Defining Privacy in Crypto: From Banks to Blockchain

Source: Blockworks Original Title: A man’s blockchain is his castle Original Link: https://blockworks.co/news/mans-blockchain-castle

The Evolution of Financial Privacy

“The house of every one is to him as his castle and fortress.” — Sir Edward Coke, Attorney General of England, 1604

In 1604, the Court of King’s Bench decided Semayne’s Case in favor of defendant Richard Gresham, who had refused to open his door for a sheriff seeking to seize goods to cover a debt. This established a foundational privacy principle: the home as a protected sanctuary. However, Coke left open a gate for the King’s men: law enforcement in pursuit of criminal matters could break down doors if necessary (after announcing themselves first).

421 years later, that principle remains largely unchanged. American law enforcement is required to announce their presence when executing a search, yet they can break down doors under certain circumstances. The Fourth Amendment protects against unreasonable searches, but reasonableness is the key qualifier.

Traditional banking operates similarly: your transactions are private from the public, but law enforcement can access them with proper authorization.

Crypto’s Different Approach to Privacy

In crypto finance, “privacy” has taken on a more absolute meaning. To many in the industry, a private transaction is one that cryptography makes invisible to anyone but the user — a true financial castle with no backdoor for authorities.

This reflects crypto’s cypherpunk roots: absolute financial privacy, guaranteed by code.

Yet there’s significant debate about what privacy actually means in this context.

Competing Definitions

Eli Ben-Sasson, founding scientist of Zcash, defines privacy simply: “People who shouldn’t see your stuff don’t get to see it.” This definition implies that some people should see it — perhaps law enforcement with a warrant. He notes this is “just like your everyday definition of privacy,” including traditional banking where everyone is familiar with financial privacy.

However, Shaul Kfir, who led development of the Canton Network privacy protocol, offers a stricter definition: “Privacy is I get to choose who sees my stuff.” This represents something fundamentally different from traditional banking, where you cannot choose whether law enforcement accesses your account.

Interestingly, Kfir states that Canton Network didn’t attempt to solve the problem of moving money without the institution seeing it, calling this “an imagined problem” rather than a real one for their users. This suggests Canton Network aligns more with traditional banking privacy models.

The Paradox

There’s a fitting irony here: Kfir’s stricter definition of privacy better describes what Ben-Sasson built with Zcash (true user choice), while Ben-Sasson’s definition better fits what Kfir built (institutional stakeholders have access).

Ben-Sasson noted it’s “somewhat of a mystery” why this definitional confusion exists in crypto. The core question remains: does privacy require strict voluntary disclosure, as with Zcash? Or does a more institutionally compliant model like Canton Network also qualify?

As the industry grapples with renewed enthusiasm for privacy-enabled solutions, one thing is clear: the crypto space must first decide what privacy actually means.