Why Do We Need Financial Privacy Now?

As more information & assets are stored online, the need for effective solutions to privacy concerns becomes increasingly critical. It’s almost daily that we hear about privacy violations, with not only criminals on the hunt for your personal data, but governments & private entities too

Why Do We Need Financial Privacy Now?
Why do we need financial privacy now

Privacy is a growing concern

Data breaches and privacy violations are all too common nowadays. Just a month ago, hackers accessed the personal data of 37 million T-Mobile customers. Last year, an IKEA security breach impacted 95K of their customers, and a cyberattack on the International Committee of the Red Cross compromised the personal data of 515,000 vulnerable people. Cybercriminals will take this kind of stolen personal information and use it for identity theft, accessing people’s financial accounts, or targeting them with phishing scams, and the consequences can be devastating, including losing one’s life savings in a matter of seconds.

But it doesn’t stop at criminals. Governments and private entities are also hungry for data to “keep an eye” on the population. In the US, the Patriot Act of 2001 allowed government agents to conduct surveillance of citizens without their knowledge, a law that expired in 2020 but left behind much of its infrastructure and power. The UK's Government Communications Headquarters (GCHQ) also breaches citizen privacy by accessing and monitoring their emails, social media connections, search history, IP addresses, and more.

The crypto industry isn’t exempt from government-related privacy issues, either. Last year, the US Treasury Department’s Office of Foreign Assets Control (OFAC) failed to distinguish between the creators of Tornado Cash software and the digital asset anonymizer software itself by adding both to the Specially Designated Nationals and Blocked Persons List (SDN). The department exceeded its own authority with this decision and potentially violated “constitutional rights” according to an analysis from Coin Center, who is considering taking legal action in response to the ruling.

Fight for the Future, a nonprofit advocacy group, has also joined the digital privacy conversation, releasing an open letter on their website calling for newly elected members of the US Congress to protect privacy. In a similar vein, digital privacy awareness swept across Crypto Twitter last year when an image reading “Privacy is normal” created by Chris Tomeo (Electric Coin Co.), received thousands of retweets. The graphic lists out examples of why privacy should be normalized. Privacy is already normalized in our homes and minds — it must also become the status quo in finance.

But more information and assets are stored online over time, the need for effective solutions to privacy concerns becomes increasingly critical. So an open question remains: could blockchain technology be the answer, even with the above-mentioned issues? Certainly, but not in its present state.

Let’s dive in.

Current blockchains – A one-way trip to 1984?

Blockchains are often presented as the ultimate solution for security and privacy issues. On the surface, they seem to solve key problems like centralization and security breaches, but in reality, most of them will only accelerate society down a one-way road to a 1984-esque dystopia.

We must come to terms with the fact that blockchains are not private. While crypto does allow you to send and receive money from “anonymous” wallets, it’s the very “public ledger” technology that makes all of your data public and available for anyone to see — and exploit.

People call blockchains “public ledgers” because they keep track of everyone’s transaction data and keep it public for all to see. And that’s exactly the problem: Blockchains as they currently are can’t solve privacy issues because they’re built to broadcast user data. Other users, organizations, and governments can find out exactly what you’re doing at almost any time — which is a major avenue for George Orwell’s 1984 world to become a reality.

You can think of it this way, the lines of code in your blockchain transactions function like Twitter for your bank account. Absolutely anyone can see your wallet addresses, transactions, balances, and timestamps. People are already taking advantage of the wealth of user information that blockchains make public and are selling it to companies that can then backtrack and access even more revealing data. Heard of Chainalysis?...

If we don’t act now, we could be looking at totalitarianism, big brother, and mass surveillance in the not-so-distant future. Privacy is a fundamental human right, it underpins human dignity and freedom, and we must protect it now – not in the future.

The solution – Privacy-preserving blockchains

So what’s the answer here? If blockchain technology, the most secure and decentralized financial transaction method out there, won’t cut it, what can?

The solution is to change the way we think about blockchain — and to take a privacy-first approach. You need to be able to send and receive cryptocurrencies without the whole world being able to spy on you. This is where Namada comes in – to enable seamless, interchain, asset-agnostic privacy.

Namada is a privacy-preserving proof-of-stake L1 that enables users to transfer any asset from and to any chain completely anonymously, via Namada’s Multi-Asset Shielded Pool (MASP) zero-knowledge circuit, with Visa-like speed and near-zero fees. Via Namada, all asset transfers look the same from the outside (e.g. an NFT transfer will look indistinguishable from a DAI transfer), making it impossible for any government, company, or cybercriminal to extract any transactional information – it is fully shielded and anonymous meaning that no transaction graph is visible by observers of the chain.

Unlike other privacy-preserving chains which are disjointed due to their ties to specific assets, dApps, or platforms, Namada has created a single shielded set for all assets (whether fungible or non-fungible), and found a way to decouple assets from platforms, enabling them to move to a unified privacy set. The end solution is a truly disrupting protocol that delivers higher privacy and security guarantees than other blockchains out there today. More interestingly, you can use Namada’s shielded set to seed privacy to other chains e.g the shielded asset set can seed and break linkability of one’s actions (e.g. staking, trading) on another chain. Similarly, you may retrofit privacy onto your previous assets or actions on other chains to then break linkability to cany data you may have revealed unintentionally.  

A final and very unique element of Namada’s setup is that it treats privacy as a public good. It incentivizes users to hold shielded assets and use them directly in the shielded set — and the more people use them, the more private each transaction becomes.

To find out more about Namada and how it works read:

If we continue down our current path with transparent blockchain networks, the end result could be an even less private financial world than the one we currently live in. But there’s a clear solution: we must change the way we use blockchains, giving users their freedom back and ensuring their anonymity and privacy are prioritized.

Because remember: Privacy IS normal.