Blockchain is often floated as a solution for protecting users’ privacy. While blockchain’s founding ethos does promote returning power to individuals from third-party intermediaries, the technology itself isn’t inherently private. In fact, quite the contrary – blockchains were built for transparency, not secrecy. Every transaction, wallet address, and contract interaction is visible in plain text onchain. While pseudonymity offers a thin veil, it can be penetrated relatively easily using statistical analysis and data clustering tools.
True blockchain privacy isn’t just about encrypting data, it’s about accounting for every way that information might escape, including through a system’s performance, structure, or user behavior. This is why privacy on blockchain is both critical and challenging: users deserve confidentiality without sacrificing the trustless transparency that makes the technology powerful. It is essential for the blockchain community to actively define what privacy should guarantee, and for developers to design systems that protect users by default.
Understanding why blockchains aren’t inherently private
The problem of blockchain privacy is structural. Traditional blockchains store all data on a public ledger, meaning anyone can:
- Track transactions: Every transaction on Bitcoin or Ethereum leaves a trace, including details such as the addresses of the sender and recipient and the amount transferred. Even with pseudonymous addresses instead of personal names, those addresses can be tracked and used to develop a picture of a user’s financial behavior, or to estimate an individual’s net worth, among other things.
- Link wallets to real identities: once a blockchain user interacts with a platform or dapp that is subject to regulation or KYC, the user’s pseudonymity starts to erode. For example, if a user sends Bitcoin to or from a KYC-verified exchange, the user’s wallet is tied to a verified identity. Thus, it becomes possible to connect personal data with onchain financial behavior.
- Reconstruct full transaction histories: One of blockchain’s central features is its immutability. Thus, once a wallet address is tied to a personal identity, it is possible to track the entire history of a user’s transactions onchain. This feature is necessary for transparency and trustlessness, but it does not allow for discretion or privacy.
How blockchains can become private
There are three main approaches to bringing privacy to blockchains:
1. Private by Default (Protocol-Level)
Blockchains like Zcash, Monero or Aztec build privacy directly into the protocol to encrypt transaction details, such as sender, receiver, and amount, while maintaining the transaction’s validity through verifiable cryptography. Monero uses ring signatures to mix transactions with others, making it hard to trace their origin. Zcash, on the other hand, uses zk proofs to enable shielded transactions that are provably valid, but don’t expose any details about the sender, receiver, or transaction amount.
- Pros:
- Strong privacy guarantees: All users enjoy the same level of confidentiality, minimizing metadata leakage.
- Protocol-native enforcement: No need for third-party tools or external mixers.
- Auditability with selective disclosure: Users can reveal data selectively when needed, for compliance or verification purposes, for example.
- Cons:
- High computational cost: Generating and verifying zero-knowledge proofs can be heavy on both the user and the network.
- Limited scalability: Full privacy at the protocol layer can slow down throughput and increase fees.
- Complex user experience: Managing shielded vs. transparent addresses (as in Zcash) can be confusing and cause accidental privacy leaks.
2. Add-On Privacy (Application-Level)
Networks like Ethereum add privacy through external tools such as Tornado Cash, Privacy Pools, or confidential ERC-20s. Rather than altering the base protocol, these solutions offer privacy for users or dapps that opt-in.
- Pros:
- Flexibility: Users can choose when and how to use privacy tools.
- Composability: The tools can be integrated with existing DeFi, NFTs, and wallets without forking the network.
- Rapid innovation: New privacy layers can be deployed without consensus changes.
- Interoperability: Builders and devs can mix and match tools across chains.
- Cons:
- Compliance and legal risk: Protocols like Tornado Cash have faced sanctions and shutdowns for allegedly facilitating illicit activity.
- Traceability: Advanced analytics sometimes deanonymize users.
- Fragmented UX: Users must manage multiple tools, bridges, and proofs manually.
3. Hybrid Approach
A hybrid model combines protocol-level efficiency with app-level flexibility. This model allows users, devs, and dapps to customize their level of confidentiality. It integrates privacy through client-side proving and onchain verification, wallet integration for seamless user experiences, and composability with existing dapps and DeFi infrastructure.
- Pros:
- Best of both worlds: Combines scalability, efficiency, and privacy.
- Client-side control: Users retain control of sensitive data and proofs before publishing to the chain.
- Seamless UX: Wallets and dapps can abstract privacy complexity behind familiar interfaces.
- Regulatory flexibility: Privacy can be made compliant or auditable depending on context.
- Cons:
- Implementation complexity: Hybrid systems require coordination between protocol, wallets, and dapps.
- Developer overhead: Building with privacy primitives adds complexity and testing requirements.
