Privacy coins: “try to avoid KYC as much as possible”, says Zano head of marketing

The Cryptonomist interviewed Quinten van Welzen, head of marketing and growth at the Zano project, a privacy-by-default blockchain platform on which users can launch their own assets.

Zano basically enforces the amounts being hidden, the sender and receiver addresses being hidden, and even the asset type transacted remains hidden. 

Zano’s ecosystem can be utilized to make any asset private. Then mention stablecoins, shielded versions of BTC, ETH, and even private DeFi (PriFi) etc.

Why do you think there is a new surge around privacy coins? 

I think it all started with Zcash, and I think it was a little bit orchestrated. A lot of influencers were likely paid to promote Zcash and that drew attention to privacy coins. But it’s not just that. People have concerns about government overreach, digital IDs, CBDCs. 

That contributes to privacy coins doing well. And usually at the end of each cycle, people rotate profits into privacy coins.

How do you see privacy coins evolving over the next 5 to 10 years?

I think privacy will become way more important and way more dominant across crypto. Optional privacy is weak privacy for a number of reasons, so I think it will fade away and default privacy will become the standard.

It also depends on regulations, but if blockchain wants mass adoption by companies, they need privacy too. A company doesn’t want you to see their money flows or payment behavior because it reveals insights into their business model. Privacy will become more important for both individuals and businesses.

What about the surge around stablecoins?

For e-commerce, you want to pay with a stable asset. That’s why stablecoins are popular, and USDT and USDC are the most used cryptocurrencies today. But they have serious flaws because they are not private. If you receive a stablecoin, the other party can see your wallet balance, transaction history, and that’s a security risk for users and businesses.

FUSD, the Freedom Dollar launched on Zano, is private by default and cannot be frozen. Over 3 billion USDT has been frozen to date. With FUSD, this is not possible. It’s censorship-resistant, private, and its reserves are fully auditable.

Many projects try to add optional privacy later, but it’s not enough. In Zano, privacy is default, and there is an auditable wallet you can optionally create. Via the view key, people can verify the amount and track transactions of these auditable wallets without being able to spend assets from this wallet.  Freedom Dollar uses this to prove its over-collateralized reserves, unlike Tether.

What are the main differences between Zano and the other privacy blockchains, like Monero or Zcash?

Compared to Monero, Zano is more versatile. Monero is peer-to-peer digital cash, private and good at that, but it lacks programmability. With Zano, you create an ecosystem on top of it — more like Ethereum compared to Bitcoin. You get Monero-level privacy with programmability.

We also have Ionic swaps and our own decentralized exchange, Zano Trade, which is completely private.

Compared to Zcash, the main difference is that they have optional privacy, which in my opinion translates to weak privacy. Users default to transparent addresses, so the shielded pool is small. Zano is private by default. Zcash also doesn’t yet have confidential assets or the hybrid PoW/PoS consensus that Zano already has.

The speed is also different: Monero takes about 20 minutes before you can re-spend assets, Zcash about 25 minutes, and Zano only 10 minutes.

Should privacy be opt-in or the default for cryptocurrencies?

It should be the default. Users default to what the wallet defaults to, and many don’t understand the difference between address types. They also want maximum interoperability, and some exchanges reject shielded transactions. They follow the path of least resistance.

Developers also avoid complex cryptography, and shielded transactions are often seen as high-risk by exchanges. Users internalize the idea that privacy equals risk. So optional privacy is not preferred; privacy should be default so everyone has the same protection.

Optional privacy also makes tracking easier for chain analysis companies.

There were legal issues for tools like Tornado or Samurai Wallet. Aren’t you worried regulators might target Zano for enabling privacy?

Yes, of course that’s a risk, but it’s not a reason to stop. Privacy is important for user security. A lot of people think privacy is for criminals, but that’s not true. Recently in San Francisco intruders stole $11 million from someone; on a private blockchain this information wouldn’t have been available.

Banks shield your account; I can’t see your bank balance and you can’t see mine. Cash is still used and has privacy features. Zano mimics those privacy features but in the digital blockchain world instead.

Regulators view Tornado Cash not as a neutral privacy tool, but as an active enabler of large-scale money laundering and sanctions evasion — and hold its developers responsible for providing that centralized infrastructure without required compliance safeguards.

With Zano, we don’t run any services, and all transaction fees are being burned, so we never profit from network usage and adoption. Hopefully, that helps with this particular concern, but if regulators want to target you, I believe they’ll find a way to do it.

What practical steps can everyday users take to protect their privacy on chains, apart from using Zano?

Use privacy-by-default blockchains like Zano or Monero. They keep you much safer. Also avoid KYC services as much as possible. Data leaks and malicious actors can expose your information.

That happened recently with Coinbase users: balances, home addresses and passwords became public. It puts a target on your back. So avoid KYC when you can, and use privacy-by-default blockchains. Of course this is not a call to action to break your local laws!