For years, privacy in transacting was one of crypto's most ambitious promises. Then it took a back seat as developers focused on scaling blockchains and regulators scrutinized privacy tools such as Tornado Cash. But a new Ethereum proposal and a growing number of privacy-focused products suggest the topic is making a comeback.
Market Context
The latest example is pERC-20, a proposed Ethereum token standard that would allow users to hold and transfer tokens without publicly revealing their balances, transaction amounts or counterparties. Unlike traditional ERC-20 tokens, which display balances and transaction histories onchain for anyone to inspect, pERC-20 keeps sensitive details private using encrypted cryptographic "notes" similar to digital cash.
Analysis
The proposal has sparked renewed discussion around whether public blockchains should expose every financial interaction by default. The design reflects a broader shift in how privacy is being discussed across crypto—rather than treating privacy and compliance as mutually exclusive, many newer projects are attempting to build systems that offer both.
Unlike traditional ERC-20 tokens, which function like public bank accounts where anyone can look up wallet addresses and see token holdings, transaction origins and destinations, pERC-20 would allow tokens to exist as encrypted cryptographic "notes." The result is a system where transactions remain private while still allowing the network to verify that no changes occurred.
Importantly, 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 ordinary users' balances or transaction histories.
Key Numbers
- ERC-20 is the current default token standard on Ethereum displaying all balances and transaction histories publicly
- pERC-20 introduces encrypted cryptographic "notes" for private transactions while maintaining supply transparency
- STRK20 framework supports multiple assets under a unified privacy layer including swapping, borrowing and staking
- Post-quantum secure cryptography is now being integrated into privacy frameworks like STRK20
What to Watch
Meanwhile, Starknet went live with STRK20 this week, a privacy-focused token framework designed to extend confidentiality beyond simple token transfers into decentralized finance applications such as lending, staking and token swaps. According to Eli Ben-Sasson, co-founder of StarkWare, the biggest obstacle facing privacy technologies today is not cryptography—it is user experience.
"The big problem of dealing with privacy is UX," Ben-Sasson told CoinDesk. "If the UX is bad, very few users are going to be using it. If very few users are going to be using it, and only for a very small number of things, they don't really get a lot of anonymity."
Ben-Sasson argued that the next stage of privacy infrastructure will need to support a much broader set of financial activities beyond just private payments. The STRK20 framework was built with this goal in mind, allowing users to manage multiple assets under a unified privacy layer and interact with decentralized applications while maintaining confidentiality.
Whether pERC-20 ultimately becomes an Ethereum standard remains uncertain. Like all Ethereum Improvement Proposals, it must go through a lengthy review process before seeing widespread adoption. But its emergence alongside projects such as STRK20 suggests that privacy is once again becoming a priority for blockchain developers—from niche privacy coins and mixing services to mainstream infrastructure, token standards and institutional use cases.