Has Crypto Stepped Back From The Cypherpunk Vision of Privacy?

In many ways, cryptocurrency is the embodiment of the Cypherpunk vision. However, its focus on privacy has been lost in recent years.

A group of cryptography experts and libertarians called the Cypherpunks played a critical role in developing cryptocurrency and blockchain technology. Formed in the late 1980s and early 1990s, they were driven by a shared vision of using cryptography to protect privacy, resist censorship, and promote individual freedom in a digital age.

Alongside cryptocurrencies, their movement inspired the development of other privacy-enhancing technologies, such as encrypted messaging apps, privacy-focused browsers, and virtual private networks (VPNs). 

There Is Increasing Concern About Digital Privacy

Various surveys have shown that the public is increasingly in tune with their vision. In 2021, the Edelman Trust Barometer survey showed that 74% of people worldwide believe their personal data is less secure than it was five years ago, and 66% are more concerned about their privacy than they were 12 months earlier. In the same year, PWC’s Global Data Protection Study” found that 72% of consumers are more concerned about how companies use their data than they were a year earlier. 81% said they would stop doing business with a company that misused their personal data.

And yet, compared with the early crypto community — which was populated by privacy radicals and broad-spectrum libertarians — today’s crypto users are in many ways less skeptical. As cryptocurrency adoption has risen, it has become populated with speculators and those transfixed by the performance of the markets. Perhaps this move towards openness is not very surprising. Blockchain, after all, has transparency at the heart of its technology. 

For Grace Rachmany, co-founder of PricelessDAO, privacy has always been at the heart of the crypto ecosystem. It comes as a package along with freedom and decentralization. “While the bulk of the crypto community is drawn in by the financial gains, there is and always has been a core of people who are concerned about these issues,” she says.

“Projects such as disco.xyz, Starkware, and tomi.com are working on solutions in the area of privacy and freedom. They aren’t the big money makers and you won’t find a lot of mainstream coverage for them, but people concerned with privacy aren’t always looking for mainstream coverage. Most of the crypto community has lost its way in terms of privacy, both in terms of the transfer of funds and in terms of data privacy. You still hear crypto advocates talking about how people will be able to paid for their data at the same time they are talking about soul-bound tokens (SBTs) that show you someone’s reputation.”

(A soulbound token is a type of NFT that is tied to a specific individual and cannot be transferred to another person or traded on a marketplace. They are often used to moderate the downsides of crypto-anonymity by allowing individuals to build up trust and reputation.)

The Rise of Self-Sovereign Identities

Self-sovereign identity (SSI) is a newer concept that builds on the cypherpunk vision of privacy and anti-censorship. SSI is a decentralized approach to identity management where individuals have control over their own personal data and can choose to share it with others on their own terms. With SSI, individuals have full ownership of their data and can use cryptographic technologies to secure, store, and share their personal information. This approach gives individuals more control over their personal information and reduces the power of intermediaries to control access to it.