Demand for Privacy

Privacy has remained an enduring pillar of the crypto movement, as many users still look to the asset class for the inherent freedom to conduct transactions, retain ownership, and transfer value without requiring institutional authorization. However, the rub is that this somewhat antithetical to the value proposition of bitcoin, which permanently records every transaction on its network within a public ledger. Indeed, while institutional adoption of crypto has been a major catalyst for the current market cycle, it has also made users of crypto rails more reticent about who’s in control of some of these networks.

Moreover, a growing global awareness of digital surveillance and data exploitation has raised the profile of privacy-first payment solutions. This trend has moved beyond crypto mixer services to the development of sophisticated Layer-1 and Layer-2 protocols that bake privacy into their fundamental network architecture. Technologies like zero-knowledge proofs (ZKPs)—specifically zkSNARKs and STARKs—and fully homomorphic encryption (FHE) are becoming the cornerstones of this evolution. ZKPs allow users to prove the validity of a transaction without revealing any underlying data, such as the sender, recipient, or amount.

All of this has pushed privacy sector tokens like Monero and Zcash into the public spotlight, while the Ethereum Foundation established a new privacy initiative, known as the Privacy Cluster, to strengthen privacy within its ecosystem. Some investors see this emerging area ahead of the European Union’s implementation of stricter KYC and transaction-monitoring rules, though the EU will prohibit privacy coins and anonymous or self-custodied crypto wallets starting from July 2027.