To encourage widespread adoption of blockchain transactions, privacy is essential. Businesses and investors will benefit from on-chain privacy.
Every day, there are new innovations in the crypto space. Blockchain technology is constantly innovating, whether through decentralized applications or new methods to use nonfungible tokens within decentralized finance. Only thing missing is widespread adoption. Widespread adoption. The very public nature blockchain is one thing that holds this back. DeFi’s current operation lacks any meaningful privacy. To encourage widespread adoption of blockchain technology by individuals, governments, and businesses, all parties involved in transactions with blockchain should expect consistent, regular privacy.
First, let’s define privacy. Privacy does not refer to pseudonymity as cryptocurrency claims. Meaningful privacy is the inability to trace a person’s financial accounts and protect an individual’s wealth. This allows businesses to protect trade secrets. Privacy is the concept that a government’s finances are its business, not those of their neighbors.
Cryptocurrency can be described as a currency. It will be treated as currency regardless of how it is regulated, thanks to the Canadian trucker convoy. It is a financial asset and the current knowledge of financial privacy supports privacy across DeFi. Every internet entity within the EU must adhere to the General Data Protection Regulation. Fiat banks also have privacy protocols. Many of these are subject to human error. Privacy is a natural thing, and is often overlooked until it is removed.
Crypto transactions between corporate entities are sensitive.
It is hard to deny that large financial institutions and corporations are moving to crypto. Recent news has been that Commerzbank is applying for crypto custody business licenses . Companies are beginning to recognize the advantages of crypto as a way to solve a problem they have had for decades: instantaneous cross border payments. The lack of privacy in these transactions will hinder wider adoption. Until the privacy of institutional transactions can be secured, it will still remain a niche offering.
Trade secrets can be protected by companies, even if they relate to finances and payments to employees or contractors. Hedge funds will reap the benefits of moving assets onto blockchain. They must be able protect their financial movements. Private businesses cannot protect themselves if every asset movement is tracked. This makes it difficult for them to compete. Privacy for business is as reasonable as privacy for individuals. Crypto will see wider adoption and be hampered every step of its journey until it is resolved.
Regulation does not require privacy
It is possible to have privacy in DeFi that is both secure and responsible. As frustrating as regulations can be for the Wild West blockchain projects, guardrails are able to enable growth. People don’t trust anything they don’t understand so regulations signal that those in charge are aware of what’s going on and what needs attention. This is a goodthing. The government can and should regulate crypto exchanges and fiat on- or off-ramps. Individuals who are subject to local and regional laws, as well as federal laws, will be subject to these laws. Privacy does not negate or prevent regulation. Privacy on social networks is codified by governments. Why should financial networks be any different?
DeFi will be more secure once it can be used privately. This is the bottom line. People don’t trust anything they don’t understand so we need to introduce them using the expectation paradigm that is associated with other financial ventures. We can also invite people to the space by separating the privacy argument from the discussion about anonymity. This will solve the problem that new users face when they mistakenly believe crypto is a convenient way to facilitate illegal transactions. DeFi is still a risky venture, for both businesses and private parties, until there is a reasonable expectation that privacy will be maintained.
