Crypto’s Open Source Ethos Yields Results

Polkadot, the blockchain created by legendary coder Gavin Wood after he split from Ethereum, is getting a new privacy feature. The tool uses zero-knowledge proofs and soulbound tokens (yes, the things dreamt up by Vitalik Buterin) to help limit the amount of information crypto users share when they transact on-chain.

This article is excerpted from The Node, CoinDesk’s daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.

In particular, a layer 1 Polkadot blockchain called Manta Network has teamed up with the team behind the rollup-based scaling tool Linea to build a “zero-knowledge soulbound tokens” (zkSBT) that will allow users to selectively reveal their digital identities when interacting with apps (essentially shielding their on-chain transaction activity).

And the new Cosmos NFT standard – called ICS-721 in homage to Ethereum’s ERC 721 NFT standard – will unlock a type of non-fungible asset that can be traded across blockchains.

The stories mentioned aren’t really connected (different tech, different chains, different use cases), except in the sense that they’re part of the same broader trend in crypto: the winter is for hunkering down and building. Despite being a cliche, this is worth bringing up now and again because it reveals the level of ingenuity and cooperation across crypto.

There are other industries where information-sharing is the norm, and the “free and open source” movement has been going for decades, but it is in crypto that cross-pollination hit its stride.

Vitalik Buterin blogged about the idea of soulbound tokens – a kind of blockchain-based curriculum vitae that follows a person throughout their life keeping record of their achievements, which cannot be traded or sold – in mid-2022, offering the idea to anyone to play around with. Perhaps because of the Extremely Metal moniker, SBTs gained a lot of attention and inspired others to write about how such an asset would revolutionize society.

Obviously ideas are cheap (inspiration strikes when it wants, and no amount of money will summon it) – and it’s harder to build. That’s why seeing a real-life deployment of soulbound tokens is so interesting.

Perhaps because of the amount of money still sloshing around, perhaps because of the type of people the industry attracts, there is tremendous amount of technological experimentation that happens in the crypto industry.

Nowhere else is this more visible than in zero-knowledge (ZK) cryptography, which was essentially limited to a branch of academic research since the mid-80s when computer scientists Shafi Goldwasser, Charles Rackoff and Silvio Micali (yes, the Algorand guy) coined the term. Although the concept is simple enough – deploy a system that allows one party to prove to another that some statement is “true” without showing all his cards – crypto was really the first industry to put ZK-proofs into widespread commercial use. It’s now used to help scale Ethereum, protect wallets and now that new Polkadot-based tool.

Sure, maybe the honor really belongs to the pioneering advocates for open-source code, who saw what could be built with software and the pressure to commodify it and championed for researchers to share their findings and publish code under permissive copyright licenses. These are figures like Linux’s Linus Torvalds and O’Reilly’s Tim O’Reilly – figures who helped build the internet we know today.

And because so much of crypto is open source, the industry is also open to abuse. At the low-end level this essentially opens the door for spammers to fork projects endlessly to create meme coins. And at a scarier level, nation state actors including North Korea, which has turned abusing permissive blockchain tools into a major source of income.

But whether you’re a Bitcoiner who thinks Ethereum is good if only because it’s essentially a free research project into tech that may find its way onto Bitcoin, or a FOSS zealot like Richard Stallman who wrote the “GNU Manifesto,” making the case that giving users control over their own computers is a moral imperative there’s likely more good than harm that comes from open source code.

At a time when crypto is being hounded by regulators (at least in the U.S.), it’s worth highlighting some of the benefits of crypto. Just today, Ledger CEO Pascal Gauthier announced a roadmap to open-source more of the firm’s hardware wallet after pressure from the crypto community over its proprietary “Ledger Recover” software update.

Open-source increases transparency, and likely also spurs competition and cheaper prices. Tech companies need to drive innovation, if they want anyone to pay for a product that otherwise might be free. OpenAI the once non-profit dedicated to AI safety that’s now a glorified Microsoft plugin is a case in point: CEO Sam Altman has all but said the company has no moat against the proliferation of free and open AI alternatives (something Google execs actually did say).

Not everyone will be convinced by the benefits of “open collaboration.” And I could personally see the case for keeping some technological secrets under lock and key – like how to enrich nuclear weapons – and basic intellectual property protections. But wouldn’t you want to live in a world where people shared more?

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