On-chain privacy is the need of the hour and one of the hottest topics in the Bitcoin community. While a number of discussions seem to always revolve around the Bitcoin price, privacy is making its way into the conversation as a must-have for BTC to see any sort of traction.
Many people say “only criminals need privacy”. To those people, consider removing curtains from your windows and publishing your financial statement on social media if you think privacy is meant only for criminals.
Basic privacy is a human right. This should extend to finances as well. What business does anybody have knowing how much money a person holds? Other than the people themselves, their financial services providers, and perhaps the government, there is no need to disclose information to other parties.
Another misguided notion is that privacy on Bitcoin will kill transparency. This is completely untrue. UTXOs would still exist, transactions would still be publicly available and verifiable, but sleuths like Chainalysis will find linking addresses to entities harder than they do today.
Of course, there are pitfalls to privacy. Money launderers and scammers will be able to diligently get away with wrongdoing. But does curbing this warrant taking privacy away from the masses?
So much litigation could be streamlined by installing microphones and cameras in every room of every building. But this isn’t done. Privacy is a basic right, and the masses cannot be punished on a daily basis to prevent black swan attacks.
Transparency will be alive and well on Bitcoin when Taproot and Schnorr signatures go live. Nothing can take transparency off the Bitcoin blockchain.
Successful networks cater to the needs of the people. Financial privacy is the need of the hour. Especially with CBDCs coming into the picture.
Bitcoin can offer users a unique way to exit the upcoming tirade of financial surveillance and capture their own freedom. Today, these people might not realize they need it; tomorrow, they might. But 10 years down the line, they most certainly will, given the trajectory the world is on.
Yes, this will enable scammers. But there are no solutions to these kinds of problems – only trade-offs. And it is up to the Bitcoin community to decide if this is a trade-off that’s worth it or not. Given the high level of discussion and urgency in implementing privacy algorithms to Bitcoin, it is safe to say this is deemed a necessary trade-off.
Adoption comes from catering to needs. Privacy coins will see their moat shaken once Bitcoin applies adequate privacy enhancements.
It is by far one of the most important technological improvements to the protocol since SegWit, and promises to bring more adoption to Bitcoin while boosting the Bitcoin price. Development is still infantile and there is a long way to go, but I think privacy can be a real driver for Bitcoin’s adoption as a true alternative to the current financial system.