The Future of Blockchain Analytics: Balancing Privacy and Transparency
The world may be moving in a direction where people are more comfortable having their assets and ownership available for everyone to see, according to Alex Svanevik, CEO of blockchain analytics firm Nansen.
Finding the Balance
In an interview with Cointelegraph’s Zhiyuan Sun, Svanevik highlighted how a balance between privacy and transparency may be attained in the world of blockchain analytics. According to Svanevik, it’s not possible to entirely get both:
“You cannot get 100% transparency and 100% privacy. I think many of us want to have as much transparency as possible on corporate entities, exchanges, protocols, etc. But we expect some degree of privacy at the individual level.”
Because of this, Svanevik believes no one would be willing to place themselves on either of the extremes. He said that being fully private would make people miss out on the transparency expected out of corporate counterparties, while being fully transparent is an uncommon stance, as people generally want some level of privacy.
The Generational Aspect
There’s a generational aspect to the issue of privacy, argued Svanevik, who believes the younger generation cares less about the privacy elements of crypto. “If you just think about how they use social media — TikTok, Instagram, Snapchat and so on — they tend to be very open in sharing about their lives,” he said.
Meanwhile, people 30 years ago would be “quite shocked” if they saw how people put their whole lives on social media, said Svanevik. As such, he predicts the world may be more comfortable with greater asset transparency in the future.
“So, if you own, NFTs, if you own crypto, you might want to show that off to people. You might actually want to put that on your social media, which is what people are increasingly starting to do,” he explained.
Solving the Trade-off
When it comes to solving the trade-off between privacy and transparency, Svanevik believes that projects have to come up with settings that can go between both spectrums. He said they “probably have to come up with something where in different circumstances, you opt for more privacy, and in other circumstances, you opt for more transparency.”
The Nansen CEO explained that there could also be some regulatory implications when balancing transparency and privacy. Svanevik said regulators might not be comfortable with someone being able to send $500 million in assets in total privacy through protocols like the sanctioned crypto mixer Tornado Cash. However, crypto regulators may be lenient regarding people sending assets worth thousands of dollars.
The Future Outlook
While he hasn’t seen a protocol that “strikes the right balance” between the two things, the executive believes that in the next few years, someone will come up with one able to do so and also acceptable to regulators.