a16z: Privacy, the most important moat in the crypto space by 2026

Source: A16z

Original Title: Privacy trends for 2026

Translation and compilation: BitpushNews

1. Privacy will become the most important moat in the crypto space this year

Privacy is a key feature for the global financial shift onto the blockchain. However, almost all existing blockchains lack this feature. For most chains, privacy is just an afterthought patch. But now, privacy itself has enough appeal to make a chain stand out among many competitors.

Privacy also plays a more important role: it creates a “Chain Lock-in” effect; you could also call it a “Privacy Network Effect.” Especially in a world where pure performance competition is no longer sufficient.

Due to the existence of cross-chain bridge protocols, transferring from one chain to another is trivial as long as everything is public. But once privacy is involved, the situation changes completely: transferring tokens is easy, but transferring secrets is hard. There are always risks when entering or leaving privacy zones—those monitoring chains, mempools, or network traffic might identify your identity. Crossing the boundary between privacy chains and public chains (or even between two privacy chains) leaks various metadata, such as transaction timing and size correlations, making user tracking easier.

Compared to many homogeneous new chains (whose transaction fees may be driven down to zero due to competition, as block space becomes largely commoditized), privacy-enabled blockchains can have stronger network effects. The reality is, if a “general-purpose” chain doesn’t have a thriving ecosystem, killer apps, or unfair distribution advantages, users or developers have little reason to use or build on it, let alone stay loyal.

On public blockchains, users can easily transact with users on other chains, and which chain they choose doesn’t matter much. But on privacy blockchains, the choice of chain becomes critical because once they join, they are unlikely to move away and risk exposing their identity. This creates a “winner-takes-all” scenario. Since privacy is a necessity for most real-world use cases, a few privacy chains could dominate a large portion of the crypto market.

— Ali Yahya (@alive_eth), General Partner at a16z crypto

2. The social app mandate this year: not only resisting quantum attacks but also decentralizing

As the world prepares for quantum computing, many crypto-based social applications (like Apple, Signal, WhatsApp) have been leading the way. The problem is, all mainstream instant messaging tools rely on our trust in privately operated servers run by a single organization. These servers are easy targets for government shutdowns, backdoors, or forced data handovers.

If a country can shut down your server, if a company holds the keys to its private servers, or even if the company owns the private servers, what’s the point of “quantum-resistant encryption”?

Private servers require “trust me,” but without private servers, it means “you don’t need to trust me.” Communication doesn’t need a single intermediary. Instant messaging needs open protocols, so we don’t have to trust anyone.

The way to achieve this is through network decentralization: no private servers, no single app, open-source code, top-tier cryptography (including quantum resistance). In an open network, no individual, company, nonprofit, or country can deprive us of our communication capabilities. Even if a country or company shuts down an app, 500 new versions will appear the next day. Shutting down a node, thanks to blockchain and other technologies’ economic incentives, will be immediately replaced by new nodes.

When people own their messages via private keys as if they own money, everything changes. Apps may evolve, but people will always control their information and identities; ultimately, users can own their messages even if they don’t own the app.

This is more important than quantum resistance and encryption; it’s about ownership and decentralization. Without these, we’re just building a “fortress” encryption system that can be shut down at any time.

— Shane Mac (@ShaneMac), Co-founder and CEO of XMTP Labs

3. “Secrets-as-a-Service” will make privacy a core infrastructure

Behind every model, agent, and automation, there’s a simple dependency: data. But today, most data pipelines—whether input or output—are opaque, volatile, and non-auditable.

This is fine for some consumer applications, but many industries and users (like finance and healthcare) require companies to keep sensitive data confidential. This is also a major obstacle for institutions seeking to tokenize real-world assets (RWA).

So, how do we innovate securely, compliantly, autonomously, and globally while protecting privacy?

There are many ways, but I’ll focus on data access control: who controls sensitive data? How does it move? Who (or what) can access it? Without data access control, anyone wanting to keep data confidential must currently rely on centralized services or custom setups. This is time-consuming, costly, and hampers traditional financial institutions from fully unlocking on-chain data management potential. As AI agent systems begin autonomous browsing, trading, and decision-making, individuals and institutions across industries need cryptographic guarantees, not “trust me” assumptions.

That’s why I believe we need “Secrets-as-a-Service”: providing programmable, native data access rules through new technology; client-side encryption; and decentralized key management, enforcing who can decrypt what, under what conditions, and for how long… all on-chain.

Combined with verifiable data systems, secrets can become part of the internet’s foundational public infrastructure, rather than patchwork application-layer fixes. This will make privacy a core infrastructure.

— Adeniyi Abiodun (@EmanAbio), Chief Product Officer and Co-founder of Mysten Labs

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4. Security testing will evolve from “Code is Law” to “Specs are Law”

Last year’s DeFi hacks targeted some long-standing protocols with strong teams, rigorous audits, and years of operation. These incidents reveal a disturbing reality: current standard security practices are largely heuristic and case-by-case.

To mature this year, DeFi security needs to shift from “finding vulnerabilities” to “design-level properties,” from “do your best” to “principled” approaches:

In the static/deployment phase (testing, auditing, formal verification): this means systematically proving “global invariants,” rather than verifying manually selected local variables. Several teams are developing AI-assisted proof tools that help write specifications, propose invariants, and take over the costly manual proof work of the past.

In the dynamic/deployment phase (runtime monitoring, enforcement): these invariants can be transformed into real-time guardrails—the last line of defense. These guardrails will be embedded as runtime assertions, and every transaction must satisfy these conditions.

Now, we no longer assume catching every vulnerability; instead, we enforce key security properties directly in the code, automatically revoking any transaction that violates them.

This is not just theoretical. In practice, almost every exploit so far triggers these checks during execution, preventing malicious actions at the source.

Thus, the once-popular “Code is Law” has evolved into “Specs are Law”: even novel attacks must satisfy the security properties that maintain system integrity, making remaining attacks trivial or extremely difficult to execute.

— Daejun Park (@daejunpark), Engineering Team at a16z crypto