DigiCash founder David Chaum is known as the “Godfather of Crypto,” and he thinks he has an idea that people can’t refute.
DigiCash was the first digital currency secured by cryptography, and Chaum is working with the Swiss Central Bank to provide a central bank digital currency (CBDC) called eCash 2.0. Its privacy features are believed to be imperious to counterfeiting. Chaum explained the process in an essay for CoinDesk.
“This is a fully generalizable way to realize a market for pairs of assets. It includes a solution to both custody and settlement risk,” he wrote. “And it obviates manipulation through information asymmetry by ensuring that all details remain private to traders. It is immediately applicable to crypto markets, where the need is most urgent and acutely felt. Once deployed it will demonstrate that traditional markets can benefit significantly from adopting such best practices from crypto.”
Chaum said this will have positive implications.
“Crypto exchanges can now switch to the no-custody and no-settlement risk technology that grants them no more information than traders,” he told Globe Banner. “This would then prove that crypto is safer than conventional equity or commodity trading.”
Chaum was an early proponent of public and private key cryptography. He is also the creator and CEO of the cryptocurrency Elixxir, a secure blockchain-based and quantum-resistant messenger app, and is currently leading xx network, a completely private, quantum-secure decentralized messaging and payment platform.
With a doctorate in computer science from the University of California at Berkeley, Chaum is known for a number of fundamental innovations in cryptography and has taught at NYU Graduate School of Business and Cal.
In October, Binance, the world’s largest cryptocurrency exchange by volume, posted an article from CoinEdition, which highlighted Chaum’s development and introduction of CBDC, a next-generation technology that will enhance privacy, set to be finished by mid-2023. CBDC is said to be designed to allow people to conduct transactions, without revealing their personal information, which can help avoid financial scams and other malicious activities.
In a Feb. 10 blog post, Binance noted that following the November 2022 collapse of FTX, the crypto industry experienced a “crisis of trust,” and the Binance development team has been “hard at work building advanced proof-of-solvency solutions,” demonstrating that all user funds stored on Binance are fully covered at a 1:1 ratio, plus reserves. Binance believes this is “critical” to “restore industry trust.”
Binance argues that with proper guardrails in place, there is great opportunity for Web3 to improve the lives of millions of people through transformation of financial services and beyond; however, implementing smart regulations and serious industry efforts is the only way to rebuild the trust needed to make it happen.
Binance recognizes that governance, consumer protection, security, financial stability and integrity are top of mind concerns for crypto regulators. The post attributes recent events and lingering misconceptions around the technology as accentuating these concerns.
In an interview with CoinDesk last year, Chaum said he believes Web3 developers “need to find the right mix of passion, philosophy and know-how if they want to sustain the ongoing fight for public cryptography over generations,” adding that no matter what, he views this web with “a conscience” as being on the right side of history.
Following the breach of trust that engulfed the crypto industry after the collapse of FTX, Binance CEO and founder CZ said in a blog post, “Before there were clear guidelines for the industry, we have always held Binance to the highest standard to prioritize our users’ best interests, a goal we share with regulators around the world.”
The post highlighted several steps the company has taken to ensure compliance and enhance user protections. In 2022, Binance became the first crypto company to join the National Cyber-Forensics and Training Alliance (NCFTA).
The NCFTA is a nonprofit organization that works to identify and neutralize cybercrime threats. Binance also established a system through which governments and law enforcement agencies can submit requests for information. In 2021, Binance increased the size of its international compliance team and advisory board by 500%.
That’s further evidence that the industry will move past this problem and become a reliable market force for many years, Chaum said. As someone deeply involved in cryptography in 1989, his words carry a lot of weight.
“Cryptocurrencies have so much going for them, including [allowing] decentralization of the web, they are far and away the best way to move value around, and they open up all kind of new business models,” Chaum told Globe Banner.