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Evolution of Privacy Technology: From Product Application to Tokenization Exploration
The Myth of Privacy Technology: The Evolution from Product to Tokenization
The roots of blockchain are deeply embedded in privacy technologies, especially cryptography. From elliptic curves to zero-knowledge proofs, these technologies highlight the importance of privacy economics in the Web 3.0 era. However, the reality is not as promising. Certain privacy coins frequently face delisting from trading platforms, and founders of privacy projects even face legal risks. These events indicate that even if some emerging privacy projects can be listed on mainstream platforms, the idealism of privacy projects is gradually fading, and their practical application results are far from perfect.
In developing privacy products, blockchain projects may need to learn from their Web2 counterparts to improve their technical level and product usability.
Proton: Privacy Can Become an Excellent Product Form
"Privacy is a feature, not a standalone product." This statement speaks to the essence of privacy technology applications. Simply discussing the supplementary significance of privacy to products is of little importance; in other words, privacy also needs to find a suitable market. Large tech companies can still be popular while infringing on user privacy, mainly due to the convenience of their products and strong network effects. Users often accept various services from these companies for the sake of convenience and widespread use.
In this regard, the fines imposed by regulatory authorities have not been significant in effect. Taking a well-known technology giant as an example, even when facing a hefty fine of nearly $3 billion, the company only needed a little over two weeks to earn back that amount. More importantly, these fines have not translated into revenue for European technology companies, leaving them even more powerless when facing the giants.
Proton's strategy is to build its own product ecosystem. Its background from the European Organization for Nuclear Research has earned it higher credibility compared to commercial companies. Through cryptographic technology, open source code, and product audits, Proton has created truly meaningful privacy products—users can achieve corresponding functions without relying on the services of certain large companies.
Although Proton's network effects and scale effects cannot currently compete with technology giants, the products they offer are sufficient to meet everyday usage needs compared to their peers in the blockchain field, making them a qualified alternative.
Proton's product line mainly revolves around its email service. It is worth mentioning that Proton Mail is also the preferred choice of a certain social media platform founder. Unlike regular email services, Proton Mail can be used without linking a mobile number and supports end-to-end encryption, ensuring the privacy of email transmission. Before certain instant messaging software was regulated, using it in conjunction could create a higher level of commercial privacy experience.
Proton has also begun to venture into the Web3 space by launching the Proton Wallet. Unlike other transaction-oriented wallets, Proton Wallet has relatively simple features and places a greater emphasis on privacy protection.
The significance of Proton lies in proving the feasibility of building viable products based on privacy technology. Unlike the advertising profit model of traditional giants and the token economics of Web3 projects, Proton adopts a paid system, which can be termed as "the non-tokenization practice of cryptographic technology."
From Skiff to Nillion: The Tokenization Attempts of Cryptographic Technology
Compared to Proton's pragmatic approach, other Web3 privacy projects such as Skiff, Nym, Privasea, and Nillion seem more like adventurers. Their product-market fit is not yet clear, but token issuance has already taken the lead.
In early 2024, a well-known note-taking software company acquired Skiff, marking the first acquisition of a Web3 startup by a major Web2 product. Skiff offers an IPFS-based document suite and encrypted email services, but its user interface experience is lacking, which is a common issue faced by many Web3 products today.
The development of other Web3 privacy projects also faces challenges. Nym is gradually shifting its focus to the VPN field, Privasea emphasizes more on applications in the AI field, while Nillion remains caught up in discussions of the previous round of technological hotspots.
The concepts of multiparty secure computation (MPC) and blind computation built by Nillion belong to the derivative narrative of Ethereum and zero-knowledge proofs in the Layer 2 space. However, with the weakening price trend of Ethereum, privacy technology products are gradually losing market attention, with the most obvious example being that fully homomorphic encryption (FHE) has not become the next hotspot for zero-knowledge proofs as expected.
The issue is not that privacy technology itself is unimportant, but that the combination of privacy technology and Token has lost its appeal at the current stage. For projects like Nillion, investments from large exchanges and venture capital seem to be more focused on than the technology itself.
In the latest technical paper, Nillion's research still focuses on the practice of MPC, aiming to reduce algorithm complexity to improve computational efficiency. However, such AI-integrated Web3 privacy technologies find it difficult to identify real application scenarios, as mainstream AI companies do not rely on these technologies to dominate the market.
Conclusion
Monero (XMR) may seem somewhat unfamiliar in today's rapidly evolving cryptocurrency market, but it should be regarded as the last significant attempt to truly consider how to combine cryptographic technology with practical application scenarios after Bitcoin.
In February 2024, XMR was delisted from a major exchange, losing its most important source of liquidity. This may mark the end of an era. From then on, so-called privacy technology projects may become more objects of market speculation rather than genuine tools for solving problems. The future direction of Web3 privacy economics remains full of uncertainty.