Developers of anonymous decentralized finance (DeFi) protocol DarkFi, Amir Taaki and Rachel-Rose O’Leary, say that the development of zero-knowledge cryptography might be the key to survive a looming regulatory crypto winter which might split the DeFi industry into tightly-regulated and unusable Regulated DeFi (RegFi) and frictionless and private Dark DeFi (DarkFi) after 2022.
In an exclusive interview with Cryptonews.com at the Blockchain Economy Expo 2021 event in Dubai last week, the developers said that despite the current macroeconomic climate and development of AI-based systems, they are bullish on privacy and think that crypto will play a pivotal role in the fight to preserve it.
According to Taaki, crypto is “like a lifeboat that [people] can use to travel to safety.”
Meanwhile, if the above-mentioned split happens, he expects the market capitalization of most cryptoassets to fall, and that only the most robust protocols would survive such an “extinction event.” However, Rachel-Rose O’Leary estimates that crypto will come out stronger out of this “because it will have to reassert its autonomy and its ideology in order to sustain the winter.”
Despite that, she remained positive about the market outlook for crypto as the macro environment is still favorable for this nascent asset class.
Also, the developer said they estimate to ship DarkFi’s mainnet in the next six to eight months.
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Watch our full interview with DarkFi developers and learn about the results of DarkFi, growth plans, trends in financial privacy and crypto, their take on metaverse, BTC predictions, and more.
The interview is brought to you by Matt Zahab and Eimantas Žemaitis.
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The transcript of the interview:
How has DarkFi been in 2021?
Amir: We just announced the project literally two weeks ago. Our Telegram channel is already over a 1,000 people in a short space of time. Lot of people want to help the project, very, you know… said it was the best token, let’s come, so we have a lot of enthusiasm.
Rachel-Rose: Yeah, I think people, the whole kind of…people are a bit burned out from the NFTs and like metaverse, the kind of fantasy world – stuff that’s coming out of crypto – and DarkFi is emerging as something more real. Its also a movement more than it is a single project or a company. So it is very welcoming in that way, lots of people wanna get involved.
Talk to me about testnet – how has that been so far?
Rachel-Rose: Okay so testnet was probably a misnomer – it’s actually more of a prototype…but really what it demonstrates is like the underlying cryptography, and then we, like, put together a network to kind of showcase that. That’s really useful in terms of the first stage of the release process but the next step is…we have to produce big steps ahead in terms of, you know, basically putting on a blockchain, and also swapping out some of the core cryptography.
Tell me more about your growth plans for 2022 and 2023.
Amir: Yeah, so, we are…technical development schedule is..right now we have several parallel, like, development targets, one of which is the blockchain, one of which is switching to, upgrading to our new peer-to-peer network that we’ve developed, and the third thing is switching on a Halo 2 upgrade. So those, since their release, we’ve switched back to stage zero of our development cycle. The development cycles go through stages 0, 1, 2, 3, 4 and 5. So stage zero, the team can relax and engage in a bit of research, exploration, integrate new features as we go further along in that roadmap with a focus on those three things I’ve mentioned – the network, the blockchain and the ZK. Then, you know, things will become more tight, there will be a bit more pressure. So right now the team is ready relaxed. We don’t like to set deadlines, you know, because it’s very hard, creative work, but I’d say we’re about six-eight months of – I guess, like, a testnet or public release, I’m not sure.
Rachel-Rose: Yeah, so the next major release is like the second testnet, which will be like the actual blockchain and like the Halo 2 constructs. And then, that’s just before basically mainnet. That’s like, the mainnet is basically ready but we just want to test it a little bit more, but yeah – I’d say within a year optimistically.
Who are your main users, who are you going after?
