Brothers, I bought some Monero in 2020. At that time, I felt that privacy was a necessity, and the complete transparency of the blockchain was inherently anti-human design. Sooner or later, the market would give privacy coins a fair chance.
The subsequent events are known to everyone. Binance delisted it, and other major exchanges followed suit, not because Monero's technology is inadequate, but because it made 'complete opacity' too thorough, giving regulators an undeniable reason to kick it out. I ended up losing sixty percent on that position, and at the time, I thought I might have really misjudged this track.
Later, I didn't touch privacy projects for a long time. It wasn't until I saw the design logic of @MidnightNetwork that I sat up straight again.
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First, let me explain why I made the wrong judgment before.
At that time, I thought privacy was a single dimension— the more hidden, the better; full transparency is the enemy. This logic works in the worldview of cypherpunks, but it completely fails in reality. Institutional funds need to be compliant, exchanges require KYC, and regulatory agencies need audit rights. These are not variables that can be countered, but rather prerequisites for the market to grow.
Monero chose confrontation and ended up being kicked out. Zcash has a design for selective transparency, but made a bunch of compromises in execution, ultimately pleasing nobody, and the team underwent significant layoffs last year.
$NIGHT Midnight takes the third path that I hadn't thought of before: not hiding, but you decide who to show it to.
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How exactly to do this, I will explain with a down-to-earth analogy.
You go to negotiate a big contract, and the other party requires checking your company's finances. Previously, you had two choices: either open all the books, showing every detail; or say that you won't show anything, causing the negotiation to break down immediately.
Midnight's selective disclosure gives you a third option: you can let the other party see the conclusion that "this company is profitable, has healthy cash flow, and has no violations," but they cannot see the specific client list, profit margins, or supplier prices. You provide the answers that regulatory agencies want, without leaking business secrets.
The technical foundation of this matter is zero-knowledge proofs. What is stored on-chain is not your raw data, but cryptographic proofs that certain conditions are met. Who has the right to verify this proof is up to you, not the protocol, nor any third party.
This transforms the relationship between privacy protection and compliance requirements from being mutually exclusive to being two things that can coexist, which neither Monero nor Zcash has achieved.
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I have to complain about another common issue with this track: no matter how good the technology is, cold starts are really difficult.
The privacy network has a special problem that ordinary public chains do not have— your privacy protection strength depends on how many people are active in the network at the same time.
The term is anonymity set. Your transaction hidden among ten thousand people's transactions is not as secure as being hidden among a hundred people's transactions, it's a different level of security. In the early days of the network, with fewer users, even if the cryptography is perfect, the actual privacy protection ability is also compromised.
This is not something I worry about out of thin air. Zcash's mainnet has been online for several years, and the proportion of actual shielded transactions has remained very low; most people still use transparent addresses for transfers. The reason is simple: the shielded address pool is too small, and using it makes you stand out even more.
The Midnight mainnet has not gone live yet, and this question has no answer for it. Attracting enough real users in the early stages is a more difficult problem to solve than technology.
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My current position is not heavy, accounting for about 4% of the total position.
It's not that I don't have faith in this direction; it's because I've seen too many projects that were technically correct but failed to execute properly, and I've lost money on them, so I've learned my lesson.
I think the technical route currently takes compliance issues in the privacy track very seriously. Charles Hoskinson's team has a real accumulation in cryptography. But from testnet to mainnet, from mainnet to the first batch of institutional users actually going on-chain, from institutional entry to forming a real anonymity set scale, every link in this chain can potentially get stuck.
The privacy track has seen a batch of projects die, but the problem itself hasn't died. Whoever can truly make this chain work will naturally have the market provide the answers.
I'll wait and see here. #night
This situation has occurred in almost all DAO projects, and Midnight is likely no exception.