Negotiating Privacy: The Right Roles and the Right Regulation

By Antoni Zolciak and Matthew Niemerg

Privacy can exist on a spectrum. When it comes to this hot topic, it’s easy to think in absolute terms. But the unfortunate truth is that this is rarely a binary, even in real life.

This conversation is increasingly important as different jurisdictions start to regulate the roles of individuals, businesses, and governments in the context of technology and privacy. We shouldn’t expect web3 to escape their impact.

Moreover, we should understand that web3 has the potential to define the conversation going forward. This is why the conversations around controversies surrounding Arkham Intelligence and web3 privacy are especially important.

Privacy, technology, and policy

We’re always being selective about our privacy in everyday interactions. We choose to share identity, financial information, or personal interests to everyone ranging from close relatives to online strangers to large corporations to the government.

These disclosures happen because that personal information is necessary to the other party and we expect to receive a service or good in return. For example, a company might need your financial information to process a payment or your identity in order to comply with KYC or AML.

At the end of the day, individual and enterprise users alike have a right to customize their own privacy settings depending on the context. We should think about online privacy in the same way. True privacy means that everyone fully owns their information and can be selective about how to share it.

In a functioning society, this will sometimes mean making disclosures to satisfy business terms or legal requirements. The goal is to make users aware of what, how, why, and who they share their sensitive details with and give them proper tools to manage the process.

Revealing secrets selectively

There’s a reason, however, why we’ve become used to talking about privacy in the wrong way. The internet’s current server-based architecture lets a handful of centralized entities collect and manage the information of billions of users. As a result, people think about privacy as a “take it or leave it” deal in exchange for convenience.

But now we’re at a place where we can digitally emulate real life when it comes to privacy. Web3’s infrastructure puts users back in a position where they can access company services while their information stays with them and not in a remote server. Zero-knowledge proofs even lets them prove claims without revealing any information at all.

Whose choice is it?

All of this leaves us with the question of who gets to choose what. There’s a balance to strike in terms of how information is shared between individuals, businesses, and government institutions.

Individual prerogative

The decision to reveal personal information should always remain in the hands of individuals. However, government institutions will still choose when and how to enforce their own terms. This leaves individuals in a position where they’re incentivized to provide information on their own in return for a service, benefit, or protection.

Business models

Just as individuals can define their own privacy decisions, businesses also have a right to enforce their own policy requirements. It wouldn’t be disagreeable for businesses that rely on ad revenue to require certain disclosures in exchange for better services. Both ends of the market can decide what to accept and reject, without a centralized middle man.

Government protection

This leads us to the role of governments. It would be naive to expect that governments won't maintain some degree of enforceability over critical information, especially in matters of national security. Everyday concerns matter, too.

The right understanding

In most of the privacy-preserving protocols in web3 there exists a cryptographic way for a user to reveal the origin of the transaction through approaches such as view keys. This gives users the ability to remove anonymity at their discretion. “Their discretion” being key here. Web3 simply makes privacy more negotiable than ever.

Still, there are certainly new lines to be drawn. But they should be in line with the right understanding of web3 technology. In terms of regulatory approach, the outlook on how to regulate the roles of individuals, businesses, and governments should be one of guaranteeing this “negotiability” of privacy.

Intelligence exchanges and where privacy matters

We should examine new developments around privacy in web3 and Arkham Intelligence’s dox-to-earn business model under this light.

We live in a world where everything and anything can be monetized and sometimes the pursuit of profit fails to consider the longer-term detrimental effects on a free society. This disregard for consequences can jeopardize the safety and well-being of individuals and groups.

Moreover, the consequences extend beyond personal finances. There is a genuine risk of exposing wallet addresses, as well as the personal information of family members such as children, parents, siblings, spouses, and friends.

An Intelligence Exchange aims to undermine the financial privacy of individuals within the web3 space. By doing so, it fosters a culture that undermines the significance of financial privacy and privacy in general. This business model takes away the individual prerogative to privacy and leaves it at the mercy of online mobs.

Such reckless exposure has the potential to place individuals in harm’s way, calling for the role of governments to ensure their safety. If web3 returns privacy to its rightful place as an individual prerogative and makes it negotiable, a service like Arkham should be the right focus for regulatory discussions.

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The Aleph Zero blockchain was founded in 2018 to enable a fast, secure, scalable, and privacy-preserving environment for Web3 builders. The project closed $15M in VC and community funding and debuted on the broader markets in 2022 after ensuring regulatory compliance in Switzerland and having the core technology peer-reviewed. With a team of 50 cryptography, engineering, and business professionals, Aleph Zero is now focused on incubating application-specific use cases utilizing zero-knowledge and multi-party computation technologies.

Antoni Zolciak is a co-founder of Aleph Zero Foundation (Switzerland), an organization overseeing the development of the Aleph Zero blockchain, and a Managing Partner of Cardinal Cryptography (Poland), firm focused on core development of the Aleph Zero ecosystem.

Matthew Niemerg is a co-founder and board member of the Aleph Zero Foundation. He holds a Ph.D. in Mathematics from Colorado State University and currently serves as an expert on the EU Blockchain Observatory Forum. He is also a co-founder of Cardinal Cryptography.