Original Title: "Privacy Fix"

Written by: Prathik Desai

Translated by: Block unicorn

The reason cryptocurrency makes everything public and transparent is simple.

If everyone can see all the information, then no one can lie and get away with it. A public ledger means exchanges cannot fake reserves, decentralized autonomous organizations (DAOs) cannot quietly misappropriate funds, and whales cannot pretend they have never sold any assets.

These are precisely the pain points in traditional markets that cryptocurrency aims to solve. It does address some of these issues. But as Byron Gilliam of Blockworks quoted Kevin Kelly this week, "Most of the problems we face today are caused by the solutions we had in the past." The solution of cryptocurrency is complete transparency, but in a market built on anonymous addresses, this solution rarely resolves the issues entirely.

This design works well for standardized and audited institutions. However, when it becomes clear that the same solution would turn every retail investor's financial life into a permanently public stream of information, its effectiveness diminishes significantly.

Cryptocurrency integrates all our financial scenarios, including receiving payments, trading, donating, and various experiments, into a transparent wallet.

In recent months, as courts and regulatory bodies continue to crack down on privacy infrastructure, this tension has become impossible to ignore. On Wednesday, November 19, a U.S. district judge sentenced the two co-founders of Samourai Wallet (a Bitcoin wallet with a built-in mixing tool) to 5 years and 4 years in prison, respectively. They were found guilty of operating an unlicensed money transfer business and handling over $237 million in criminal proceeds.

In August of this year, a U.S. jury failed to reach a consensus on money laundering and sanctions charges against Roman Storm, the founder of the cryptocurrency mixer Tornado Cash. However, the jury found him guilty of conspiracy to operate an unlicensed money transfer business and sentenced him to a maximum of five years in prison.

In Europe, new anti-money laundering regulations will prohibit the use of privacy coins like Monero and Zcash on EU-regulated platforms starting July 1, 2027. The message conveyed is clear: anonymous currencies are unwelcome.

However, within the market, users are doing the exact opposite.

In today’s in-depth analysis, I will explain why this is not just a wave of "privacy coin hype," but a sign that cryptocurrency is trying to fix its transparency flaws.

Now, let’s get to the point.

The establishment of public blockchains is based on the assumption that if transparency helps detect fraud, then greater transparency benefits everyone.

Under this design, every wallet address breaks down the barriers between your financial identities. On the blockchain, your income, your "degen" side obsessed with various meme coins, long-term investments, and random experiments are all recorded in the same ledger, visible to anyone who can link that address to your real identity.

Anthropology professor Michael Wesch refers to this phenomenon on social media as "context collapse," where family, colleagues, strangers, close friends, and acquaintances are compressed into a single audience. We have all experienced moments like this: a vacation selfie intended for just a dozen people ends up in an awkward moment on your boss's feed, right? Only on the blockchain, the consequences can be significant financial losses.

Once your information address is leaked, there is no turning back. All details of your crypto assets, activity logs, and adventurous behaviors could be permanently searchable on a block explorer.

Don’t bother pondering how you could be doxxed. The reasoning is obvious. Once a blockchain user interacts with a KYC-regulated platform or dApp, the user's anonymous identity could be linked to an account that has completed KYC verification. Tracing the clues is not difficult.

Recent legal events have left users concerned about the erosion of privacy, prompting them to rely more on protocols that can address the transparency issues of cryptocurrency code.

The recent performance of privacy protocols demonstrates that users are actively supporting privacy protection. Despite the downturn in prices on Wall Street and the cryptocurrency market, funds and users are flowing into the privacy protection space, including the growing fund pool of Zcash, the private DeFi suite on Railgun, and the Ztarknet experimental project on Starknet.

This is most evident in Zcash's rebirth.

For over seven years, despite its high academic value, Zcash has been almost forgotten commercially. Its concept is solid: it protects transaction security by hiding the sender, receiver, and transaction amount while ensuring the network can verify that no tokens are created out of thin air.

It employs zero-knowledge proofs (ZK proofs): one party (the prover) can prove to another party (the verifier) that a statement (in this case, a transaction) is valid without revealing any information beyond its validity.

At the time, not many people took it seriously.

