For a long time, the ability to transact privately was one of the boldest promises in the world of cryptocurrency. However, as other trends gained momentum, this goal was pushed to the side.
While developers worked on making blockchains faster and regulators closely examined privacy tools like Tornado Cash, the industry’s focus moved to other areas. Now, a new proposal for Ethereum and a wave of privacy-focused products indicate that this topic is returning to the spotlight.
The most recent development is pERC-20, a proposed standard for Ethereum tokens that would let users hold and move tokens without making their balances, transaction amounts, or trading partners visible to the public. This proposal has reignited the debate over whether public blockchains should make every financial interaction visible by default.
Unlike the standard ERC-20 tokens used on Ethereum today—which show balances and transaction histories on the blockchain for anyone to see—pERC-20 keeps these sensitive details hidden.
Currently, most Ethereum tokens work like open bank accounts. Anyone can search for a wallet address and see how many tokens it holds, where they came from, and where they were sent. With pERC-20, tokens would instead exist as encrypted cryptographic “notes,” much like digital cash.
The outcome is a system where transactions stay private while still allowing the network to confirm that no one has tampered with them.
It’s important to note that the proposal doesn’t hide everything.
The total supply of a token would still remain visible to the public, so anyone can check that new tokens aren’t being secretly created. The proposal also includes a compliance feature that would let issuers freeze specific notes using a cryptographic blacklist, without revealing the balances or transaction histories of regular users.
This design reflects a wider change in how privacy is being approached across the crypto industry.
Instead of viewing privacy and regulatory compliance as opposing goals, many newer projects are working to build systems that offer both.
However, some developers believe that private payments are only one piece of the puzzle.
Earlier this week, Starknet launched STRK20, a privacy-focused token framework designed to expand confidentiality beyond simple token transfers and into decentralized finance applications like lending, staking, and token swaps.
According to Eli Ben-Sasson, co-founder of StarkWare—the main development company behind Starknet—the biggest challenge facing privacy technologies today isn’t the underlying cryptography. “The big problem with privacy is user experience,” Ben-Sasson told CoinDesk.
Historically, privacy-focused cryptocurrencies have had trouble with ease of use. Users often dealt with slow wallet synchronization, complicated transaction processes, and limited compatibility with the broader crypto ecosystem. These issues made privacy tools hard to use and, in some cases, weakened the privacy they were meant to provide.
Privacy systems depend on large groups of users participating together. If only a small number of people use a privacy network, it becomes easier to single out individual participants.
“If the user experience is poor, very few people will use it,” Ben-Sasson said. “And if very few people use it, and only for a limited number of things, they don’t really gain much anonymity.”
Ben-Sasson noted that pERC-20 appears to focus mainly on private token transfers and builds on ideas from privacy-focused projects like Zcash. While he called that an important feature, he argued that the next phase of privacy infrastructure will need to support a much wider range of financial activities.
“Today we can do more,” he said, referring to privacy-preserving DeFi applications.
The STRK20 framework was created with that goal in mind. Instead of protecting just one token, the framework lets users manage multiple assets under a single privacy layer and interact with decentralized applications while keeping their activities confidential. According to Ben-Sasson, users can access services like swapping, borrowing, and staking without giving up their privacy.
The framework also uses cryptography that is secure against quantum computing threats, which Ben-Sasson said will become increasingly important as blockchain developers start preparing for future advances in quantum technology.
The difference between pERC-20 and STRK20 highlights an emerging debate about what privacy in crypto should actually look like.
One approach focuses on making payments private while keeping everything else transparent. Another aims to make privacy a core layer that extends across an entire ecosystem of financial applications.
Either way, the fact that this discussion is happening at all marks a significant shift.
For much of the past several years, privacy occupied a relatively small corner of the crypto industry, often linked to niche privacy coins or controversial mixing services. Today, the conversation is increasingly centered on mainstream infrastructure, token standards, and institutional use cases.
Whether pERC-20 will ultimately become an Ethereum standard is still uncertain. Like all Ethereum Improvement Proposals, it must go through a lengthy review process before it could be widely adopted. But its arrival, alongside projects like STRK20, suggests that privacy is once again becoming a priority for blockchain developers.
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