Author: Igor Belov | Cryptography Engineer | Core Developer at Aztec Protocol

Blockchain's original promise was freedom from surveillance. Satoshi's whitepaper talked about privacy through pseudonymity. But pseudonymity isn't privacy. Every transaction you make is visible forever. Your entire financial history is one address link away from exposure.

We built a panopticon and called it liberation. Zero-knowledge technology finally offers a way out.

The privacy illusion

Most people don't understand how exposed they are on public blockchains.

You buy ETH on Coinbase. KYC'd. Your identity is linked to an address. You send to your wallet. You interact with DeFi. You buy an NFT. You donate to a cause. Every action is recorded, timestamped, connected.

Chain analysis companies like Chainalysis and Elliptic build profiles on millions of addresses. They sell this data to governments, exchanges, and anyone who pays. Your "anonymous" wallet probably isn't.

One connection reveals everything. Your employer pays you in crypto — now your salary is public. You pay a friend — now your social graph is visible. You buy medication — now your health conditions are inferrable.

This isn't hypothetical. It's the current state. Every Ethereum transaction you've ever made is searchable by anyone with an internet connection.

What zero-knowledge proofs actually do

Zero-knowledge proofs let you prove something is true without revealing the underlying information. I can prove I'm over 18 without showing my birthdate. I can prove I have sufficient funds without revealing my balance. I can prove a transaction is valid without exposing sender, receiver, or amount.

The math is complex — SNARKs, STARKs, PLONKs — but the concept is simple: verification without disclosure.

Applied to blockchain, this means transactions that are cryptographically valid but informationally opaque. The network confirms rules are followed without knowing what specifically happened.

ZK-rollups: Scaling meets privacy

ZK-rollups were originally built for scaling. Bundle thousands of transactions, generate a single proof, post it to Ethereum. Massive throughput gains, lower costs.

But the same technology enables privacy. If proofs don't require revealing transaction details, you can verify without exposing. The rollup knows your transaction is valid. Nobody knows what you did.

Aztec Network — where I work — is building exactly this. Private DeFi where your trades, loans, and transfers are shielded by default. zkSync and StarkNet are exploring similar directions, though with different tradeoffs.

The technical challenge is programmability. Early privacy coins like Zcash offered shielded transfers but limited functionality. Building private smart contracts — private DeFi, private DAOs, private everything — requires new cryptographic techniques we're still developing.

The compliance question

Let's address the elephant: regulators hate privacy.

Tornado Cash developers were arrested. OFAC sanctioned smart contract addresses. The message was clear: privacy tools are presumptively criminal infrastructure.

This framing is wrong but politically powerful. Privacy isn't inherently criminal — your bank doesn't broadcast your transactions, and nobody calls that money laundering. But crypto privacy faces hostile regulatory environment regardless of merit.

The solution isn't abandoning privacy. It's building compliant privacy — systems where users can prove compliance without sacrificing confidentiality.

View keys let you selectively disclose to auditors or regulators. Proof of solvency shows you have funds without revealing holdings. Proof of source demonstrates clean origin without exposing transaction history.

Privacy with auditability isn't a contradiction. It's what mature financial systems actually need.

Current state of private crypto

Where are we today?

Zcash pioneered shielded transactions but adoption remains limited. Most ZEC transactions are still transparent — privacy is opt-in, and most users don't opt in.

Monero provides stronger default privacy through ring signatures and stealth addresses. It works, but it's isolated — no smart contracts, no DeFi composability, increasingly delisted from exchanges.

Tornado Cash proved demand for Ethereum privacy but also proved regulatory risk. The protocol still works — code is unstoppable — but the human infrastructure was targeted effectively.

ZK-rollups are the next frontier. Aztec's testnet is live. We're targeting mainnet in 2025. Private transactions with full programmability — DeFi that doesn't broadcast your strategies to the world.

Why privacy matters beyond criminals

The "nothing to hide" argument is lazy and dangerous.

Businesses need confidentiality. If your supplier payments are public, competitors know your cost structure. If your treasury movements are visible, traders front-run you. Corporate adoption of crypto requires privacy — not optional, mandatory.

Individuals deserve dignity. Your political donations, medical payments, and personal relationships aren't public business. Financial surveillance enables discrimination, stalking, and coercion.

Dissidents require protection. In authoritarian regimes, transparent blockchain means the government sees everything. Hong Kong protesters learned this — donation trails led to arrests. Privacy is life-or-death when adversaries have state power.

The question isn't whether bad actors will use privacy. They will — they already do, with cash, with shell companies, with existing financial opacity. The question is whether everyone else gets protection too.

What comes next

My predictions for privacy in 2025 and beyond.

Private rollups go live. Aztec, and likely competitors, launch mainnet. The technology works — now we prove demand.

Institutional interest grows quietly. Banks and corporations want blockchain efficiency without public exposure. They'll use private infrastructure even if they can't talk about it publicly.

Regulatory battles intensify. Expect more Tornado Cash situations. The fight over financial privacy is just starting. Decentralization of protocol development becomes security — no team to arrest.

Privacy becomes default expectation. Just as HTTPS became standard for web, on-chain privacy will become standard for blockchain. Not for everyone immediately, but the direction is clear.

The transparent era of crypto was necessary for bootstrapping trust. The private era is necessary for mainstream adoption. We're building the bridge.

Igor Belov is a cryptography engineer specializing in zero-knowledge proof systems. He contributes to Aztec Protocol and previously worked on cryptographic research at EPFL.