On-chain privacy key to wider cryptocurrency adoption

Innovations in the crypto space appear every day. Whether through decentralized applications or new ways to implement and use non-fungible tokens (NFTs) in decentralized finance, blockchain technology is innovating at the speed of light. The only thing missing? broadly used. One thing hindering this is the very public nature of blockchains. The way DeFi currently operates lacks meaningful privacy. To foster widespread adoption by businesses, governments, and individuals, those executing blockchain transactions should expect regular, consistent privacy.

First, we need to define what privacy means. This does not imply the pseudonym that cryptocurrencies now claim to have. Meaningful privacy means that personal financial accounts are not tracked and personal wealth is not exposed. This means businesses can protect trade secrets.Privacy means government finances are the people’s business, not the people’s dangerous neighbor.

related: In Crypto, Nobody Cares Who You Are: Here’s Why It’s a Good Thing

A cryptocurrency is just that — a currency.With the Canadian truck fleet and Russia’s war on Ukraine Bringing a Shift in the Crypto Atmosphere, it will continue to be considered a currency whether or not it is regulated as a currency. It is a financial asset, and our current understanding of personal financial privacy supports the entire DeFi transition to privacy. The European Union adopted the General Data Protection Regulation, which every internet entity operating within the EU is expected to comply with. On a more traditional level, fiat banks have multiple privacy protocols, many of which are vulnerable to human error. Privacy is natural and often not taken seriously until it is removed.

Privacy Is Crucial for Enterprise Crypto Transactions

Undeniably, companies and large Traditional financial institutions are turning to cryptocurrenciesit is reported that giants such as Commerzbank are Apply for a cryptocurrency custody business license. Corporate finance departments are starting to see the benefits of using crypto to solve a problem that has plagued them for decades: instant cross-border payments. The lack of privacy in these transactions will hinder wider adoption as it will remain a niche product until the privacy of such institutional transactions is preserved.

Companies have the right to protect trade secrets, including those related to finances and payments to employees and contractors.Hedge funds will benefit greatly Transfer assets to the blockchain, must be able to protect their financial flows. If every asset movement could be tracked, private companies would be unable to protect themselves and competition would be diluted. Expecting commercial privacy is just as reasonable as expecting personal privacy. As encryption gains wider adoption, it will continue to be hampered at every step until privacy concerns are resolved.

related: Loss of Privacy: Why We Must Fight for a Decentralized Future

Privacy does not threaten regulation

The good news is that privacy in DeFi can be both responsible and secure. We all know regulation is growing and the wild west can be frustrating for blockchain projects, Guardrails can boost growth. People don’t believe what they don’t understand, so when regulations comeThey show that the people lead the government know what happened and what needs to be monitored.This is a OK thing. Governments can – and should – regulate cryptocurrency exchanges, fiat entry and exit, and individuals who are subject to local, regional and federal laws no matter where they live. Privacy does not threaten or disable regulation. The government codified privacy on social networks. Why should financial networks be an exception?

The bottom line is that once DeFi is secure and available privately, people will feel more comfortable using cryptocurrencies. Because people don’t trust what they don’t understand, we must invite them using the expectation paradigm that comes with other financial activities. Another way we can invite people into this space is to separate privacy arguments from anonymous discussions. This will help address the problems new adopters face when they mistakenly believe that encryption is an easy way to facilitate illegal transactions. Until there are reasonable expectations for privacy, DeFi remains a risky venture for private parties and businesses.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk and readers should do their own research when making a decision.

The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Kiran Mosque is the Chief Scientist at Railgun, a decentralized smart contract project that brings privacy to cryptocurrencies that work seamlessly with DeFi. He has an extensive background in developing technologies for blockchain and DeFi projects. He was an early adopter of Bitcoin and one of the first to develop its GPU mining software.