In addition to our awesome interview with Shawn Wilkinson of Storj, we also had a chance to sit down and talk to Kyle Drake of Coinpunk and Project Skyhook. With this interview being pretty in-depth we’ve split it into two different parts, so be on the look out later this week for part two which gets even better. In part one we talk to Kyle about how he began Coinpunk, the future of Bitcoin, as well as Dark Wallet. Most recently Kyle began working on BitcoinJS, a Javascript library for Bitcoin wallet applications that has been improved a lot here in the last few months. But without any further to do, be sure to check out part one of the interview below.

Hey Kyle, thanks for taking time today to do an interview. Could you tell us a little about yourself and your technical background?

It’s been a fun and busy year. Definitely the most interesting of my life.

Let’s dive right in — tell us about Coin Punk and what gave you the inspiration to start it.

The first version of Coinpunk was a server account based “wallet”, as in the private keys were stored on the server. I was talking with a lot of people in the Bitcoin space, and dug into all the wallet hacks over the last few years, and realized that putting private keys on a server is an extremely stupid idea. Regardless of how much security or process you throw at a server,  you’re always one OpenSSL Heartbleed away from someone laying waste to the Bitcoin “server accounts” out there. And the fact that hacking the server is so incredibly lucrative and easy to do anonymously means everyone is going to try to do it, and that makes you a huge target. So I decided to build an open source web wallet that doesn’t involve server trust. Coinpunk encrypts private keys on the client side before sending it to the server.

I finished that work, but I didn’t like the way I ended up building it. Firstly, you still need to make sure the code served by the site isn’t tampered with. And these days, we can use HD wallets to generate a string of words that users can store somewhere as a backup – with that system, there’s really no reason to send any confidential data to the server, even in an encrypted form. So I’m working on re-wiring Coinpunk to be a standalone application. But in order to do this, we had to go back and clean up BitcoinJS, which is what it’s based on, and we’ve recently finished this work: http://bitcoinjs.org.

This is awesome, because not only did we fix the library up for us, we’ve fixed it up for a lot of other people in the process. Over 1.5 million wallets are using this library, so it’s in everyone’s interests that the code to make this stuff is well designed. I’m proud of my role in that, it gives me a good feeling when I get to help others in my work and improve the entire ecosystem.

What do you think is the future of Bitcoin or where do you think the market is moving?

A few years ago when Bitcoin was still pretty new, I did a presentation where I described how Bitcoin was similar to other monies: http://www.slideshare.net/KyleDrake/bitcoin-the-cyberpunk-cryptocurrency. My conclusion was that Bitcoin was going to be known as a fantastic store of value, and that remains my strong opinion on it. Sending payments internationally is good, and without intermediaries is also good, and making money more liquified and easier to send for things like charity is a huge reason I got into Bitcoin. But it’s the store of value proposal that I think really gives Bitcoin it’s teeth. I think we’ll see a flavor of that when the Bitcoin ETFs come online, and it becomes very easy for investors to drop some Bitcoins into their portfolio. There’s absolutely nothing Bitcoin can’t do for investors that Gold can, and I really see Bitcoin taking a lot of players from Gold and currency reserves in that way. The price of Bitcoin may be the least interesting thing about it, but it’s also the most useful. The rise of Bitcoin prices has enabled me to spend a lot of time working to improve the usefulness of Bitcoin, and that’s ultimately what gives Bitcoin it’s value proposition.

Earlier you mentioned Dark Wallet, what’s your take on it and why do you think it’s important?

Dark Wallet is a very important project, because they have been (often solely) working on improving the privacy of Bitcoin, a property that is shared by government-issued currencies, and is also shared by the US constitution as I’ve mentioned before. Many have their differences of opinion with the project and it’s leaders, but that is a stupid reason to dismiss the significance of their work. Privacy does not mean you are a law breaker. We all have things we want to remain private, and that’s not a bad thing. We have a reasonable right to privacy, and Bitcoin should fundamentally endorse and reflect that.

I see their work as a hedge against onerous regulations like what NYDFS is proposing, and an artist’s statement that these types of onerous regulations simply won’t work. What they will do in practice is push more people into projects like Dark Wallet, as users become disgusted with their entire financial life being unconstitutionally monitored whether they are doing things we consider to be bad, or not.

Stay tuned tomorrow to hear Kyle’s thoughts on New York’s proposed BitLicense, multi-sig addresses, and his thoughts on funding for Bitcoin-related projects.