In cryptocurrency, privacy is far from straightforward.

This article reflects the views of Adam Gągol, Co-founder of Aleph Zero.

It’s widely acknowledged that making tasks straightforward increases the likelihood of their completion. This adage is applicable in various fields, including marketing and sales. In the realm of cryptocurrency, this concept holds especially true, as just ten centralized exchanges represent 90% of all trading activity. Their streamlined user experience attracts many users. However, the issue of privacy in cryptocurrency adds a level of intricacy atop an already complex technological landscape. For widespread user adoption, privacy features must be intuitively designed. Simplifying these features is essential for making them effective.

The Complexity Barrier

Presently, privacy solutions in the cryptocurrency market demand users to maneuver through an intricate maze of technical terms, various platforms, and complex procedures. Most crypto wallets, which typically do not prioritize privacy, are designed in ways that are challenging for users familiar with “web2” applications. A fundamental task—maintaining the privacy of financial transactions—often necessitates a deep understanding of technology.

This level of complexity exists within an environment that already poses challenges through poor user experience. Essential functions like sending tokens, managing private keys, and living up to decentralized applications remain far from user-friendly. When privacy is added as another complex layer, which hasn’t been adequately simplified, many users abandon the process altogether.

Consequently, users revert to centralized exchanges, forfeiting the independence and self-determination that originally attracted them to cryptocurrency.

Privacy Should be User-Centered

The Fogg Behavior Model (FBM) effectively illustrates this scenario. Created by Dr. BJ Fogg from Stanford University, the model posits that for a behavior to occur, three factors need to align: motivation, ability, and prompt. The absence of any one of these factors means the action won’t take place.

In terms of cryptocurrency privacy, while users may be highly motivated to protect their financial data, if they find the required skills too challenging (whether due to technical complexity, multiple steps, or confusing interfaces), they are unlikely to proceed, independent of the number of prompts they receive.

Studies indicate that individuals tend to avoid or abstain from activities—even those beneficial to them—if the process is overly complicated. This accounts for why many crypto users recognize the significance of privacy yet still opt for centralized exchanges or blockchains that monitor and share their transaction records.

An additional challenge is the disjointed nature of blockchain privacy itself. Users often require various privacy solutions for different blockchains, compelling them to familiarize themselves with multiple tools and strategies. Our project, Common, aims to tackle this issue by providing multi-chain privacy solutions with user-friendly interfaces, although such methods remain outliers in the industry. Ideally, privacy solutions should be chain-agnostic, offering a straightforward, comprehensive way to safeguard transactions across various blockchains.

This fragmentation increases the cognitive burden on users and perpetuates the notion that cryptocurrency privacy is reserved for experts—a troubling concept that undermines one of the fundamental values of the industry: its openness and democratic nature.

The Privacy Paradox in Finance

What complicates matters is that financial privacy isn’t a contemporary issue. Traditional banking has upheld transaction privacy as a foundational feature since historical times, such as during the Medici era. Transfers made through banks do not allow other customers to view individual transactions, a basic level of privacy that has remained standard for ages.

Despite the fact that modern internet users, especially members of Gen Z, might readily disclose personal information on social platforms (and generally tend to be less privacy-conscious), they still demand privacy in their financial transactions. This discrepancy between the privacy expectations of traditional finance and cryptocurrency creates a hurdle for adoption that the industry must confront. Notably, many Bitcoin users assume it ensures strong privacy measures.

The cryptocurrency market faces a critical dilemma: simplifying privacy is essential to retaining its appeal to everyday users as awareness of its inadequate privacy features increases. Until users can safeguard their transaction information as easily as they do in traditional financial systems, widespread adoption will remain a distant goal.