On-chain privacy is key to the wider mass adoption of crypto

On-chain privacy is key to the wider mass adoption of crypto

The path to mass adoption of cryptocurrencies is paved with on-chain privacy. Bitcoin’s blockchain has become riddled with addresses and transactions that are not anonymized because users want to identify themselves, but most people don’t care about their own personal identity when it comes to online payment channels like cryptocurrency wallets.

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The “crypto mass adoption meaning” is a question that has been asked many times. The answer to this question is that on-chain privacy is key to the wider mass adoption of crypto.

On-chain privacy is key to the wider mass adoption of crypto

Every day, new crypto innovations emerge. Blockchain technology is evolving at breakneck pace, whether it’s via decentralized apps or new methods to integrate and utilize nonfungible tokens (NFTs) in decentralized finance. Is there anything missing? Adoption is widespread. The public nature of the blockchain is one factor holding this back. In its current state, DeFi lacks significant privacy. Those conducting blockchain transactions should anticipate frequent, consistent privacy in order to drive widespread adoption for corporations, governments, and people.

On-chain privacy is key to the wider mass adoption of crypto

First and foremost, we must define privacy. It does not imply anonymity, as Bitcoin now claims. A personal bank account will not be tracked, and an individual’s wealth will not be disclosed, according to meaningful privacy. It implies that a company can safeguard its trade secrets. Privacy implies that a government’s finances are its citizens’ concern, not those of threatening neighbors.

Related: No one cares who you are in crypto: Here’s why that’s beneficial.

Cryptocurrency is just that: a kind of money. With the Canadian trucker convoy and Russia’s war on Ukraine giving cryptocurrency a new lease of life, it will continue to be considered as a currency regardless of whether it is regulated as such. It’s a financial asset, and our existing knowledge of personal financial privacy bolsters the need for DeFi privacy. The European Union has passed the General Data Protection Regulation, which is binding on all online entities operating in the EU. Fiat banks, on the other hand, offer a variety of privacy mechanisms, many of which are vulnerable to human mistake. Privacy is natural, and it is frequently taken for granted until it is taken away.

For business crypto transactions, privacy is critical.

With news that heavyweights like Commerzbank are asking for crypto custody business licenses, it’s tough to deny that companies and huge conventional financial institutions are migrating to crypto. Instantaneous cross-border payments have been a concern for corporate treasuries for decades. Lack of privacy for such transactions will limit adoption since it will remain a niche service until the privacy of such institutional transactions is assured.

Trade secrets, especially those relating to finance and payments to workers and contractors, are protected by companies. Hedge funds, who stand to gain a lot from shifting assets on the blockchain, need to be able to secure their financial transactions. Private enterprises will be unable to defend themselves if every asset transfer can be traced, and competition would be diminished. It is just as acceptable to demand privacy from businesses as it is from people. As crypto becomes more widely used, it will be stifled at every turn until the issue of privacy is resolved.

The Loss of Privacy: Why We Need to Fight for a Decentralized Future

Regulation is not threatened by privacy.

The good news is that DeFi can be both responsible and secure when it comes to privacy. We all know that regulation is becoming more prevalent, and as unpleasant as guardrails might be for the Wild West of blockchain initiatives, they can also help them develop. People don’t trust things they don’t understand, so rules signify that the people in charge of governments are aware of what’s going on and what has to be monitored. That is beneficial. Crypto exchanges, fiat on- and off-ramps, and people who are subject to municipal, regional, and federal laws wherever they live may — and should — be regulated by governments. Regulation is neither threatened or hindered by privacy. Privacy on social media is codified by governments. Why should financial networks be treated differently?

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On-chain privacy is key to the wider mass adoption of crypto

In the end, if DeFi is safe and can be used discreetly, people will be more comfortable with crypto. We must welcome them utilizing the paradigm of anticipation that comes with other financial pursuits since people do not trust something they do not comprehend. Another method to bring people into the arena is to separate the debate about privacy from the debate over anonymity. This will assist in resolving the issue that new users confront when they mistakenly believe that crypto may be used to support unlawful activities. DeFi will remain a dangerous endeavour for both private people and corporations until there is a fair expectation of privacy.

This post makes no investment recommendations or advice. Every investing and trading choice has risk, therefore readers should do their own research before making a decision.

The author’s views, ideas, and opinions are entirely his or her own and do not necessarily reflect or represent those of Cointelegraph.

Kieran Mesquita is the chief scientist of Railgun, a decentralized smart contract initiative that uses DeFi to introduce anonymity to cryptocurrencies. He has a lot of experience designing technology for blockchain and DeFi applications. He was an early Bitcoin user and one of the first to design GPU mining software for the cryptocurrency.

The “defi adoption” is a problem that has been present for a while. The wider mass adoption of crypto is key to the success of the cryptocurrency market.

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