- Evolving standards: Best practices are still developing.
Below, we discuss several examples that represent the hybrid model.
Validium
At the protocol layer, Validium exemplifies how hybrid systems achieve privacy without compromising performance. Unlike a traditional zk-rollup, which publishes transaction data directly onchain, Validium allows users to transact offchain, and a cryptographic proof attesting to the validity of the result is verified onchain. Every batch of transactions is cryptographically verified using zk proofs, ensuring that the offchain data hasn’t been tampered with. This method improves scalability and privacy by keeping sensitive information off the public ledger, while ensuring it is secure. In short, Validium embodies the “private by design, verifiable by default” ethos.
Self-custody wallets
At the user interface level, self-custody wallets implement client-side privacy, allowing users to generate and manage their proofs, keys, and encryption locally, without ever exposing sensitive information. Self-custody over one’s private keys also reduces the risk of unauthorized access and data breaches often associated with custodial wallets. While these wallets don’t offer complete anonymity, they improve privacy by removing the need for external management.
When integrated with zk-proving frameworks like Noir or POTC (Proofs on the Client), self-custody wallets become privacy enablers, not just asset managers.
Why Starknet is becoming the best place for privacy
Starknet Exemplifies the Hybrid Approach
Most zero-knowledge systems use SNARKs, which rely on trusted setup ceremonies and complex elliptic-curve assumptions. Starknet, on the other hand, is a zk-rollup built on STARKs, which are inherently scalable and efficient and require no trusted setup. In addition, quantum resistance is built into the design, unlike SNARK-based systems, and STARKs are composable, meaning they can seamlessly integrate into smart contracts, rollups, and privacy layers.
Starknet’s S-two prover provides sufficient privacy for most use cases and, once made zk, S-two’s proofs will offer formal guarantees. It is worth noting that no other STARK prover is currently zk. S-two’s speed enables local proof generation and onchain verification, opening the door to high-performance, privacy-preserving apps. This combination makes Starknet uniquely suited for verifiable privacy at scale, where thousands of private transactions can be verified cheaply and instantly onchain.
ZK Proofs: Privacy Meets Scalability
In addition to protecting data privacy, zk proofs compress computation, allowing for scalability. This is what enables privacy-preserving dapps like Mist.cash, Tongo, and Privacy Pools to operate smoothly without overloading the network. ZK proofs allow builders on Starknet to design dapps that keep user data private without compromising performance. And users benefit from faster, cheaper, and safer interactions, backed by mathematically guaranteed privacy.
Privacy by Design, Not as an Afterthought
Starknet treats zk proofs as a core design principle. From the proof layer (STARKs) to the application layer (Noir, Tongo, Mist.cash), to its hash functions and the Cairo language, every component of its architecture is built to be zk-friendly, with the idea that users should control what they reveal, and when.
With the Garaga SDK, devs who use the zk language Noir can verify SNARK proofs on Starknet without needing to write any Cairo code. Thus, whether you are a Noir or a Cairo developer, you can verify speedily and cost-efficiently on Starknet.
As the Starknet ecosystem matures, this commitment to privacy by design through zk proofs will continue to expand, enabling a slew of confidential, composable, and compliant onchain experiences.
Existing privacy solutions on Starknet
From infrastructure to applications, the Starknet ecosystem is committed to the idea that privacy and transparency can coexist, and that true decentralization requires both. The Starknet ecosystem already hosts a growing lineup of privacy-focused projects that explore different aspects of privacy, some of which were discussed above:
- Mist.cash – combines private payments and privacy pools in one UX-friendly package
- Tongo – enables confidential ERC20s, allowing builders to deploy private tokens easily
- 0xbow Privacy Pools – ad-hoc privacy mixing with on-chain composability
- Typhoon Network & Visoft Privacy Pools – experimental privacy solutions pushing the boundaries of decentralized privacy
The Starknet Foundation and StarkWare actively support responsible privacy teams through grants, technical guidance, and collaboration with tooling frameworks like Noir, Garaga, and Cairo. As new projects emerge, Starknet continues to solidify its position as the most advanced privacy-ready Layer 2 in the Ethereum ecosystem, balancing verifiability, performance, and confidentiality.
Privacy on Starknet Today
- Users: Users can try Mist.cash to make private payments directly on Starknet.
- Builders: Builders can work to deploy private tokens with Tongo, or integrate privacy pools and Mist.cash into your dApps. Upgrade to 0.14.1 to unlock POTC support for next-gen privacy performance.
- And follow the Starknet X handle and website for more privacy announcements and developments!
Not investment advice; do your own research. Engagement carries risk, including risk of loss. Current privacy on Starknet is supplied by third party apps.