Today, these numbers have seen a significant increase. In just the past two months, the price of Zcash (the native token ZEC) has risen tenfold, reaching its highest level in over seven years. Approximately 4.9 million ZEC (about 30% of the circulating supply) exists in crypto fund pools, hitting an all-time high and significantly up from the beginning of the year.

What has changed? Abstraction.

As early as the beginning of 2018, the interface of the Zashi wallet was not user-friendly. Now, Zashi has remedied this shortcoming. Zashi encapsulates ZEC in a mobile application, providing a unified address and one-click shielding feature. It also ensures that your ZEC is not locked in a single location. By integrating with NEAR's Intents system, Zashi allows you to treat shielded ZEC as a cross-chain private savings account.

NEAR Intents is a cross-chain routing tool that simplifies the token transfer process. It transforms the user's question from "How do I get from here to there?" to "This is what I want; you help me solve it." Users no longer need to struggle to find paths through bridges and decentralized exchanges (DEXs); they simply specify the desired outcome, and NEAR's solver network searches for the best path to execute the user's request in liquidity venues.

Since its launch at the end of 2024, NEAR Intents has processed approximately $6.2 billion in transaction volume, with nearly $9 million in cumulative fees (out of $11 million) earned in the past two months.

When Zashi operates on top of Zcash, your principal balance can remain in Zcash's shielded fund pool, while NEAR Intents handles the complex cross-chain infrastructure. The target chain can only see the final transfer record. Your other information, including historical transaction logs, other holdings, and activities, will not leak outside the private space.

Zcash has created a private foundational layer, while Railgun embeds private collections directly into Ethereum itself.

Railgun's smart contract system uses a zero-knowledge proof to hide balances and transaction paths while maintaining composability. Users can deposit funds into Railgun's shielded fund pool and privately interact with DeFi protocols within the pool through exchanges, lending, or providing liquidity, only publicly disclosing deposit and withdrawal information.

As of October, Railgun has processed approximately $4 billion in private transactions since its launch in 2021, with about $1.6 billion contributed in the year 2025 alone.

Railgun provides DAOs and professional trading teams with the value that Zashi offers to individuals: allowing institutional-level DeFi strategies to operate completely out of the public eye while remaining on Ethereum.

Starknet takes this model further up the stack.

It has experimented with Ztarknet, combining Starknet's ZK proofs with Zcash's vault.

Last month, a proposal on the Zcash community forum outlined a Starknet-style L2 that could execute programs off-chain while providing on-chain proofs.

Imagine a scenario where all complex activities occur off-chain, Starknet generates a proof that everything has been completed correctly, and Zcash simply verifies that proof and updates the balance.

ZEC continues to function as currency, Zcash maintains its strong privacy attributes, while Starknet adds speed and programmability on top of that.

All these projects—Zashi, NEAR Intents, Railgun, Starknet, and Ztarknet—share the same goal: to meet the market's demand for a world where activity and identity are completely separated, leaving no trace.

Of course, none of this comes without a cost.

Technical risks are always present. With each additional layer of intent, rollup, or shielded set, there is more code that could potentially go wrong. Vulnerabilities in routers or verification systems could leak information you thought was hidden or trap assets in circuits that no one can safely unlock.

Additionally, there are social and user experience risks. Cryptocurrency has long sought to gamify on-chain activities, rewarding users through airdrops, points, loyalty programs, and "prove you used X" activities. If more user activities shift to private spaces, the social interaction aspect may become incomplete.

In all these changes, how should the average user respond?

First, ask yourself what harm context collapse could cause, and then decide which contexts need protection. For some, this may mean investment; for others, it may mean the right to trade without letting bad transactions permanently stain their network identity.

Zcash wallets with viewing keys, intent-based routers, private collections on Ethereum, or rollups that only hide positions without obscuring the market—each addresses different aspects of the problem and carries its own risks.

Cryptocurrency solves the problem of information centralization in traditional markets through public ledgers. It makes it harder to falsely report reserves and easier to detect fraud. Moreover, it integrates all financial information into a globally searchable information stream. The rise of these protocols is precisely to correct this issue.

If they continue to maintain this momentum, they will prove that privacy and accountability do not have to be mutually exclusive; you can add a few doors without tearing down the house.

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