Crypto Needs Privacy To Scale in Payments: Binance Co-Founder CZ

The lack of privacy for onchain transactions is one of the biggest hurdles to the mass adoption of cryptocurrencies for payments and a medium of exchange, according to Changpeng Zhao, co-founder of the Binance cryptocurrency exchange.

The executive commonly known as “CZ” said the lack of privacy prevents businesses and institutions from paying expenses in crypto. He gave this example: 

“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.”

In a previous conversation with investor and host of the All-In Podcast Chamath Palihapitiya, CZ also cited physical security concerns as a reason why onchain transparency is a risk to users. The comments follow a revival of privacy and the cypherpunk ethos in crypto.

Cypherpunk ideology is central to the birth of cryptocurrencies, peer-to-peer digital money that can be transferred without centralized intermediaries, and the encryption of online communication to shield messages from surveillance.

Related: ‘No privacy’ CBDCs will come, warns billionaire Ray Dalio

Encrypt everything: the rise of onchain privacy

Businesses and institutions will not embrace crypto, Web3 platforms, or blockchain if they cannot shield their transactions, Avidan Abitbol, the former Business Development Specialist for the Kaspa cryptocurrency project, told Cointelegraph.

Transaction data contains critical information about corporate workflows, trade secrets, business relationships and can provide clues about a company’s overall financial health to competitors, he said.

These issues can lead to corporate theft, negatively impact corporations during business negotiations and increase the threat of an institution being targeted by scammers, Abitbol added.