Binance Founder CZ Identifies Onchain Privacy Deficit as Major Barrier to Crypto Payment Adoption
According to the Binance founder, the transparent nature of cryptocurrency transactions—a defining characteristic of most digital assets—may represent one of the most significant obstacles preventing widespread adoption.
According to Changpeng Zhao, the co-founder of the Binance cryptocurrency exchange, the absence of privacy features in onchain transactions represents a major impediment to the widespread acceptance of cryptocurrencies as a viable payment method and medium of exchange.
The industry executive, widely recognized by the moniker "CZ," explained that this privacy deficit creates barriers for businesses and institutional players seeking to conduct expense payments using cryptocurrency. He provided the following illustration:
Lack of Privacy may be the missing link for crypto payments adoption. Imagine a company pays employees in crypto onchain. With the current state of crypto, you can pretty much see how much everyone in the company is paid by clicking the 'from' address.
During an earlier discussion with Chamath Palihapitiya, an investor and the host of the All-In Podcast, CZ additionally highlighted physical security risks as another reason why the transparent nature of onchain transactions poses dangers to cryptocurrency users. These remarks come amid a resurgence of interest in privacy-focused solutions and the revival of cypherpunk principles within the cryptocurrency space.
The cypherpunk movement's philosophy lies at the heart of cryptocurrency's origins, establishing peer-to-peer digital currency systems capable of facilitating transfers without requiring centralized intermediaries, while also emphasizing the encryption of digital communications to protect messages from unauthorized surveillance and monitoring.
Encrypt everything: the rise of onchain privacy
Corporate entities and institutional organizations will remain hesitant to adopt cryptocurrency, Web3 platforms, or blockchain technology unless they gain the ability to protect and conceal their transaction activities, according to Avidan Abitbol, who previously served as the Business Development Specialist for the Kaspa cryptocurrency project, in his conversation with Cointelegraph.
He explained that transaction records hold vital intelligence regarding corporate operational processes, proprietary business secrets, partnership arrangements, and can offer insights into a company's broader financial condition to rival companies and competitors.
According to Abitbol, these challenges can result in corporate espionage, adversely affect companies during business negotiations and discussions, and heighten the risk of institutions becoming targets for fraudsters and scammers.
The ongoing advancement and evolution of artificial intelligence systems will intensify and worsen this problem, as stated by Eran Barak, who formerly held the position of CEO at privacy-focused company Shielded Technologies.
He explained to Cointelegraph that centralized server infrastructures housing critical or high-value data will become increasingly appealing targets for hackers utilizing AI-powered tools and techniques.
According to his assessment, this development indicates that onchain privacy solutions and technologies will become essential and necessary for safeguarding valuable digital information as artificial intelligence grows more sophisticated and capable of piecing together heuristic indicators about prospective targets while creating statistical models to predict probable outcomes and scenarios.