Hard Money vs. Privacy: Saifedean Ammous Questions the Push for Crypto Privacy

In an engaging interview with Cointelegraph, Bitcoin advocate Saifedean Ammous sparked a debate among Bitcoin enthusiasts and privacy advocates, raising questions about the significance of privacy in the realm of money.

Key Takeaways

Saifedean Ammous expresses doubt about the importance of privacy in cryptocurrency compared to the demand for hard money that maintains value.
He criticized Zcash’s privacy features and its reliance on a "trusted setup" model.
Ammous believes that privacy in blockchain technology is a complex issue, yet emphasizes the primary need for resistance to monetary debasement.
The conversation surrounding privacy in cryptocurrency is ongoing and evolving among industry leaders.

Hard money vs. privacy? Saifedean Ammous questions crypto’s privacy push

Ammous critiques the traditional view of money's need for privacy versus the necessity of having money that cannot be devalued. He shares his skepticism towards Zcash’s privacy protocol and discusses the balance between monetary integrity and privacy in cryptocurrency.

The Privacy Debate in Cryptocurrency

Ammous stated, “This is the question. How much demand is there for money that does not get debased versus how much demand is there for money that allows you to maintain your privacy?” This striking remark highlights the dilemma faced by many in the cryptocurrency sector.

Known for his book “The Bitcoin Standard,” Ammous described Zcash as a “shitcoin,” expressing concerns about its initial setup, which involved a ceremony in 2016 to create cryptographic parameters for its privacy features. “The whole thing is built on a trusted setup, where you have to trust a bunch of people who started the whole thing. I’m not in any mood to get into these kind of stupid games,” Ammous stated.

While Ammous admitted he wasn't an expert on Zcash’s protocol, he raised questions about whether its privacy features might affect public trust regarding the total supply of ZEC tokens. Zcash offers both shielded and unshielded versions of ZEC for transactions. Shielded ZEC transactions are privacy-oriented, concealing the sender, recipient, and amount through encryption and zero-knowledge proofs. Despite his reservations, Ammous acknowledged that both shielded and unshielded pools of Zcash are verifiable through various blockchain explorers.

Contrasting Views on Privacy and Hard Money

Following Ammous's comments, various key figures in the cryptocurrency community shared their thoughts. Helius co-founder Mert Mumtaz characterized Ammous’s inquiry about monetary debasement and privacy as a “false dichotomy.” Digital Currency Group CEO Barry Silbert maintained that privacy continues to be a fundamental concern for Bitcoin advocates.

Zcash co-founder Zooko Wilcox also participated in the discussion, citing instances where the Canadian government tracked Bitcoin addresses associated with striking truckers, underscoring Bitcoin’s lack of privacy.

Privacy vs. Hard Money

The dialogue continued online, with users debating the merits of privacy in monetary systems and differentiating between Zcash and Bitcoin’s approaches. Ammous acknowledged that blockchain privacy is an evolving process. He noted that many privacy features desired by Bitcoin users may be integrated through layer-2 solutions.

“On the issue of privacy, it’s interesting how it’ll evolve. One unpopular opinion I have is that on-chain privacy is very difficult and continues to get more difficult," he remarked. However, he suggested that this challenge might not be entirely negative, as people can achieve desired privacy levels through secondary solutions without compromising Bitcoin's integrity.

Ultimately, Ammous’s perspective is rooted in the belief that hard money is vital for economic stability and growth. “I think people would rather have hard money that is not private than easy money that is private. The notion that people want privacy in their money is greatly exaggerated to promote certain cryptocurrencies," he expressed.

He concluded by stating that money, by its very nature, leaves a trail of information with every transaction, especially in a digital context. Consequently, “it’s very difficult to make money into something that is private and on-chain.” However, Ammous reinforced that the primary desire is access to a form of money resistant to devaluation, a market with immense potential.

As 2025 approaches, interest in Zcash has surged. It topped Coinbase’s search charts in November, with ZEC’s price increasing tenfold in recent months, reaching a market capitalization of over $10 billion.

Further Reading: Understanding the Conflict Between Privacy and AML Laws in Cryptocurrency Projects.