Why Privacy Coins Aren’t Enough | The Breakdown

So it's a new year. That means new narratives. Or in the case of privacy coins, it's very old narratives made popular all over again. And sure, Zcash and Monero come back around every bull market. It's true. But a lot has changed since privacy coins were prominent in 2021, let alone 2014 and 2015 when they first arrived. I've seen a theory going around that Zcash and Monero are obsolete, but it's not true. They they just don't offer a complete picture on how to achieve true and lasting on chain privacy. Privacy coins present a decent solution to keeping transactions private and so on, but most users leak identities somewhere else, especially when they move capital over from the old fiat world into the new crypto space, as in when they actually convert their fiat into crypto and back again. I have a theory. If user privacy is a legitimate concern, we need to stop pretending that on chain privacy alone solves it, and we really need to start looking outward rather than only inward to really make a lasting difference. This is the breakdown. Let's get to it. Nothing said on the breakdown is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are opinions, not financial advice. Hosts and guests may hold positions in the company's funds or projects discussed. First, let's look at what people are saying about the privacy narrative, for crypto in 2026. Maelstrom CIO and Perps pioneer Arthur Hayes predicted that this year's dominant narrative will surround privacy. Zcash will become the privacy beta, and we're already long off out of that at excellent prices obtained in the third quarter of twenty twenty five. That basically aligns with what a 16 z wrote in December. Privacy is one feature that's critical for the world's finance to move on chain. It's also the one feature that almost every blockchain that exists today lacks. For most chains, privacy has been little more than an afterthought, but now privacy by itself is sufficiently compelling to differentiate a chain from all the rest. Privacy also does something more important. It creates chain lock in, a privacy network effect, if you will, especially in a world where competing on performance is no longer enough. Sandy Peng, cofounder at Ethereum's z k roll up scroll, cited a 16 state in her own post shortly after. Every year, crypto finds a new obsession. 2021, 2022 was NFTs. 2023 and 2024 was the race to scale Ethereum. 2025 was meme coins and everyone launching their own l twos. 2026 belongs for privacy. Look, I love the energy, but there's still a lot missing from these takes. And if we're being honest, the privacy narrative is really about compliant privacy, a term which really makes me cringe. Privacy in crypto is really three different problems, how you acquire digital assets, how you broadcast transactions, and …