Ethereum must solve its privacy woes, says Ernst & Young crypto chief

With Ethereum hitting new record highs, US regulations enshrining stablecoins into law, what’s the next major hurdle for the second-largest blockchain?

Privacy, according to Paul Brody, consulting giant Ernst & Young’s blockchain director.

“Large companies don’t want to disclose the details and the nature of their business relationship,” Brody said.

“Without privacy, it’s very easy to reverse engineer who’s buying what, from whom and how much they’re spending. That’s considered very sensitive, non-public information.”

Enterprise Ethereum?

Privacy, or lack thereof, has long been a contested issue for public blockchains.

That’s because every transaction, swap, trade, or non-fungible token is easily viewable by anyone with even the most rudimentary analytics tools.

Developers within the industry have implemented various technical solutions, such as zero-knowledge proofs, which reveal some information about a person or their on-chain activity without revealing their entire identity.

Cryptocurrencies, including Monero and Zcash, were designed as a direct response to Bitcoin’s lack of privacy, enabling users to obfuscate their transactions from onlookers.

Still, much of the privacy conversation has been centred around the individual, or rather, the retail crypto user.

‘With stablecoins, everybody’s going to have money onchain.’

—  Paul Brody, EY blockchain director and chair of the Ethereum Enterprise Alliance

Privacy that protects enterprise organisations from leaking trade secrets is also on the menu, according to the EY executive.

Brody, who is also the chairman of the Ethereum Enterprise Alliance, attributes much of this shift — as well as Ethereum’s starring role — to changing regulations in the US.

Alongside pausing or halting ongoing investigations into various crypto executives, President Donald Trump has signed a flurry of pro-crypto executive orders, too.

Perhaps the most critical component of this shift has been the arrival of landmark stablecoin legislation.

Stablecoin unlock

The Genius Act, which passed in July, allows any entity, including banks and non-banks, to begin issuing stablecoins.

“With stablecoins, everybody’s going to have money onchain,” said Brody.

Indeed, JPMorgan, Bank of America and Visa are just some of the traditional finance entities that have moved to launch their own stablecoins — a push that could fuel a 1,200% growth of the market over the next five years to be worth $3.7 trillion, according to Citigroup.

And combine that with privacy-preserving technologies, Brody suggests, Ethereum’s next leg up is just around the corner.

“Suddenly, we can manage our inventory, we can factor our receivables. We can borrow against the assets of our inventory if we have those assets tokenised,” he told DL News.

And the upshot?

“All of it will buy, run, and operate on Ethereum.”

Liam Kelly is a DeFi Correspondent at DL News. Got a tip? Email at liam@dlnews.com.