For years, privacy in transactions was one of the most ambitious promises of cryptocurrencies. It then took a backseat as other trends took off.
As developers focused on scaling blockchains and regulators examined privacy tools like Tornado Cash, much of the industry’s attention shifted elsewhere. But a new Ethereum proposal and a growing number of privacy-focused products suggest the topic is making a comeback.
The latest example is pERC-20, a proposed Ethereum token standard that would allow users to hold and transfer tokens without publicly revealing their balances, transaction amounts, or counterparties. The proposal has sparked renewed debate over whether public blockchains should expose all financial interactions by default.
Unlike traditional ERC-20 tokens, which is the default token standard on Ethereum today and which displays on-chain balances and transaction histories for anyone to inspect, pERC-20 keeps sensitive details private.
Today, most Ethereum tokens function as public bank accounts. Anyone can look up a wallet address and see how many tokens it owns, where they came from, and where they were sent. Under pERC-20, the tokens would exist as encrypted cryptographic “notes,” similar to digital cash.
The result is a system where transactions remain private while allowing the network to verify that no changes to the transactions have occurred.
It is important to note that the proposal does not hide everything.
The total supply of a token would remain publicly visible, allowing anyone to verify that new tokens are not being created secretly. The proposal also includes an enforcement mechanism that would allow issuers to freeze specific banknotes through a crypto blacklist without exposing the balances or transaction histories of ordinary users.
The design reflects a broader shift in the way privacy is discussed in cryptocurrencies.
Instead of treating privacy and compliance as mutually exclusive, many newer projects are trying to create systems that offer both.
But some advocates argue that private payments are only part of the challenge.
Earlier this week, Starknet launched STRK20, a privacy-focused token framework designed to extend confidentiality beyond simple token transfers and into decentralized finance applications such as lending, staking, and token swaps.
According to Eli Ben-Sasson, co-founder of StarkWare, the main developer behind Starknet, the biggest obstacle facing privacy technologies today is not cryptography. “The big problem with dealing with privacy is UX,” Ben-Sasson told CoinDesk.
Historically, privacy-focused cryptocurrencies have had issues with their usability. Users often faced slow wallet sync, cumbersome transaction flows, and limited compatibility with the broader crypto ecosystem. Those limitations made privacy tools difficult to use and, in some cases, undermined the privacy they were designed to provide.
Privacy systems depend on the joint participation of large groups of users. If only a small number of people use a private network, it is easier to identify individual participants.
“If the user experience is bad, very few users will use it,” Ben-Sasson said. “If very few users are going to use it, and only for a very small number of things, they really won’t get much anonymity.”
Ben-Sasson said pERC-20 appears to focus heavily on private token transfers and builds on ideas pioneered by privacy-focused projects like Zcash. While he described this as an important capability, he argued that the next stage of privacy infrastructure will need to support a much broader set 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 securing a single token, the framework allows users to manage multiple assets under a unified privacy layer and interact with decentralized applications while maintaining confidentiality. According to Ben-Sasson, users can access services such as swaps, loans and betting without sacrificing privacy.
The framework also uses post-quantum secure cryptography, which Ben-Sasson says will become increasingly important as blockchain developers begin to prepare for future advances in quantum computing.
The contrast between pERC-20 and STRK20 highlights an emerging debate about what privacy in cryptocurrencies should really look like.
One vision focuses on making payments private while preserving transparency elsewhere. Another seeks to make privacy a fundamental layer that extends to an entire ecosystem of financial applications.
Either way, the discussion itself marks a notable change.
For much of the last few years, privacy occupied a relatively small corner of the crypto industry, often associated with niche privacy coins or controversial mixing services. Today, the conversation is increasingly focused on core infrastructure, token standards, and institutional use cases.
It is still uncertain whether pERC-20 will eventually become an Ethereum standard. Like all Ethereum improvement proposals, it must go through a lengthy review process before it can see widespread adoption. But its emergence, along with projects like STRK20, suggests that privacy is once again becoming a priority for blockchain developers.
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