Last few weeks we’ve been seeing privacy coming back to the narrative, that’s great news for crypto and I’m very happy that finally we get to work on it again. For years nobody has cared when we’ve attempted to work on it, nobody asked, nobody wanted it even for free. Hence why I’ve received several questions asking for why now, what has changed? Althought there’s no single answer to point out, I do think a couple things have aligned themselves to make this moment happen. A good way to go through it is comparing it to Maslow’s hierarchy of needs.

A pyramid outlines the hierarchy of needs for cryptocurrency, from fundamental safety to privacy, accompanied by brief descriptions for each level.

Normally, we would start with physiological needs, but in digital world I would transform that into, don’t loose your keys, which is basically what for Maslow would be the second layer. In that sense, we are merging the first two archetypical layers. Afterwards, we need to cover our emotional needs, we need to let the degen we all have inside express itself (hopefully not so much as we loose all our funds). That is, we need defi, something that makes us feel attached, that make us feel smart and useful. As we grow higher into the pyramid, we need to start scaling, more people can come in, new opportunities can arise, and that’s the reason payments couldn’t be a thing. The ecosystem was not mature and fast enough to handle real-world scenarios, things are changing massively here with more and more players coming in by the day. Enabling payments, the all new rage in crypto thanks to credit card and stablecoin issuers with great UX.

But now, we have got to crypto, something that feels foundational, but if you take a look at the needs and the tech developed, privacy has always been a late-stage need:

  • If you don’t have safety of funds, privacy doesn’t matter.
  • If you don’t have usable primitives, privacy still doesn’t matter.
  • If you don’t have usable primitives, privacy still doesn’t matter.
  • If you don’t have payments, privacy is invisible.

The time is now.

Existing solutions shoot right in the middle

When we talk about privacy, we talk about two distinct properties, transactional privacy, that is, hiding what I do, payments, swaps, trades… and identity privacy, hiding who I am, and breaking the link between addresses when transferring. In crypto working around these two is specially complicated and projects often trade one for the other and expect that if you go far enough in that direction you’ll get privacy. It doesn’t work.

But anonymity is not privacy, creating new wallets isn’t enough, it’s an endless game you have to play every time something gets leaked. And moving funds in crypto is hard enough to have to do every so often. It’s a recipe for a disaster, a “Chronicle of a Death Foretold”.

Then you have projects with FHE with great properties such as being able to execute on top of encrypted data, but at miss the part of the identity and now we know how’s doing something on top of a protocol.

The classical Computer Science trilemma moved to crypto and it’s something most people understand by now. Well, here we have a dilemma. And now solution has yet managed to get close to it.