The Bitcoin revolution is taking over the means of online trade. However, it has one flaw, and this has to do with privacy. The blockchain ledger has been in the public since the inception of Bitcoin. All transactions are always exposed. They are in the public domain. This makes traders vulnerable as it is possible to trace transactions.

While there is no direct security risk involved, financial transactions are private and should be kept private. You may hear, "you have not committed any crime, so you have nothing to hide", but it is important that you keep your transactions out of the public eye. Just because you may have no reasons to hide your transactions does not give the next person or government the right to snoop on your activities. Privacy is important.

It is very easy at the moment to trace transaction patterns on many blockchains. This is likely to bring some form of insecurity. Hackers can easily pick certain data and use it to bring down certain institutions. In this hyper-connected world, power lies in privacy. This is the only way to keep such elements as hackers at bay.

Even though today’s business requires a lot of transparency, this ought to be controlled. People who are not involved do not need to gain access to information they do not require. This is just good business practice!

Fungibility and the Future of Cryptocurrency

Fungibility being the property of a good in which its units can be mutually substituted, is a key property in the future of cryptocurrency. Cryptocurrencies such as ZenCash have this property well worked out. Like cash, it is untraceable. This is where privacy comes in.

This is because, in cryptocurrency, the likes of ZenCash have a private protocol. It uses the latest developments in cryptography called Zero-Knowledge Proofs. Zero-Knowledge Proofs are best illustrated using the Ali Baba cave analogy: