The Evolution of Privacy Technology: From Crypto Assets to Productization Practices

Privacy technology has always been the cornerstone of blockchain. From the early elliptic curves to the current zero-knowledge proofs, the importance of privacy economics in the Web 3.0 era is evident. However, the development path of privacy projects has not been smooth.

Recently, several privacy projects have encountered setbacks, with a certain privacy coin frequently being delisted by trading platforms, and the founder of a certain anonymous mixing tool even being arrested. These events indicate that even if some emerging privacy projects can launch on mainstream platforms, the overall geek spirit of the industry seems to be fading, and the delivery capability of the final products is also difficult to be satisfactory.

In creating privacy products, blockchain projects may need to learn from their Web2 counterparts to enhance their productization level.

Proton: A Successful Productization Case of Privacy Technology

"Privacy is a feature, not the product itself." This statement captures the essence of privacy technology applications. It is not enough to merely discuss privacy as a complement to product forms; in other words, privacy technology also needs to find a suitable market. Large tech companies are able to maintain user engagement while infringing on user privacy mainly due to convenience and network effects.

In the face of this situation, the fine strategy adopted by regulatory authorities has had little effect. Taking a well-known search engine as an example, even after being fined nearly $3 billion, it only takes about 16 days to earn that money back. Worse still, these fines have not translated into revenue for European tech companies, making them even more powerless when facing giants.

Proton's strategy is to build its own product ecosystem. Its scientific background from the European Organization for Nuclear Research has earned it a high level of credibility. Through encryption technology, open-source code, and product audits, Proton has created meaningful privacy products—users can achieve corresponding functions without relying on the product suites of large technology companies.

Although it currently cannot compete with giants in terms of network effects and scale effects, the products offered by Proton are sufficient to meet daily usage needs compared to other blockchain projects, making it a qualified alternative.

Proton's product line mainly revolves around its core email service. Notably, this email service has also gained favor among some well-known figures in the tech industry. It can be used without binding a mobile phone number and supports end-to-end encryption, ensuring the privacy of email transmission. Before certain instant messaging tools are regulated, using these two products together can basically create a higher level of commercial privacy protection experience.

Proton has also begun to venture into the Web3 space, launching its own Crypto Assets wallet. Unlike other trade-oriented products, Proton's wallet features are relatively simple.

The significance of Proton lies in proving the feasibility of building viable products based on privacy technology. Unlike the advertising revenue model of traditional giants and the token economics system of Web3 projects, Proton adopts a paid model, which can be referred to as "the non-tokenized practice of encryption technology."

From Skiff to Emerging Projects: Tokenization Attempts of Crypto Technology

Compared to Proton's pragmatic approach, some emerging privacy projects seem to be on a different path. They have already begun attempts at tokenization before finding their own market positioning.

In February 2024, a well-known note-taking software announced the acquisition of Skiff, marking the first acquisition of a Web3 startup by a major Web2 product. Skiff offers services similar to mainstream office suites, including document tools based on distributed storage and encryption email. However, its biggest issue lies in the poor user experience, as the interface design is not attractive enough to compete with Web2 products.

The development of other Web3 privacy projects is also not satisfactory. Some projects are gradually shifting their focus to the VPN field, while others emphasize applications in the AI field. Meanwhile, certain new projects are still exploring concepts from the last round of hot technologies, such as multiparty computation (MPC) and blind computation.

These concepts originate from the application of Ethereum and zero-knowledge proofs in Layer 2 solutions, but as the market's enthusiasm for Ethereum has waned, privacy tech products have gradually lost focus. This does not mean that privacy technology is no longer important, but rather that the combination of privacy technology and tokens has lost its appeal at the current stage.

For some emerging projects, the support of investment institutions seems to be more important than the technology itself. Concepts they propose, such as trusted layer, multi-ecosystem, and privacy AI, may not be the real source of profit. In contrast, at least some projects are still trying to enter actual market competition.

In the latest technical paper, some projects are still researching how to optimize the MPC algorithm to improve computational efficiency. However, it is difficult to find real application scenarios for these Web3 privacy technologies combined with AI, as mainstream AI companies have not adopted these technologies. If new products can seize market share from giants by incorporating privacy technologies, that would be a truly meaningful innovation.

Conclusion

Monero (XMR) may be somewhat unfamiliar to participants in the rapidly evolving Crypto Assets market today, but it should be regarded as the last serious attempt to consider how to combine encryption technology with real-world application scenarios after Bitcoin.

In February 2024, a well-known privacy project was delisted by the largest trading platform, losing its main source of liquidity. Perhaps from that time on, so-called privacy tech projects have become part of speculation, but the Web3 privacy economics has not yet completely collapsed.

Regardless, privacy protection remains an important issue. However, merely discussing various technical terms without addressing the actual problems may ultimately undermine the social trust behind these technologies. We have already seen some negative effects, such as people beginning to doubt certain technological concepts.

After certain security incidents occur, not only do technical experts remain silent, but even front-end developers and multi-signature mechanisms seem to have lost their voice. This reminds us that truly valuable privacy solutions need to find a balance between technological innovation and practical application.