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

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.

Get the news in your inbox. Explore Blockworks newsletters:

• The Breakdown: Decoding crypto and the markets. Daily.
• 0xResearch: Alpha in your inbox. Think like an analyst.