Amir: I have worked a lot with Iranians, Kurds, and like, people from Middle East, I had some guys from North Africa going ‘hey brother, I wanna…we really like the project, so I think there’s probably a wellspring of people who have been shut out off all the normal, kind of, KYC coinlist, kind of, auctions, so we gonna do something that’s like, a bit more open to everyone, so, we’re not like, western-centric, you know. We do have a presence, heavy presence in Europe, not so much in the US. But you know, Asia, Middle East, Europe, that’s kind of what we’re thinking at the moment.
How is your view on financial privacy changing amongst the general public – can you see any megatrends amongst financial privacy changing in the next 2 – 3 years?
Rachel-Rose: Yeah, so, I think when it comes to privacy there was an interesting kind of watershed moment some months ago, I guess it was six months to a year ago, Whatsapp released like a new privacy policy and there was a massive exodus to Signal. So I think that phenomena, like, really captures that people are fed up with this incisive surveillance happening in all areas in their life. The vaccine passports is just another example of this, and, you know, there’s a natural extension of that into the financial sphere.
Amir: Yeah, I’d also say that, the Edward Snowden disclosures which happened a few years ago, like, before, like, a lot of talk around like, you know, the surveillance apparatus by people was seen like a conspiracy theory talk. You know, there was a lot of like, I remember, like a lot of hackers, and like, techy people, kind of going ‘ah London has the most amount of CCTV cameras in the world, like, obviously they are using that footage, they’re like, using AI’ and then people kind of look at them be like ‘nah, you’re being a bit strange,’ but then Edward Snowden disclosures came out and then people were like ‘oh, actually they were right all along.’
So, that really put that in the forefront of people’s attention, so I feel like people, as well, people are becoming very poor in the world now, and they really feel essence of injustice, economic injustice. A lot of wealth and power is concentrated and so, what our system of politics has done for a long time, you know you got these, the politicians-sophists, and they go to the right schools, and they know how to talk, and they know how to use the media to get themselves elected – so that kind of manipulation, you know, while it has worked to get them elected, you know, like one election cycle or longer-term, has bread this like, huge amount of distrust, wide distrust in the society where people feel like the information that they gain from the media is just lies and propaganda and none of them trust it. It’s a very unstable situation that people are living in, but that also feeds into the kind of crisis the states are facing – with immigration, with ecology, with new technologies where they in some sense are losing power, and the way that they reassert power is through authoritarianism.
You know, like, we’re seeing automation, and artificial intelligence, and centralization of financial infrastructure which leads to this concentration of wealth, and actually exacerbates the underlying causes and the underlying problems. So it’s like Catch-22 situation where they’re printing money into oblivion because they want to, like, escape out of this crisis, but the money is not going into the hands of people – it’s like accumulating, it’s like an organism where the bloodflow, it’s like internal bleeding, and it’s not reaching the like… end, limbs, you know, and it’s just aggregating in one part.
So it’s kind of like that but with money printing. It’s not going out into the wider economy, it’s just going into like a few banks. So there is a lot of distrust from people, and, I feel like people are looking for an escape, and that is, I think, the main reason why people are looking at crypto as an escape path, like a way to take like a cup, there’s an incoming storm, and it’s like for them, like a little vessel, lifeboat that they can use to travel to safety, to reach land.
Crypto trends for 2021 and 2022, what are you two looking at?
Rachel-Rose: I mean I’m obviously biased but really the zero-knowledge, the advances that it made, it’s become, it’s never been more practical to deploy anonymous software. So I think we haven’t even seen the beginning of this – this is really gonna, in the next five years, this is really gonna be like a major trend.
What is your take on the metaverse?
Amir: Yeah, so, about your question, and about metaverse. So, 2020, there was a big market crash and then, you know, bitcoin went all the way down to USD 3,000, but then that narrative around the store of value was very strong, and bitcoin rose, went all the way up to USD 60,000. Then there was a drop in the market, then the market shifted to alternative layer 1’s, you know, part this mindset of like, network-based thinking, where we’re moving away from like one cryptocurrency, one blockchain to like many different networks integrate and value flows in and out of them. So we had like the whole like, big Solana pump, and Fantom, Polygon – many different L1s and L2s.
