Crypto Privacy: 99.6% of Transactions Legitimate, Says Aleph Zero Co-Founder
2min read Matthew Niemerg, Co-Founder of the Aleph Zero, argues that blockchain privacy is a fundamental right rather than a tool for criminal activities. He criticizes the UK government's pressure on Apple to remove end-to-end encryption from iCloud accounts in the UK, viewing it as a misguided attempt to stymie privacy. Niemerg contends that the assumption by governments and regulatory bodies—that privacy is only necessary for those with something to hide—is flawed and dangerous. Privacy, he asserts, is about maintaining control over personal information in a data-hungry world, with financial privacy being a cornerstone of individual autonomy.
Niemerg highlights that the reality of crypto use undermines the narrative that it is primarily used for illicit activities. According to Chainalysis’s 2024 crypto crime report, only 0.34% of all crypto transactions are associated with illicit activity, with more than 99.6% being legitimate. This statistic challenges the moral panic often generated around blockchain privacy features, such as the Tornado Cash saga. Niemerg argues that if similar scrutiny were applied to cash, paper money would have been banned long ago.
Privacy in crypto serves numerous legitimate purposes, including salary negotiations, medical payments, and donations to causes. Without privacy, these fundamental activities become vulnerable to surveillance and control. Some use cases, such as business agreements requiring confidentiality and financial inclusion efforts in oppressive regimes, would be impossible without robust privacy protections. Journalists protecting sources, dissidents seeking funding, and organizations operating in hostile environments all rely on private transactions to function.
Niemerg acknowledges the importance of compliance with laws around KYC and broker reporting requirements but distinguishes between accountable transparency with appropriate authorities and naked exposure to the entire world. He cites Shielder as an example of a system where others can’t trace transactions, but users can reveal their identities to exchanges or KYC services when needed. This infrastructure of privacy is essential for compliance to be meaningful rather than coercive.
Niemerg argues that the philosophical foundation for crypto privacy is sound, as privacy is a fundamental right, not a privilege. Financial transactions reveal intimate details about our lives, and the right to keep these matters confidential underpins individual freedom. Historically, cash provided this privacy naturally, and crypto with privacy features simply extends this tradition into the digital realm. Decentralization challenges entrenched power structures by distributing control and knowledge among many participants, creating a more balanced system.
Niemerg concludes that privacy in blockchain is not a bug but a feature. It is not a tool for criminals but a right for citizens. As we navigate the complex landscape of digital finance, we must resist the false choice between security and privacy. A truly secure financial system protects not only our assets but also our dignity, autonomy, and freedom. Ultimately, it is privacy that makes this dignity possible.
