According to Changpeng Chao, co-founder of crypto exchange Binance, the lack of privacy in on-chain transactions is one of the biggest obstacles to mass adoption of cryptocurrencies as a payment and exchange medium.
The executive, commonly known as “CZ”, said that companies and institutions cannot pay their expenses in cryptocurrencies due to the lack of privacy. He gave this example:
“Lack of privacy may be the missing link in cryptocurrency payment adoption. Imagine a company paying its employees in cryptocurrency on-chain. In the current state of cryptocurrencies, you can pretty much see how much everyone in the company is being paid by clicking on the ‘from’ address.”
In a previous conversation with investor and All In podcast host Chamath Palihapitiya, CZ also cited physical security concerns as a reason why on-chain transparency poses a risk to users. These comments follow the resurgence of privacy and the cypherpunk ethos in cryptocurrencies.
Cypherpunk ideology is central to the birth of cryptocurrencies, peer-to-peer digital money that can be transferred without centralized intermediaries, and the encryption of online communications to protect messages from surveillance.
Related: Billionaire Ray Dalio warns of upcoming CBDC with ‘no privacy’
Encrypt everything: The rise of on-chain privacy
Avidan Abitbol, a former business development specialist at the Kaspa cryptocurrency project, told Cointelegraph that companies and institutions will not adopt cryptocurrencies, the Web3 platform, and blockchain if they cannot secure transactions.
He said transaction data contains important information about a company’s workflow, trade secrets and business relationships, and can provide competitors with clues about a company’s overall financial health.
These issues can lead to business theft, negatively impact businesses during business negotiations, and increase the threat of organizations becoming targets for fraudsters, Abitbol added.
Eran Barak, former CEO of privacy company Shield Technologies, said continued technological developments in AI systems will exacerbate this problem.
He told Cointelegraph that centralized servers containing sensitive and valuable information will become increasingly attractive to AI-assisted hackers.
This means AI will become more powerful, able to gather heuristic clues about potential targets and statistically model expected outcomes, and will require on-chain privacy techniques to protect valuable online information, he said.
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