Actually, No One Really Cares That Crypto Isn’t That Private

This paranoia for privacy really mostly lives in the minds of a niche group of ideologues

article-image

Midjourney modified by Blockworks

share

This op-ed is in response to a previous op-ed on blockchain’s danger to user privacy.


The cryptocurrency ecosystem is currently experiencing a narrative mirage

For years, those following the space have believed in, and at worst relied upon, the illusion of crypto anonymity. This illusion — that crypto provides an untraceable alternative to the traditional banking system — mostly finds its origins in news stories about the early Bitcoin criminal underworld. 

Misunderstandings perpetuated by the mainstream media about the fundamentals of blockchain technology have generated misconceptions in the public’s mind about the level of privacy these cryptocurrencies provide by default. 

For many, the idea that cryptocurrencies were built on fully auditable public ledgers remained a technical afterthought, rather than a tangible reality with practical implications for privacy and info security. 

While people were vaguely aware that cryptocurrencies weren’t perfectly anonymous and that government agencies might be monitoring criminal transactions, a general faith in anonymity persisted despite the existence of a permanent, public record of all blockchain transactions, allowing anyone to analyze and link activities to an identity. 

The rise of public blockchain intelligence is beginning to shatter this narrative. 

Every day, the adoption of services such as ENS, which are often linked to real-name Twitter accounts, shows that crypto users are eagerly and purposefully tying their identity to their cryptocurrency activity — and that the paranoia for privacy lives mostly in the minds of a niche group of ideologues. 

But this doesn’t imply that the tools these ideologues create to chase their hopes and dreams, such as Zcash or Monero, will cease to exist. Like other privacy tools across the internet, such as Tor, these tools can continue to exist in parallel with the rest of the clear-net to cater to an eccentric group of users with more esoteric use cases. 

Going public

Blockchains are the richest trove of public financial databases to ever exist, creating immense value for blockchain analytics companies and their users — and privacy activists across the ecosystem fear what incentives and implications this could bring.

Read more from the other side of this privacy debate: Want Privacy? Don’t Use Blockchain Yet

Yet despite the negative views promoted by these activists, crypto users continue to show — simply by which products they actually use — that these fears are misplaced. It seems that people care more about utility and ease-of-use than they do about privacy. 

This mirrors what happened on the internet, where the transition from pseudonymous mailing lists to being ok with putting your public identity online spurred a new wave of highly usable platforms such as Facebook. 

In the same way, a new era of companies focused on crypto identities and their activity has dawned. This too will unlock a market for new companies whose products and services bring increased adoption. 

Ultimately, our industry will grow healthier as a result of cryptocurrency economies knowingly and willingly moving toward real identities and a ubiquitous adoption of tools that allow crypto activity to be easily seen and understood by others. 

This path forward will destroy the fictitious public image of crypto as a shadowy world of anonymity, allowing participants to focus on other use cases for this transformational technology — and alerting those who continue to have an interest in privacy to search for tools that actually serve their end goals.



Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png

Research

Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.

/

article-image

Continued demand for bitcoin ETFs coupled with greater demand for bitcoin from exchanges is contributing to price moves, analysts say

article-image

Morpho Blue is designed in a way where risk management is externalized, Morpho Labs’ CEO said

article-image

Snowflake, a cloud-based data warehouse solution, has partnered with Dune to make curated blockchain data available to its clients

article-image

Crypto is fast and it’s only getting faster as bitcoin threatens to retest its own highs set more than two years ago

article-image

The settlement ends the legal battle over eth.link, a domain once owned by imprisoned developer Virgil Griffith

article-image

TBC President Lee Bratcher told Blockworks he’s “confident” about the Council’s case against the DOE