Privacy in blockchain and crypto is a major concern for users, study reveals

Privacy is still one of the most important features of cryptocurrencies for traders according to data.

To better understand user behavior and sentiment regarding transactions and privacy on the blockchain, Manta Network ran a survey in December 2020 studying user trust regarding privacy on the blockchain, as well as centralized and decentralized exchanges. 

The 2021 Privacy & Trust on Cryptocurrency Exchanges report examines the drivers behind user trust and activity surrounding blockchain transactions and exchanges.

Download the full report here.

The 404 participants in the survey all demonstrated some level of activity in the blockchain space. The majority of respondents identified as researchers and investors, and leaned toward crypto-maximalist views.

Despite their positive outlook on the future role of cryptocurrency, though, most respondents highlight concerns over their privacy as it related to blockchain activity. 73% of respondents have either hesitated or completely avoided making a transaction in the past because they were worried about the privacy implications around those transactions (e.g., their wallet address would be revealed and linked to their identities).

Furthermore, 84% of respondents expressed at least some level of concern that wallet addresses do not offer enough privacy. Wallet addresses act as a pseudonymous solution for maintaining privacy, but once the identity is linked to the individual, then all of the assets and transaction history of that wallet address are identified as well.

Respondents disagree that wallet addresses provide enough privacy. One user provided a personal example: “My friend made a lot of money in DeFi. He asked me to guess how much he made. I told him the exact number; he was shocked. It was because he transferred ETH to me before.”

Regarding trust and use of exchanges, opinions varied between centralized and decentralized exchanges. 29% of respondents indicated that brand reputation of centralized exchanges was a factor that positively impacted their trust and usage of those exchanges.

For decentralized exchanges, respondents indicated control of their assets as a driving factor. On the other hand, the gas fees on existing DEXs are an inconvenience that cause users to avoid trading on decentralized exchanges.