“Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.” Benjamin Franklin’s famous words have been applied in countless contexts over the years. Today, they ring true when referencing financial freedom and the right each individual has to control their own wealth and to transact in private.
The rise of cryptocurrency has thrust the issue of financial privacy into the spotlight. On the one hand, crypto empowers anyone to move money permissionlessly on blockchain rails. At the same time, the public nature of these networks means that anyone can scrutinize transactions and wallet balances.
The duality of blockchain-based systems, with the power to anonymize and deanonymize, is embodied by Worldcoin, whose focus on security has come at the expense of individual privacy.
Privacy Paradise or Surveillance Nightmare?
It’s hard to avoid the dystopian undertones to a project named Worldcoin, although were it just the name that was problematic it wouldn’t warrant discussion. Concerns over Worldcoin’s lack of privacy controls emerged within weeks of the cryptocurrency launching earlier this year. Much of the criticism the project has faced centers around the biometric data Tools for Humanity stores and its opaque data retention policies.
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Worldcoin launched with great promise, prompting long lines of people queuing to get their retinas scanned in places like Nairobi. In return, applicants were promised 25 WLD worth around $50 at the time. That was in July. Since then, global reaction to Worldcoin has soured, with Kenya’s government shuttering access to the service. It turns out that the concept of a single “World ID,” while admirable from an administrative perspective, raises major ethical questions.
People will do all kinds of foolish things for money. But the majority draw the line, it appears, at having their eyeballs uploaded to a pan-global corporation’s database. A greater idea of how the world feels about digital privacy and cryptocurrency can be found in Consensys’ web3 perception survey. With 15,000 participants across 15 countries polled, it provides a snapshot of global attitudes to crypto.
Digital Privacy Matters
The key takeaway from the Consensys report is that privacy matters. A lot. 83% of the 15,000 individuals surveyed cited a belief that data privacy is important, while 79% desire greater control over their online identities. The report concludes: “We see the transition to web3 as an opportunity for users of the internet to take control…We can leverage the power of web3 to address issues related to ownership on the web, identity, privacy, and monetization for creators.”
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It’s clear that web3 technology can be harnessed in different and often opposing ways: to restore privacy or to strip it away; to provide financial freedom or financial restrictions. This dichotomy is perfectly captured in a recent feature on privacy protocol Namada, which observes: “When it comes to privacy on public blockchains, there’s a lot of work to be done. As the world becomes an ever-mutating, interconnected web of people and industries, the need for privacy and transparency escalates coupled with the need to balance the two.”
The Right to Be Invisible Onchain
Namada, for its part, has a vision for digital privacy that includes supporting private transactions on existing blockchains such as Ethereum and Cosmos. Namada’s protocol supports shielded assets and data, allowing fungible and non-fungible tokens to be privately transferred onchain. Laudable as this effort is, achieving opt-in privacy for web3 users everywhere will take time and the support of multiple web3 developers.
While enforced privacy networks such as Monero are good for cloaking the activities of all users, most blockchain users don’t require this degree of secrecy. Rather, they desire the ability to conceal specific transactions without the risk of this very action singling them out for enhanced scrutiny. Only once onchain privacy has been normalized will it be widely utilized. This is what Namada is working towards: privacy as a service, if you like.
Most blockchains don’t require a retina scan in order to access them. But conversely, most blockchains don’t have privacy controls that can be activated at the flick of a switch. If web3 is to avoid going down the Worldcoin route, it needs privacy enforced at the protocol level and at every other layer moving up the stack. We’re not there yet. But one day, making a private onchain transaction may be as simple as sending an email.
