Although one may assume that the demand for privacy in Bitcoin and other blockchain-based systems is coming from crypto-anarchists and libertarians, the reality is that a huge push for concealing transactions on the blockchain is coming from the traditional financial industry.
During a recent cryptocurrency event at the Cato Institute , Zcash CEO and longtime cypherpunk Zooko Wilcox-O’Hearn made the point that banks, clearinghouses, payment processors and everyone else he’s talked to in the financial industry are the ones who are asking for more privacy on the blockchain.
Financial Industry Willing to Help Bring Privacy to Blockchains
During a panel focused on financial privacy at the recent Cato event, Zooko made it clear that the vast majority of the push for enhanced privacy on the blockchain is coming from banks, but this was not a dismissal of the push for privacy coming from users. Zooko claimed that the increase in privacy solutions for blockchain technologies over the past six to 12 months is a reaction to the demand coming from various financial institutions.
“There is a lot of demand among users, but I don’t know how much they’re willing to stump up. Whereas the financial industry appears [ready to do so],” Zooko said.
Why Is the Financial Industry Demanding Privacy?
Zooko pointed to two main reasons that banks and other financial institutions need privacy for any blockchain they’re going to use:
> Banks are thinking about using blockchains to lower their costs, but they also understand that this technology could disrupt their industry. The idea of saving money is obviously attractive, but the disruptive properties of public ledgers are forcing financial services companies to pay close attention to the blockchain ecosystem. Financial institutions understand that the pervasive lack of privacy in shared ledgers is a roadblock for the use of blockchains […]
