Comfort is the death of innovation. It is complacency in disguise. - xh3b4sd

Sharing information is hard for humans, because I don't know what is happening inside of your brain, and vice versa. Now, I am certainly glad that my thoughts are my own. Nobody should ever know about all the insane brain waves I am getting all the time, because chances are, they would lock me up and throw away the keys. Sounds familiar? This aspect of life may simply be attributed to the human condition itself. And so, while it is a good thing that we cannot directly share the internal patterns of our brains, the bad thing is often that we can also not prove them.

What we are discussing here this week in the Powerlaw Memo is the process of information sharing, the attestation of facts, and the attribution of circumstances. Attestations matter, because attestation is trust. The game theoretical tragedy on the geopolitical stage is always rooted in the limitations of information sharing. Great powers distrust one another because neither side can verifiably prove the innocence of their benign motives. We can talk to one another, but we cannot prove to tell the truth, until it is too late.

To that end, trust assumptions rule everything around us. The government cannot trust its citizens. And citizens can certainly not trust their government either. For those reasons we are governed by systems that tell us how to live. We are governed by rules that are well intended, but often appear to stand in the way of progress or even freedom. To those ends, we are often left fighting the very systems that we grew to disagree with, despite the fact that we were the ones who created them in the first place. Sharing information, attesting to facts, and attributing circumstances are fundamental problems of society. And at some point in life, we have to ask ourselves when we should stop to settle for less.

As it stands today, the government knows basically everything about everyone. That is not what we wanted, but it is what we had to do in order to build our empires, up to this point. So fred you not, dear reader. The destruction of privacy may end up being a temporary footnote in the history books, similar to the centralization of media over the last 100 years. Brittle seeds of technological progress enabled monopolies for collecting and distributing information, effectively dictating opinions of generations. But as it naturally occurs with empires, they rise and fall by the hand of progress alike. Where electrical engineering brought us the centralizing forces of transistors and data centers, moon math brought us consensus mechanisms and zero knowledge proofs, to free us from the all seeing eyes of the nation state.

It is probably fair to say that we would never have made the progress on zero knowledge proofs that we already achieved today, without the relentless research and engineering driven by the blockchain industry. And if you are reading this today, dear reader, then you are in the top 0.001%, because most parts of the world do still not understand what we are even talking about here. That means, we are still early. We are in fact so early that there are still huge benefits to be had, based on the transition that this world will be going through over the coming decades. The question will eventually be this. Who can capitalize on this transition?

Attesting conflicts with privacy, which means, attestations that can preserve privacy are an absolute game changer. Zero knowledge proofs can change the way we think about the internet, the government, life itself, and any other complex system out there, because zero knowledge proofs can lead to more efficient business processes and higher levels of application security.

Proof of reserves is the assurance that an entity is in fact holding an asset. With this proof, a business is verifiably saying "our treasury holds 3000 ETH". Without such a proof, we are left wondering whether that number is real or rather aspirational. Customers and investors alike can be verifiably put to ease with this simple principle of operational integrity. Those kinds of claims can be proven without revealing any sensitive details about the underlying financial infrastructure and its composition. The automation aspects of those verifiable industry standards may lead to more economic activity onchain, that will effectively be better integrated, while being more reliable at the same time.

Proof of solvency is the assurance that a business can meet all of its obligations. With this proof, a business is verifiably saying "we have enough money to cover all liabilities". In today’s world, those words must be taken on the basis of opaque trust assumptions, which creates a lot of friction and room for third party intermediaries that are frankly nothing but a drain on the system. The onchain economy of the future will do away with this friction, and in turn enable every business conducted on Ethereum to leverage the cryptographically secure automation of verifiable solvency statements. ZK balance sheets will define a renaissance for economic efficiency without middlemen, because, code is law.

Proof of identity is the assurance that a user is in fact who they claim to be. Financial businesses will always be required to know their customers and conduct anti money laundering practices. Being able to privately prove that "I have a Coinbase account", or that "I am a US citizen" will enable users to onboard more easily onto financial services onchain. Easier onboarding is just better for business. And so, onchain businesses can onboard users faster, while providing better user experiences that are privacy preserving, which in turn may even lead to improved user retention overall.

Proof of income is the assurance that an individual received consistent cashflow from any activity. The real estate industry is typically conducting background checks around income to increase the likelihood of a home owner to fulfill their liabilities. Zero knowledge proofs would enable us to more easily verify that "I make at least 3000 USD of free cashflow every month". We will soon be living in a world in which it will be unnecessary to mail bank statements around or share personal tax reports only to make another person believe that my numbers are good numbers. In the not so distant future, Ethereum will allow us to prove the facts of our lives without compromising our individual information security.

Proof of profession is the assurance that an individual works, or has worked, at a certain company. Even further, we can imagine all aspects of our professional history to be proven, be it onchain or offchain. Businesses often have to do tedious background checks on job candidates, because it has been incredibly hard to verify that "I worked at Splits for 3 years". Those aspects of recruiting are so hard that an entire industry has grown around this problem domain of finding great people to work with. Our technological progress can do away with all sorts of opaque and inefficient business practices by simply automating talent networks using zero knowledge technology onchain.

Proof of loyalty is the assurance that a customer has been using a certain product or service for a certain amount of time. I could for instance prove that "I have an Athletic Greens subscription for over 10 years". Following that line of thinking we can imagine loyalty programs that provide discounts to partnership products and services, so that you may pay less for your health insurance if you can prove to be a healthy consumer. Living a better life and receiving better services go hand in hand on top the cryptographically enabled onchain economy.

Proof of credit is the assurance that an individual or business is in fact creditworthy. Credit scores are just numbers, but they mean something that is very relevant in today's day and age. Having a credit score may not be that much of an issue. But how those numbers come to be is often dictated by monopolies of sensitive data collection that we even have to pay for. Having to pay for the infringement on our human rights is not only an absolute disgrace, but also an information security nightmare. Zero knowledge proofs allow me to say that "I have a credit score above 750" without anyone making profit by knowing everything about my financial decisions.

Proof of quality is the assurance that a particular product or service is actually good or enjoyable as far as its users are concerned. Web2 gave us the five star rating system, which influenced consumer behaviour to a great extend. What we usually don't know though in Web2 is how real those ratings actually are. Anyone with an internet connection may provide more than one rating. The issue of Web2 primitives has always been that they are not sybil resistant, which means that a single person may operate multiple identities on the internet. Blockchains did not invent private keys, but they greatly furthered their adoption across the general population of the internet. Web3 can therefore leverage Ethereum's private key infrastructure, enabling businesses to implement onchain rating systems on the basis of zero knowledge proofs. Onchain rating systems can greatly increase the value of their expressed ratings, because customer identity can be proven anonymously across many onchain applications, which allows its associated ratings to be of higher quality on the basis of network effects. With all of that in mind, onchain businesses may one day say "our customers are generally very happy with our product", and they can prove it.

With a hard cut we go now over to our number for this week, which is a little over 340. Because this is the amount of onchain payments companies that we know of today. Every week more businesses find their way into the Ethereum ecosystem. And with an ever increasing network of onchain businesses, the opportunity set to establish novel customer success stories is up into the right. Buckle up buttercup. Ethereum is not waiting.