Privacy Returns to the Center of Crypto’s Mission
As crypto approaches 2026, one of its most foundational principles — privacy — is under renewed pressure. The convergence of governments, Big Tech and digital identity systems is forcing the industry to confront a difficult question: how to verify users without turning decentralized networks into surveillance infrastructure.
Ethereum co-founder Vitalik Buterin has been one of the most vocal advocates warning against sacrificing crypto’s original values in the name of mass adoption.
“The goal is not to onboard people to Ethereum,” Buterin wrote recently. “The goal is to onboard people to openness and self-sovereignty.”
His message reflects a growing concern that onboarding users into tightly controlled platforms — so-called “walled gardens” — undermines the purpose of decentralized systems altogether.
Decentralized Identity Gains Momentum
In response, decentralized identity (DID) has emerged as one of crypto’s most active areas of innovation in 2025. Rather than relying on a single global identifier, new systems emphasize selective disclosure, allowing users to prove specific attributes — such as age, uniqueness or regulatory compliance — without revealing their full identity.
This approach challenges the assumption that identity verification must involve persistent tracking or centralized databases. At its core is zero-knowledge proof (ZKP) technology, which enables verification without exposure of personal data.
The shift reflects a broader realization across crypto: identity does not have to mean surveillance.
Ethereum Becomes the Primary Testing Ground
Unsurprisingly, Ethereum has become a major laboratory for privacy-preserving identity systems. According to Ethereum’s own disclosures, more than 750 privacy-focused projects are currently building on the network, many centered on credentials, identity and selective disclosure rather than anonymous payments alone.
Community responses have framed this trend as a maturation of Ethereum’s original ethos rather than a departure from it. Privacy, zero-knowledge tools and human-centric identity are increasingly viewed as practical realities rather than distant ideals.
Buterin himself has cautioned against simplistic solutions. In a June essay, he warned that replacing centralized logins with a single onchain identity could still enable long-term tracking, coercion or loss of anonymity if overused.
Instead, he advocates attribute-based verification, where users only prove what an application needs to know — nothing more.
Zero-Knowledge Proofs Move Beyond Crypto
The privacy debate is no longer confined to crypto-native circles. In 2025, enterprise and government-facing identity platforms began adopting zero-knowledge techniques as well.
Examples include:
- Hedera-based IDTrust, positioned for government and institutional credentials
- Proof-of-personhood systems, designed to distinguish humans from bots without revealing identities
Sam Altman’s World ID remains the most prominent example, allowing users to prove uniqueness through biometric verification while claiming that personal data remains user-controlled. While technically ambitious, the project continues to spark debate over consent, coercion and long-term privacy implications.
Meanwhile, Coinbase CEO Brian Armstrong has publicly framed decentralized identity as a pillar of the next internet era, alongside decentralized social media and prediction markets.
State Surveillance Pressures Intensify
As crypto experiments with privacy-preserving identity, governments are moving in the opposite direction — toward broader surveillance capabilities.
In Switzerland, proposed reforms to telecommunications surveillance laws would expand identity verification and monitoring obligations to social networks, messaging apps and VPN providers. The proposal sparked backlash from privacy-focused companies like Nym and Proton, with Proton freezing future investments in Switzerland amid regulatory uncertainty.
In the United Kingdom, age-verification requirements for online content prompted the rollout of zero-knowledge-based proof systems that verify age without revealing identity — an example of how privacy-preserving tech can meet regulatory goals when implemented carefully.
In the United States, Google expanded government-issued digital ID support in Google Wallet, including ZK-based age verification, underscoring how these tools are becoming mainstream even outside crypto.
State Surveillance Pressures Intensify
As crypto experiments with privacy-preserving identity, governments are moving in the opposite direction — toward broader surveillance capabilities.
In Switzerland, proposed reforms to telecommunications surveillance laws would expand identity verification and monitoring obligations to social networks, messaging apps and VPN providers. The proposal sparked backlash from privacy-focused companies like Nym and Proton, with Proton freezing future investments in Switzerland amid regulatory uncertainty.
In the United Kingdom, age-verification requirements for online content prompted the rollout of zero-knowledge-based proof systems that verify age without revealing identity — an example of how privacy-preserving tech can meet regulatory goals when implemented carefully.
In the United States, Google expanded government-issued digital ID support in Google Wallet, including ZK-based age verification, underscoring how these tools are becoming mainstream even outside crypto.
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