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The exposure of transaction histories has attracted malicious players in the crypto market, with DeFi being the most notorious.
While cryptocurrencies are often touted as privacy-focused, that is not entirely the case. Most of the popular blockchain ecosystems, including Bitcoin and Ethereum, are designed as public networks. This means that anyone can view on-chain transaction histories by analyzing the blockchain explorer hence the transparent nature. That said, several crypto stakeholders are not comfortable with their transaction history being publicly exposed.
Currently, it is hard for one to operate within the nascent decentralized finance (DeFi) ecosystem without leaving a trace. For instance, the metamask wallet, which is the most popularly used on Ethereum, can be tracked based on historical transactions on Etherscan. Not only can on-chain analysts view transactions, but also the account balances held in a particular metamask wallet.
The exposure of transaction histories has attracted malicious players in the crypto market, with DeFi being the most notorious. According to a security report by intelligence firm Cipher Trace, over 75% of the crypto market hacks in 2021 targeted DeFi projects and users. In some instances, DeFi protocols such as Poly Network almost lost $600 million worth of users’ funds, marking the largest DeFi hack to date.
Given this trend, the fundamental question is how crypto users can protect themselves from malicious players? While there are several ways to avoid being a target, privacy-focused wallets pose a significant value proposition. Today, one does have to rely on legacy wallets such as metamask; instead, DeFi users can opt for privacy-oriented non-custodial wallets such as BlockWallet to conceal their transaction history and account balances.
BlockWallet: Send Crypto Funds Anonymously
Despite the value in transparency, you might be looking to conceal your on-chain activity for various reasons. Well, it is now possible through the Ethereum-compatible BlockWallet browser extension. DeFi users who have long endured the pain of their account balances being revealed to the public can leverage this ecosystem to send funds anonymously. Even better, the funds’ receiver or other malicious trackers will not be able to view your account.
The process of getting started on BlockWallet is pretty seamless; one can simply download the extension from the Google Chrome store and start interacting with DeFi projects hosted on the Ethereum blockchain. As for the funds’ transfer, BlockWallet pools users’ funds into one smart contract pool, creating a new address for every transaction. This means that a user can send their funds without the fear of leaving an on-chain trail.
BlockWallet is able to achieve this level of privacy through advanced cryptographic proofs and Tor integration. With the DeFi ecosystem growing bigger, this wallet is set to introduce metamask snap plugins that will allow a majority of DeFi users on Ethereum to effortlessly transfer their funds. BlockWallet also features a native token dubbed BLANK designed to power the path towards reclaiming financial privacy on blockchain ecosystems.
Notably, there are other privacy-focused blockchain wallets such as Samourai and Wasabi. However, these two are only compatible with Bitcoin, making them inaccessible to the fast-rising DeFi market.
Privacy is the Future of Decentralized Markets
The DeFi market is perhaps one of the hallmark debuts of the crypto ecosystem since Bitcoin’s launch in 2009. It kicked off with the launch of governance tokens in the summer of 2020 and now boasts over $184 billion in total locked value (TVL), according to DeFi Llama metrics. While initial participants were mostly retail traders, this market has evolved significantly to attract the interest of traditional financial institutions across the globe.
However, it was still lagging in terms of privacy until recently when privacy-focused innovations started to launch. With hackers and regulators on the heels of DeFi investors, privacy has become more important than ever before. The next evolution of this market will likely be marked by the integration of privacy-focused solutions that retain blockchain’s inherent features, including decentralization and immutability.