According to Changpeng Zhao, co-founder of cryptocurrency exchange Binance, the shortage of privacy in on-chain transactions is one in every of the most important hurdles to mass adoption of cryptocurrencies for payments and as a medium of exchange.
The executive, commonly referred to as “CZ,” said the shortage of privacy prevents corporations and institutions from paying expenses in crypto. He gave this instance:
“Lack of privacy might be the missing link in crypto payments adoption. Imagine an organization paying its employees on the crypto onchain. With the present state of crypto, you’ll be able to practically see how much everyone in the corporate is paid by clicking on the 'From' address.” Source: CZ
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. The comments follow a revival of privacy and the cypherpunk ethos in cryptocurrency.
Cypherpunk ideology is central to the emergence of cryptocurrencies, peer-to-peer digital money that might be transferred without central intermediaries, and the encryption of online communications to guard messages from surveillance.
CZ discusses the state of the crypto industry with Chamath Palihapitiya. Source: All In Podcast
Encrypting Everything: The Rise of On-Chain Privacy
Companies and institutions won’t accept crypto, Web3 platforms or blockchain if they can not protect their transactions, Avidan Abitbol, the previous business development specialist for the Kaspa cryptocurrency project, told Cointelegraph.
Transaction data accommodates necessary details about company operations, trade secrets and business relationships and may give competitors clues about an organization's overall financial health, he said.
These issues can result in corporate theft, negatively impact corporations in business negotiations and increase the danger of an establishment being targeted by fraudsters, Abitbol added.
According to Eran Barak, former CEO of information protection company Shielded Technologies, further technological development of AI systems will exacerbate this problem.
Centralized servers that contain critical or invaluable information have gotten increasingly attractive to AI-powered hackers, he told Cointelegraph.
That means on-chain privacy technologies will turn into crucial to guard invaluable online information as AI becomes more powerful and may collect heuristic clues a few potential goal and statistically model likely outcomes, he said.
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