Privacy is the key to the next stage of Ethereum

Ethereum introduced smart contracts to the world, spurring an explosion of Cambrian innovations, including the Defi, NFTS, DAO, and Dapps universes. On July 30th, the network will celebrate its 10th anniversary.

The last decade of the ecosystem has focused on proof of Ethereum’s capabilities and capabilities, and on increasing efficiency through upgrades like merges, marking the transition from proof of work to proof of demonstration. The next era will require pivots that match the more mature ecosystems we currently support. This includes not only Web3 natives, but also those who don’t know what financial institutions, governments, businesses, and “farming” are, but who want to get a loan for their homes with crypto collateral.

Amidst an increasing number of government and institutional involvement, hope is sometimes lost that Crypto’s original ideals expressed in Cypherpunk’s manifesto will contribute to the creation of a “free and open society.” For Ethereum to do good with its first promise, privacy must be the central tenet of its future.

Privacy is identity

A certain degree of privacy is essential for financial security and freedom. I don’t want to reveal my net worth to the cash register every time I buy a latte or pizza slice, but this is essentially the way I operate it for the past decade.

This level of transparency not only puts individuals at risk of phishing and other attacks, but also prevents institutions from engaging in uncovering their activities and don’t want to give their competitors an edge. It is possible to maintain a pseudonym without interacting with a centralized platform, but this is not practical for interactions that touch the real world.

People and businesses must be able to interact with governments and banks via ID-linked accounts. Additionally, the key to enabling these types of interaction is programmable privacy without the need to put personal information into theft or misuse.

The solution is ZKP driven technology

The solution is already here: Smart contracts equipped with Zero Knowledge Proof (ZKP) allow users to control who and what information they share. The application world is practical rather than viable, as programmable privacy enabled by ZKPS is integrated into Ethereum at a basic level.

Products and services must comply with the regulatory requirements of each jurisdiction in which they operate. This includes collecting customer information, countering the Counterterrorism (CFT) and AML Act in accordance with the KYC guidelines. A typical KYC process involves sharing some form of ID, such as a passport or driver’s license, and personally identifiable information (PII), such as name, date of birth, and address.

If caught by a bad actor, this type of information can be used to target people in phishing scams and other types of attacks (see Recent Coinbase Data Breaches). Instead of requiring people to reveal their PII and make themselves and their data vulnerable to attack and theft, the ZKP-powered solutions allow people to provide data to the platform and prove their participation eligibility without contributing to potential honeypots.

The likelihood that it will be enabled by ZKP is far beyond compliance. Currently, Ai Bots are suffering from a cibil attack in which AI Bots defeated real human participants to give a great advantage to certain participants. The same problem applies to distributed governance. Decision making at DAO is not really fair and free unless you can prove that the right number of votes will become the right number of people rather than the bot. ZKPS offers solutions with “proof of humanity” through data output tools such as ZKPASSPORT, ZKEMAIL, and ZKTLS.

Digital payments must provide the same privacy as cash. Payment in dollars, euros and other sovereign currencies via Stablecoins is another important factor that allows for mass adoption of Defi applications, but this is by no means a surprise without privacy guarantees. The same applies to decentralized mortgages, loans, and essentially any kind of legal agreement.

There are many other applications that have become possible with privacy as a core tenant in the Ethereum ecosystem. These include proof of reliability of product or restaurant reviews, secure digital voting, decentralized escrow services, carbon offset tracking, anonymous proof of builder status, and verifying employment skills.

Create a culture that demands privacy

Today, technology exists to implement ZKP solutions, but challenges must be overcome before privacy is comprehensively reflected as core values across the Ethereum ecosystem. Technical challenges regarding the implementation of technologies with ZKP include the greater cost of ZKP transactions. Building ZKP-focused applications is also complex, bringing a learning curve to the builder. These are all solveable problems.

The other challenges are cultural. Generate universal buy-in from participants’ spectrum to privacy values and coordinate the implementation of solutions across the technology stack, from protocols to wallets. There is also a hurdle to perceive misleading connections to privacy misconduct.

Technological change is ultimately easier than changing your mind, but at the end of the day, the core mind of code is philosophical. It is a technology that underpins belief in freedom and entities’ privacy. If we can look back at another decade of Ethereum in another decade and celebrate its role in enabling greater economic freedom, then the focus of privacy will be important.