For years, transaction privacy has been one of crypto’s most ambitious promises. Then it faded into the background as other trends took off.
As developers focused on scaling blockchains And regulators have examined privacy tools such as Tornado Cash, much of the industry’s attention has moved elsewhere. But a new Ethereum proposal and a growing number of privacy-focused products suggest the topic is making a comeback.
The latest example is pERC-20, a proposed Ethereum token standard this would allow users to hold and transfer tokens without publicly revealing their balances, transaction amounts, or counterparties. THE the proposal sparked renewed discussion about whether public blockchains should expose every financial interaction by default.
Unlike traditional ERC-20 tokens, which is the default token standard on Ethereum today which displays on-chain balances and transaction history for anyone to inspect, pERC-20 keeps sensitive details private.
Today, most Ethereum tokens function like public bank accounts. Anyone can look up a wallet’s address and see how many tokens they have, where they came from, and where they were sent. Under pERC-20, tokens would instead exist as encrypted cryptographic “notes,” similar to digital money.
The result is a system in which transactions remain private while allowing the network to verify that no changes have been made to transactions.
Above all, the proposal does not hide everything.
The total supply of a token would remain publicly visible, allowing anyone to verify that new tokens are not being secretly created. The proposal also includes a compliance mechanism that would allow issuers to freeze specific notes through a cryptographic blacklist without exposing the balances or transaction history of ordinary users.
The design reflects a broader shift in how privacy is approached in crypto.
Rather than treating privacy and compliance as mutually exclusive, many newer projects are attempting to create systems that offer both.
But some proponents say private payments are only part of the challenge.
Earlier this week Starknet went live with STRK20, a privacy-focused token framework designed to extend privacy beyond simple token transfers and into decentralized finance applications such as lending, staking, and token swaps.
According to Eli Ben-Sasson, co-founder of StarkWare, the main development company behind Starknet, the biggest obstacle facing privacy technologies today is not cryptography. “The big problem with privacy management is UX,” Ben-Sasson told CoinDesk.
Historically, privacy-focused cryptocurrencies have struggled to gain traction. Users often faced slow wallet syncing, cumbersome transaction flows, and limited compatibility with the broader crypto ecosystem. These limitations made privacy tools difficult to use and, in some cases, compromised the privacy they were intended to provide.
Privacy systems rely on the participation of large groups of users. If only a small number of people use a private network, it becomes easier to identify individual participants.
“If the UX is bad, very few users will use it,” Ben-Sasson said. “If very few users use it, and only for a very small number of things, they don’t really benefit from much anonymity.”
Ben-Sasson said pERC-20 appears to be largely focused on private token transfers and builds on ideas pioneered by privacy-focused projects such as Zcash. While describing this as an important capability, he argued that the next stage of privacy infrastructure will need to support a much broader set of financial activities.
“Today we can do more,” he said, referring to privacy-preserving DeFi applications.
The STRK20 framework was built with this goal in mind. Rather than protecting a single token, the framework allows users to manage multiple assets under a unified privacy layer and interact with decentralized applications while preserving privacy. According to Ben-Sasson, users can access services such as trading, borrowing and staking without sacrificing privacy.
The framework also uses secure post-quantum cryptography, which Ben-Sasson says will become increasingly important as blockchain developers begin to prepare for future advances in quantum computing.
The contrast between pERC-20 and STRK20 highlights an emerging debate about what privacy in crypto should actually look like.
One vision focuses on privatizing payments while preserving transparency elsewhere. Another seeks to make privacy a foundational layer that extends across an entire ecosystem of financial applications.
Regardless, the discussion itself marks a notable shift.
For much of the past few years, privacy has occupied a relatively small part of the crypto industry, often associated with niche privacy coins or controversial mixing services. Today, the conversation is increasingly focused on consumer infrastructure, token standards, and institutional use cases.
It remains unclear whether pERC-20 will ultimately become an Ethereum standard. Like all Ethereum improvement proposals, it must go through a lengthy review process before it can be widely adopted. But its emergence, alongside projects such as STRK20, suggests that privacy is once again becoming a priority for blockchain developers.
Learn more: Not all Ethereum 2 layers are dying, but many general-purpose chains no longer have a reason to exist
