“The wise man [...] is his own best friend, and takes delight in privacy whereas the man of no virtue or ability is his own worst enemy, and is afraid of solitude.” — Aristotle
Aristotle laid the groundwork for the modern world’s understanding of privacy by defining the difference between public and private space in ancient philosophical discussions. The concept of privacy has since evolved, with great thinkers and literary figures offering their perspectives throughout the centuries.
Technological advancements, such as the invention of the compact camera, also informed the public’s evolving understanding of privacy. In terms of legislation, the enforcement of the General Data Protection Regulation in 2018 started a new era of privacy reform across the globe, with more countries developing their laws to protect the private data of citizens. Since the GDPR, 128 countries have enacted their own privacy laws, including the California Consumer Privacy Act in the United States.
Blockchain-based technologies have likewise transformed the modern world’s understanding of privacy. With transparency being one of the hallmarks of cryptocurrency, blockchain networks technically allow anyone to access the complete account of transactions on them. Despite most networks being pseudonymous and allowing users to mask their identities, a gap in user privacy became apparent as cryptocurrency adoption rose. This led to the emergence of technologies like zero-knowledge proofs and zero-knowledge SNARKs, allowing coins to protect user privacy on blockchains. Despite the privacy coins coming in to fill the void, for privacy coins, the balance between transparency and privacy on blockchains remains a hot debate in cryptocurrency.
There were significant developments concerning privacy during the third quarter of 2022. In the U.S., federal privacy law in the form of the American Data Privacy and Protection Act began to take shape, although there is still much work to be done. Internationally, different countries also saw progress in terms of privacy laws, such as Indonesia with its data protection law and Ireland with the expansion of its Data Protection Commission. The European Union also committed to double down on artificial intelligence legislation through the AI Liability Directive, a complement to the AI Act that seeks to target high-risk uses of AI.
In cryptocurrency, the privacy coin economy suffered a massive loss amid the crypto winter, dropping from $11.7 billion at the beginning of 2022 to $5.22 billion by year-end. Nonetheless, significant steps were taken to forward research on zero-knowledge technology, with one of the most notable being the possible application of zero-knowledge proofs to scale Bitcoin and supplement its cryptographic algorithm.
Gartner had previously estimated that 65% of the globe would have some form of personal data protection by 2023. This estimate has risen to 75% and is expected to come to fruition by the end of 2024. In the U.S., several additional privacy laws are lined up for 2023. These include the California Privacy Rights Act and Virginia Consumer Data Protection Act, which became fully enforceable on Jan. 1; the Colorado Privacy Act and Connecticut Data Privacy Act, which will be fully operative by July 1; and the Utah Consumer Privacy Act, which will take effect on Dec. 31. Four additional U.S. states also have active bills expected to progress or be signed in 2023: New Jersey, Michigan, Ohio and Pennsylvania.
Privacy coins are seeing a resurgence in the broader cryptocurrency market, just as the notion of privacy and why it is important for those in crypto are once again coming into the forefront of the debate surrounding crypto and blockchain.
