Alvin Lang
Feb 01, 2026 03:53
a16z crypto’s Ali Yahya argues blockspace commoditization makes privateness the one defensible moat, with secrets and techniques more durable emigrate than belongings.
Overlook quicker transactions or cheaper charges. The true aggressive benefit in crypto will come from holding secrets and techniques, in response to a16z crypto Normal Accomplice Ali Yahya.
In a podcast launched January 30, Yahya laid out a thesis that is been constructing contained in the $4.5 billion crypto fund: privateness creates lock-in results that efficiency by no means can. The argument facilities on a easy statement—customers can transfer belongings between chains simply, however they cannot transfer their anonymity units.
Blockspace Turns into a Commodity
Yahya’s premise begins with the place crypto infrastructure is heading. As Layer 1s and rollups converge on related efficiency benchmarks, blockspace more and more appears to be like interchangeable. Pace and price benefits erode as rivals catch up.
“Most blockchains are beginning to look the identical,” the podcast notes. The query turns into: what really creates defensibility?
Privateness, Yahya argues, generates community results that compound over time. When customers conduct non-public transactions, they be part of an anonymity set—a pool of members whose exercise turns into statistically indistinguishable. Bigger swimming pools imply stronger privateness ensures. And this is the lock-in: you possibly can bridge tokens to a brand new chain, however you possibly can’t convey the gang that makes your transactions nameless.
Finance First, The whole lot Else Later
The a16z thesis acknowledges an uncomfortable actuality about consumer habits. Folks tolerate surveillance on social platforms—they’ve accepted the trade-off without cost companies. Finance hits in another way.
“Customers tolerate surveillance in social media—however not in finance,” Yahya famous. The stakes change when transaction historical past reveals internet price, buying and selling methods, and spending patterns to anybody who cares to look.
This explains why a16z has backed Seismic, a privacy-focused fintech blockchain, and continues investing in zero-knowledge proof infrastructure. The agency sees monetary functions because the entry level for mainstream privateness adoption, with social and gaming use circumstances following as soon as the tech matures.
The Tech Stack Taking Form
4 applied sciences are competing to ship on-chain privateness: zero-knowledge proofs (ZKPs), multi-party computation (MPC), trusted execution environments (TEEs), and totally homomorphic encryption (FHE). Every carries totally different trade-offs between privateness ensures, computational overhead, and composability with current DeFi protocols.
a16z’s investments counsel they’re betting closely on ZKPs, although the podcast acknowledges TEEs supply quicker paths to market regardless of weaker safety assumptions.
What This Means for Builders
The winner-take-most framing has implications for the place capital flows. If privateness creates sturdy moats, early leaders in anonymity set dimension achieve compounding benefits. Initiatives launching privateness options at present compete not simply on tech specs however on consumer acquisition—each participant strengthens the community impact.
The thesis additionally raises questions on decentralization. Conventional crypto knowledge treats lock-in as antithetical to the open ecosystem ethos. Yahya argues privateness lock-in differs basically from web2 walled gardens as a result of customers retain asset custody and protocol governance rights whilst switching prices rise.
Whether or not that distinction holds underneath regulatory stress—significantly as governments scrutinize privateness cash—stays the open query a16z did not totally handle.
Picture supply: Shutterstock