Then, interestingly, now there’s been a lot of talk about ArtFi, GameFi, SocialMediaFi – I think that’s part of the wider web 3 trend, which is kind of picking up. But I think ultimately, with regulators and incoming pressure towards crypto, there’s gonna be like a kind of winter, impending crypto winter where it’s gonna be a tough situation, it’s gonna be very messy. Like, we already saw AlphaHaze was like arrested, you know, he was being to like, blasé, to the regulators – they tried to make an example out of him. FTX Alameda, he just moved from Hong Kong to Bahamas, so there’s very much a process now where crypto people are being pushed to the periphery and it’s one of the reasons why Dubai is coming up. So that’s why we think like, also DeFi, is really interesting, decentralized finance, so we see ultimately that the crypto is gonna split into two, out of which one will be RegFi, which is gonna like completely bolted down and unusable, and you’d need to like to, use documents to do anything, and it will be like, just untenable, and the rest of crypto will be pushed underground into what we call DarkFi, completely like, unhindered exploration and growth.
So that’s ultimately the narrative that we’re looking towards that we see coming up maybe post 2022, we don’t know, it could be later, but that’s like what we see, like the next big evolution which a lot of people think that if this pressure comes onto crypto which will decrease the value of the crypto market overall, there will be like, substantial losses, of like, market price, but ultimately, could be very healthy like extinction events in natural history, they were kind of, they always cleared the ecological system, allowed new forms of life to kind of prosper and compete for new ecological niches that were opened up.
Same thing as well with, you know, the Black Death, it was like a mass extinction event, and you know, it allowed like, a lot of political transformation, new, like, cause, before there were all these old families, aristocrats that were holding back. So kind of like clearing out of crypto will, we think, happen, but then that will be like a tough period of survival, but whoever makes it out of that period will prosper and thrive and ultimately the entire crypto space will kind of boom and not really much can stop it.
Rachel-Rose: Just to add to that really quickly, you know, if there is this kind of event that he’s described, there will be a radicalization process, and I think crypto will come out stronger because it will have to reassert its autonomy and its ideology in order to sustain the winter.
Bitcoin price predictions for January 1, 2022 and 2023?
Rachel-Rose: Okay. I think bitcoin is probably gonna go to USD 100,000 and then crash after December. A lot of people are saying that, the fact that everyone is saying that makes it feel more real.
Amir: Yeah and I might front-run everyone and exit at USD 80,000. I’m like, more, I was very bullish on bitcoin, like, a few months ago. Now, like, I’m not so sure about bitcoin.
Rachel-Rose: I think there has to be some kind of grand finale, it’s not going to just peter out.
Amir: Interesting thing is if we’re seeing a drop in bitcoin dominance in overall markets, so if… there are two ways it can go: either bitcoin market cap dominance reasserts itself and then bitcoin, like, reclaims its number one spot, or, you know, bitcoin market dominance is broken, you know, I’m leaning slightly more towards that point of view. But if that happens, the market volume will not move all to Ethereum, because now that illusion of ultimate store of value will be kind of shattered, and we’ll likely see all of the liquidity bleed down into, basically, leapfrog over Ethereum into other L1s and L2s. And what the crypto space would experience is a period of like, hypercapitalist, hypercompetitive phase where everybody is trying to grab the liquidity and there’s a lot of, like, development, and it would also be, ultimately, healthy for crypto.
Rachel-Rose: Just to add briefly, like, irrespective of any kind of impending bear market, we still are in a situation of hyperinflation globally so that macroenvironment is not gonna change. That’s ultimately bullish for bitcoin and all of crypto, especially crypto’s with more deflationary policy. Ethereum is now going that route with the EIP-1559, you know, there was a couple of days last month where it was deflationary for the first time. It still has slight inflation most days but it’s definitely contracting in terms of its supply.
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