Founder Stories: Bolt

We believe that the adoption of cryptocurrencies and networks will accelerate during the next few years and redefine the ways we engage and transact on the internet. Access Ventures’ Blockchain Initiative aims to identify projects that can achieve or activate near term adoption of the technology and catalyze their development.

One of our portfolio companies, Bolt Labs, is building infrastructure to help bridge the gap between cryptocurrency and everyday transactions by eliminating lag time and high transaction fees while ensuring strong privacy protections.

Next time you make a transaction, think about the data about you, your counterparty, and the transaction that companies can gather. Bolt Labs created zkChannels to enable people to decide for themselves how they share their financial information without having to compromise their privacy by default. We talked to J. Ayo Akinyele, Co-Founder and CEO of Bolt Labs about what his team is doing and why. Here’s what he had to say:

How did Bolt Labs come to be? What was the problem you were trying to solve?

We started Bolt Labs to bring scalability and privacy to public blockchains.

Existing cryptocurrencies like Bitcoin have scalability and latency problems that limit their use as a medium of exchange (can take up to 1 hour to confirm a transaction on the blockchain). The Lightning Network was designed to address these scalability and latency issues by using the blockchain to escrow funds and resolve disputes while moving the bulk of transactions off-chain. However, the Lightning protocol does not offer privacy by default.

To address this problem, Matthew Green and Ian Miers conceived of a protocol in 2016 that addresses the privacy limitations of Lightning: Blind Off-chain Lightweight Transactions (or BOLT). It offers a strong privacy solution while preserving the efficiency of off-chain payments.

The importance of strong privacy protections to the development and adoption of blockchain technology is not always obvious or intuitive. In fact, the battle against privacy-related protocols has existed since the beginning of the internet era. The HTTPS protocol, for example, is an essential infrastructure that enables secure banking or e-commerce today. Yet as it was being developed in 1995, many overemphasized how the technology-enabled criminal or terrorist activity over the privacy protections for honest customers buying or selling goods online. But just as the HTTPS protocol has proven to be a critical building block for secure internet communication, strong privacy protections are required for cryptocurrencies to be suitable for many use cases.

Fortunately, because early use cases of blockchain tech are financial in nature (versus chat or sharing files on the original internet), the need for privacy is more obvious. Furthermore, as the internet age has matured, we as a society are increasingly aware of the importance of the privacy and ownership of even our personal communication data.

The initial BOLT research was designed for Zcash, but showed significant promise for use across blockchain protocols. Bolt Labs has extended this initial research beyond Zcash to Bitcoin, and our team is working towards a chain-agnostic approach that will bring the benefits of privacy and scalability to blockchains across the ecosystem.

What is zkChannels?

zkChannels extends the initial BOLT research and is a second layer protocol that enables privacy-preserving, off-chain transactions between customers and merchants. The protocol allows customers to transact with a merchant without revealing their identity and allows merchants to securely authenticate customer transactions without needing to “see” their personal identifying data. Our protocol fundamentally decouples the customer’s identity from the service itself.

How did your team come together?

The core team has prior experience working together on cryptographic research projects and security consulting work. The team came together as a result of these connections. For instance, Matthew Green was one of my research advisors at Johns Hopkins University (JHU). I met Colleen Swanson through a colleague and we worked on a few security consulting projects together. I shared the same research lab at JHU with Ian Miers, Gabe Kaptchuk, and Gijs Van Laer. I was introduced to Marcella Hastings through Gabe and recruited Darius Parvin through the Insight SF program.

Designing privacy protocols for real-world usage is incredibly challenging. It requires having applied knowledge and understanding of cryptography. We have assembled a team of experts in cryptography that are passionate about bringing privacy-enhancing technology to the real world.

How will this change the world? What’s the impact?

We envision a future in which our protocol is a core building block for protecting consumers privacy when transacting with digital currencies. As digital payments become commonplace, we imagine that users will be able to use zkChannels to access any online service or paid content without being tracked.

Who are your target users? Who will this affect?

Our technology benefits users that are looking to maintain their privacy online while accessing services or protected web content. These include users of VPN services, cloud compute or storage, and much more.

Cryptocurrency payment processors that adopt zkChannels will be able to forward transactions without collecting data about their users. Finally, zkChannels will also benefit institutional traders that want to trade their cryptocurrency on exchanges without revealing movement patterns to the public.

We envision a future in which our protocol is a core building block for protecting consumers privacy when transacting with digital currencies.

What’s been a key breakthrough to this point?

Our team has developed an off-chain privacy solution based on cutting-edge cryptography research that enables anonymity for public blockchains. The key breakthrough is that we can deploy zkChannels on any Bitcoin-like currency and can extend to smart contract platforms like Tezos as well.

What does the world look like when zkChannels is fully deployed?

With emerging privacy regulations like GDPR in Europe that protect consumers, we believe that zkChannels has the potential to become a new standard for security and privacy in online services. This means that people will be able to use cryptocurrencies as a payment method for accessing services and content without leaking their real-world identities. Services will no longer be able to collect data about the users they serve by default. The same way HTTPS became a standard for private web transactions, zkChannels can become a de facto standard for private blockchain transactions.

What are you most excited about for the future of zkChannels?

Without privacy, a digital society is a surveillance society. We are most excited about how zkChannels empower everyday users to control how they want to share their financial information.

Interested to learn more about Bolt Labs? Check out their portfolio page. You can also view our other Founder Stories here. Visit our portfolio page to see other investments we have made in companies working along the blockchain adoption curve. If you are working to create solutions using blockchain technology, contact us!