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DeFi Works Public, Real Finance Requires Privacy

The Missing Trust Layer: Why 95% Stay Out

  • By UNDAO

Illustration by UNDAO

At a Glance:

  • Adoption gap: Global crypto use is stuck around 5% because 95% of people don’t want exposure to salaries, balances, or counterparties.
  • Public-by-default flaw: DeFi can operate openly for speculation, but real-world finance like payroll, trade secrets, and treasuries requires confidentiality by design.
  • The missing trust layer: Not more tokens or regulation, but privacy embedded by design is what makes blockchain real infrastructure.

Global crypto adoption still sits around 5%. Beyond regulatory hurdles, most people don’t want their salaries, balances, or counterparties exposed on a public ledger. While DeFi functions openly for trading and speculation, most mainstream financial services require confidentiality standards that public blockchains do not currently meet.

That’s the reality: DeFi may work in public. Real finance doesn’t.

A Lesson from the Internet

In 1994, people were terrified to put credit cards online. The web was unencrypted.

Then Netscape launched SSL. Amazon took off.

A $6.3 trillion e-commerce market was born.

Privacy wasn’t an add-on. It was the unlock.

Blockchain is at the same moment; but it’s more complex, tangled with regulation. The market won’t unlock overnight.

Problem: The Public-by-Default Design

Every transaction on leading blockchains is visible to anyone. Wallet balances are an open book. Competitors can track business payments. Salaries leak compensation structures.

Imagine if your bank account had a public URL; that’s crypto today.

Think of the 2021-2022 crypto turmoil, where Nansen’s on-chain analysis exposed how Alameda’s intertwined transactions with FTX revealed liquidity strains and underlying risks; an illuminating example of what happens when critical business flows are fully exposed on public blockchains.

Furthermore, major payroll and HR firms in the US and Europe have publicly declined crypto payment integrations, citing privacy and traceability concerns as key blockers. A March 2025 Gemini survey underscores the challenge, with over 60% of global non-crypto users identifying privacy of balances and counterparties as the top barrier to adoption, surpassing regulatory and market volatility concerns.

Until blockchain privacy is built in by design, critical financial activities will remain exposed, keeping crypto out of reach for most real-world use cases.

Strategic Stakes

Public ledgers may work for DeFi insiders comparing portfolios. But they collapse when real-world needs demand privacy:

  • Companies protecting trade secrets
  • Employees receiving paychecks
  • Institutions moving treasuries on-chain
  • Everyday users who want better banking alternatives

Without privacy, blockchain will remain limited to a niche or speculative playground, not genuine infrastructure.

Recent examples highlight progress on privacy for real business needs. JPMorgan’s Onyx Network, for instance, is a permissioned blockchain built specifically for interbank settlements, selectively revealing transaction data only to relevant parties. Similarly, the World Bank and several fintech firms use distributed ledger technology for bond issuance, restricting transaction access for compliance and confidentiality.

Meanwhile, everyday users often cite concerns about surveillance as a top reason for avoiding crypto payroll or payments.

The Shift: Privacy as Infrastructure

The architecture adding privacy by design won’t just improve crypto; it’s essential to make it usable for the other 95%. Privacy forms a foundational prerequisite, but it’s not a silver bullet.

Broader adoption also depends on seamless usability, robust regulatory compliance, and interoperability across platforms. And that’s where nuance matters:

  • Regulators are tightening traceability at the edges: FATF’s travel rule, EU’s TFR, and MiCA enforcement.
  • Central banks are experimenting with cash-like privacy: ECB’s offline digital euro, IMF frameworks, BIS pilots with PETs (privacy-enhancing tech).
  • Enterprise players are rolling out zero-knowledge (ZK) systems: like EY Nightfall for private Ethereum transactions.

This isn’t about evading oversight. It’s about confidentiality that still proves compliance.

The Signal Ahead

Privacy-enhancing technologies are still maturing. Performance and user experience have rough edges. But the direction is clear, embedding privacy into the blockchain infrastructure playbook.

That’s why the endgame is obvious. DeFi can stay public. But if blockchain aims to capture the other 95%, privacy isn’t optional.

The architecture that embeds privacy into blockchain won’t just improve crypto.

It’s what turns blockchain into usable infrastructure.

And behind the scenes, it’s something we’re building.

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