Privacy Coins: The Last 1,000x Opportunity in the Crypto Space

Author: mert | helius.dev Source: X, @0xMert_ Translation: Shan Ouba, Golden Finance

In short, when Bitcoin was first created, it faced three major issues: legality, programmability and scalability, and privacy.

Bitcoin addressed the legality issue by becoming a trillion-dollar asset. Solana and Ethereum tackled programmability and scalability. Privacy remains the only unresolved challenge (which also creates a market gap with asymmetric rewards), with public chains like Zcash leading the way in this direction.

I refer to privacy technology as the last thousandfold opportunity or the final PvE battle—not just a catchy buzzword (though it does have that effect). More importantly, this is based on the emerging market asymmetries and gaps, combined with favorable macro conditions. This field encompasses not only zero-knowledge proofs but also mixers, fully homomorphic encryption (FHE), and secure multi-party computation (MPC).

Development Timeline Overview

Bitcoin originated from the cypherpunk movement, aiming to create a native internet currency as a direct response to the 2008 financial crisis. Early Bitcoin was innovative, anarchistic, and uncertain—no one could be sure if it would succeed. Gaining legitimacy became the core goal at that time. As Bitcoin gained recognition, two main criticisms emerged: first, its lack of programmability (later evolving into scalability issues), and second, its lack of privacy.

Ethereum was created to solve the programmability problem, while Solana focused on scalability within programmable scenarios. Over the past 5 to 8 years, the main development thread in crypto has been these processes, with Bitcoin’s legitimacy gradually gaining acceptance. Moving forward, the fields of programmability and scalability will continue to improve within the Bitcoin ecosystem, but breakthroughs on the order of thousands of times are unlikely. Future improvements are more likely to be marginal rather than exponential.

On the other hand, Zcash was developed to address another major concern: privacy. If we view human technological progress as a tree (as shown in the diagram), Zcash aims to make breakthroughs on the privacy branch.

The issue of insufficient privacy has long been recognized by pioneers like Satoshi Nakamoto (who cited Zooko Wilcox’s views in his first Bitcoin post) and Hal Finney in public forums.

In the early days, the core challenge for digital cash was the double-spending problem—spending the same funds more than once. To solve this, all users needed to see each other’s account balances, which is the main reason blockchain is inherently transparent today. This transparency is a necessary outcome of solving double-spending.

In fact, Satoshi publicly expressed willingness to incorporate zero-knowledge proofs into Bitcoin to enhance privacy, believing it could make Bitcoin more complete. However, at that time, he hadn’t yet found a way to solve double-spending after adding this technology, as it was still too new.

The novelty of zero-knowledge proofs at that time is evident from Zcash, which was the first team to deploy this technology in a production environment—not just in crypto but across all industries.

However, due to the novelty and development difficulty of zero-knowledge proofs, multiple iterations were needed to refine the technology and eliminate trust assumptions. As a result, both Zcash and the broader zero-knowledge proof field experienced a tough development phase.

This situation has persisted until now. Zero-knowledge proofs are finally maturing, while the scalability and programmability tracks have reached the upper limits of their technical S-curves.

Today, Bitcoin has achieved legitimacy; Solana and Ethereum have demonstrated product-market fit for programmability; and privacy tech remains the only area with the potential for asymmetric gains.

Opportunities in Privacy Technology

From a timing perspective, this is a critical moment for the development of privacy tech. Recently, the crypto space has been driven mainly by speculation and commercial interests, but the origin of cryptocurrencies is rooted in the cypherpunk movement—the core goal of which was to build systems that ensure freedom and privacy through cryptography and code. Now, we are returning to that fundamental direction.

Coupled with macroeconomic factors: the spread of debt crises, Bitcoin’s proof of non-sovereign currency viability, frequent incidents of power abuse and privacy violations worldwide (especially in Europe), and the increasing demand for privacy from institutional on-chain participants—all these factors suggest that privacy and zero-knowledge proof technologies will soon sweep across the globe.

Moreover, privacy tech has a unique advantage: its high difficulty, significant impact, and novelty can attract top talent from the AI field. This will create a positive feedback loop of talent influx and capital investment, further accelerating development.

It can be said that the era of private currencies that span the globe and cannot be stopped is quietly arriving.

Note: I do not believe that projects like Bitcoin, Solana, or Ethereum have no room for growth. Their future scale will undoubtedly expand further. However, based on their current sizes, achieving a hundredfold increase is highly unlikely.