really great thing until like you're deemed to be the bad guy. And I guess people don't really appreciate that like surveillance isn't about making the world a better place, right? It's about making sure that people who have, you know, I guess it's not really about like making the world a safer place. It's, it's probably more, at least in my opinion, like making sure that others aren't doing things that you don't want them to do while you're the one that has the stick. And people frequently say that like they don't have anything to hide, which I think is really bad too. Like, I think that that's like saying, like, I don't believe in free speech because I don't have anything intelligent to say or perhaps like more accurately is like saying I don't have a single thought or have never said a single thing that might be misinterpreted in the future and put me in a weird spot later down the line. And I think that it's, I don't know, a lot of the arguments against privacy are pretty vapid and pretty privileged. And so like, I would, I would tell people to like, appreciate that like all of the societal values that, you know, they take for granted and like, as like obviously true, could be deemed an eccentric threat to the, the powers that be and so, like, we should be fighting pretty aggressively for, like, our right to privacy, especially when it comes to financial privacy. Because I think back to the American Revolution, if we had this perfect surveillance machine where people's transactions could be tracked pretty accurately in real time, we'd probably still have the queen on our money. And so, like, we should, you know, we should work really aggressively to, like, maintain financial privacy because it's. I think it's really inherently important to a modern and free society. **Speaker A:** Man, you said a lot of really good things and, like, important reasons to fuck. Man, you said some good shit. Hold on, I need to think of what I'm about to say. **Speaker B:** Well, just think. I like, okay, so think about it this way, right? Like, we have to look at the broader ecosystem, right? The world, right? The real world. Like, all of the things that we say are, like, true about the world and, like, are obvious and are the correct way of thinking. Aren't all. Weren't always the case. Like, women's right to vote wasn't always a thing, right? Like, do you want to, you know, like, people have the right to be gay? Like, not everywhere in the world. Like, you want to have premarital sex. Not if you're in Southeast Asia, you know, so, like, we kind of got to take it all with a grain of salt and understand that, like, every societal value that we take for granted in a free society can. Can change very quickly. **Speaker A:** For sure. For sure. Everything you say could not be more just on point. And I think, I think that the deeper that I get into this industry and the older I get, and just, like, the more life punches me in the face, the more I realize that, like, the American experience is, like, a very unique one, and, like, unique in good ways, unique in bad ways. But so much of what is, like, incredibly powerful and important about crypto is, like, just not relevant to the American experience. And the best examples, until recently, right, were inflation protection and, like, privacy or. Or protection against a government that has, like, gone crazy, gone rogue, right? And I think that on. On January 6, 2021, I happen to be on the phone with Wells Fargo. I was, like, talking to them about moving some money over on the, like, in investment management side. And I was watching the capital be overrun, and I just remember saying, look, this is before I found crypto. And I said, I am only going to move over with you if you can help me get at least 10% of my net worth outside of this country before the next election. Was it buying property in France? Like, I don't care I just, like, I need to know I have an estate plan. And, like, for me, that was because, like, I recognize that this country is changing so fast and so volatile that, like, the things that I used to count on, like, don't. That aren't, like, we can't count on them anymore. And I think that this, like, whole privacy thing is. Is just one of those things where it's, like, you have to sit here and say smart things, like, with. With comparisons to the First Amendment and stuff to, like, really grind it into an American's head. But, like, what. What Railgun is doing and what you, Allen, are doing, like, on behalf of Railgun and on behalf of our industry and making this case for in front of the government is, like. Is God's work. It's, like, what we need, because that is the point of crypto. And if we don't do this, then we're just as much risk as, like, the Russians were when, like, that situation unfolded, as the Iranians are, as the North Koreans are, as anything. And if we don't have privacy, like, what are we doing here? **Speaker B:** I agree. Well said. We should have it. You deserve it. **Speaker A:** Well, and that is why I'm so thankful and so honored that you, Alan, and the Railgun team are bringing it to us, so won't take up any more of your time. I so much appreciate the time and the conversation and the learnings and just everything. So, Alan, thank you so much. And you want to tell the people, like, where they can find you, where they can find Railgun, anything like that? **Speaker B:** Yeah, of course. We have a great telegram group. It's called the Church of Railgun. It's, I guess, a bit sacrilegious, but all in good fun. We have Twitter you can follow. Railgun Project. You can find me on Twitter as well. We're pretty easy to find, I guess. We're pretty heavily doxed building privacy tools so you don't have to. **Speaker A:** All right, Alan, thank you so much once again, just super appreciated, and, yeah, thank you. **Speaker B:** Thank you.