Central authorities have demonized privacy: Crypto projects need to react

Zcash (ZEC), a privacy coin launched in 2016, unveiled an update to its system on May 31 that will allow users to more easily make private, trustless digital cash payments on mobile phones. Not everyone would consider it a good development.

The unfamiliarity, uncertainty, and public intrigues surrounding privacy, including its complexity, misuse, and speculative activity, present a number of challenges and reputation issues for crypto project innovation. While a fundamental principle and a source of pride among crypto projects like Zcash, privacy has been demonized by those in power, including lawmakers, regulators, banks and academics.

However, frequent hacks and data breaches prove that the need to protect people’s privacy is more essential than ever. This is where cryptocurrency companies can enter the conversation and support these fundamental consumer protections through the use of privacy-focused projects.

Related: What are privacy coins and how do they differ from Bitcoin?

Consumer sentiment and corporate offenses

The sentiment towards the need for data and financial privacy went mainstream when the extraordinary revelations of the 2017 Equifax breach It came to the light. The most sensitive financial information of nearly all American households has been placed in the hands of third-party vendors without their knowledge or informed consent and has not been adequately protected.

Americans have long been isolated from our most sensitive financial information. Due to Equifax’s negligence, we now know how vulnerable our privacy and financial security truly are. Things only got worse in the following years. Nearly 294 million people were hit from data breaches in 2021, with over 18.5 million records exposed. It has been the worst year for corporate data breaches since 2017.

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Take away: The cryptocurrency industry needs a bad guy. We need a proactive awareness drum for traditional consumers that reminds them of the unethical practices of companies that don’t protect their information and use it deceptively. But it can’t be a “break everything down and get out of the system” message. We also need to educate people about how Web3 prevents this from happening, but leaving them in control of their data.

Related: The loss of privacy: why we must fight for a decentralized future

Politicians take note

The scandal surrounding the loss of control of our financial information caught the attention of policy makers, some of whom have stated that “financial data should be treated with the same confidentiality as medical records”. But what actually emerged out of this rhetoric? Not so much. Like Cristiano Lima of the Washington Post to put it:

“Although there is universal agreement that Congress should do more than talk, specifically, establish rules on the collection and use of consumer data, the action has remained elusive.”

Why is this important? Americans cannot depend on lawmakers to protect their privacy.

Take away: Americans are increasingly frustrated with Big Tech and trust in government is at an all-time low. There is an opportunity to create a wedge and tap into those feelings, while at the same time striking a “privacy first” narrative that allows Americans to seek protections for themselves.

The message projects need to establish is threefold: 1) why people should want and need everything from their data to text messages to be private; 2) how much of our legitimate privacy rights – and therefore our financial fates – have been compromised and removed from our control; and 3) privacy is a constitutional right desired by the majority of Americans.

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Related: Self-custody, control and identity: how regulators got it wrong

The stigma against cryptocurrencies

But we need to address the gorilla in the room. The privacy conversation has been subject to intense scrutiny by the media, law enforcement and various regulatory bodies and we are losing the battle to define our industry. Take this quote from US Senator Elizabeth Warren:

“DeFi is the most dangerous part of the cryptocurrency world. […] This is where scammers, cheaters and scammers mingle between part-time investors and cryptocurrency traders for the first time. “

The common denominator of these attacks is that they take the privacy strength of cryptocurrencies – its revolutionary development as an almost impenetrable means of protecting its users’ identity and their financial information – and position it as an extremely negative. The implication: Privacy projects are designed as a tool for drug dealers, suspicious transactions, and evasion of law enforcement, regulators and tax collectors.

Take away: If this characterization is left unanswered, privacy-focused crypto projects will not only allow their brand positioning to be hijacked but Expose yourself to additional scrutiny, negative coverage, investigation, and possible legal action – all of which they could they prove to be detrimental to their value and longevity. Inaction is not an option.

Related: In defense of cryptocurrencies: why digital currencies deserve a better reputation

Unfortunately, we have failed to truly organize and create an industry-wide plan that will resonate with our target audience and grow our movement. Until we do this, we will let others define us, potentially leading to our death.

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Hence, we need to normalize privacy, demystify it, and most importantly, gain allies in our cause. To do this, privacy projects and advocates, both internal and external to cryptocurrencies, must come together under a united front.

This article does not contain investment advice or recommendations. Every investment and trading move carries risk and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed herein are those of the author only and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Trey Same is the founder and CEO of DittoPR. Trey is a former Associated Press reporter and former Deputy Press Secretary for US Education Secretary Margaret Spellings, as well as being one of the cryptocurrency industry leaders in communications.