While a core tenet and source of pride among crypto projects, privacy has been demonized by those in power, including lawmakers, regulators, banks and academics.
Zcash (ZEC), a privacy coin that launched in 2016, unveiled an upgrade to its system on May 31 that will allow users to more easily make private, trustless digital cash payments on mobile phones. Not everyone would view this as a good development.
The unfamiliarity, uncertainty and public intrigue surrounding privacy — including its complexity, misuse and speculative activity — presents a number of challenges and reputational issues for innovating crypto projects. While a core tenet and source of pride among crypto projects such as Zcash, privacy has been demonized by those in power, including lawmakers, regulators, banks and academics.
Yet, frequent hacks and data breaches show that the need to protect individuals’ privacy is more essential than ever. It’s here where crypto firms can enter the conversation and advocate for these vital consumer protections through the use of privacy-focused projects.
Consumer sentiment and corporate malfeasance
Sentiment toward the need for data and financial privacy entered the mainstream when the extraordinary revelations of the 2017 Equifax breach came to light. The most sensitive financial information of nearly every American household was put in the hands of third-party providers without their knowledge or informed consent — and was not appropriately protected.
Americans have long been walled off from our most sensitive financial information. Due to the negligence of Equifax, we now know just how vulnerable our privacy and financial security truly is. Things have only gotten worse in the succeeding years. Nearly 294 million people were impacted by data breaches in 2021, with more than 18.5 million records exposed. It was the worst year for corporate data breaches since 2017.
Takeaway: The crypto industry needs a villain. We need a drumbeat of proactive outreach to mainstream consumers reminding them of the unethical practices of companies who both fail to protect their information and use it deceptively. But it can’t be a “tear it all down and exit the system” message. We have to also educate people on how Web3 prevents this from happening but putting them in control of their data.
Policymakers take notice
The scandal surrounding the loss of control of our financial information caught the attention of policymakers, some of whom said that “financial data should be treated with the same confidentiality as medical records.” But what actually emerged out of this rhetoric? Not much. As The Washington Post’s Cristiano Lima put it:
“While there’s universal agreement that Congress needs to do more than talking — specifically, setting rules around the collection and use of consumer data — action has remained elusive.”
Why is this important? Americans can’t depend on lawmakers to protect their privacy.
Takeaway: Americans are increasingly frustrated with Big Tech, and trust in government is at an all-time low. There’s an opportunity to drive a wedge and tap into those feelings, while at the same time striking a “privacy first” narrative that empowers Americans to seek out protections on their own.
The message projects have to establish is threefold: 1) why people should want and need everything from their data to their text messages to be private; 2) how so much of our legitimate financial privacy rights — and thereby our financial destinies — have been compromised and removed from our control; and 3) privacy is a constitutional right that the majority of Americans want.
The stigma against crypto
But, we have to address the gorilla in the room. The privacy conversation has come under intense scrutiny by the media, law enforcement and various regulatory bodies, and we are losing the battle to define our own industry. Take this quote from U.S. Senator Elizabeth Warren:
“DeFi is the most dangerous part of the crypto world. […] It’s where the scammers and the cheats and the swindlers mix among part-time investors and first-time crypto traders.”
The common denominator of these attacks is that they take crypto’s privacy strength — its breakthrough development as an almost impenetrable means to shield the identity of its users and their financial information — and position it as an extreme negative. The implication: privacy projects are designed as a tool for drug dealers, suspicious transactions, and avoidance of law enforcement, regulators and tax collectors.
Takeaway: If this characterization is left unanswered, privacy-focused crypto projects will not only allow their brand positioning to be hijacked but expose themselves to additional scrutiny, negative coverage, investigations and possible legal action — all of which could prove detrimental to their value and longevity. Inaction is not an option.
Unfortunately, we have failed to truly organize and create an industry-wide plan that will resonate with our target audiences and grow our movement. Until we do this, we will let others define us, potentially leading to our demise.
So, we have to normalize privacy, demystify it, and — most importantly — gain allies in our cause. To do this, privacy projects and advocates — inside and outside crypto — must come together under a united front.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.