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 property.
Neglect quicker transactions or cheaper charges. The true aggressive benefit in crypto will come from maintaining secrets and techniques, based on a16z crypto Basic Companion 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 property 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 comparable efficiency benchmarks, blockspace more and more seems to be interchangeable. Pace and value benefits erode as rivals catch up.
“Most blockchains are beginning to look the identical,” the podcast notes. The query turns into: what truly creates defensibility?
Privateness, Yahya argues, generates community results that compound over time. When customers conduct non-public transactions, they be a part of an anonymity set—a pool of contributors 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 deliver the group that makes your transactions nameless.
Finance First, Every part Else Later
The a16z thesis acknowledges an uncomfortable actuality about person habits. Individuals tolerate surveillance on social platforms—they’ve accepted the trade-off at no cost companies. Finance hits in a different 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 purposes 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 completely different trade-offs between privateness ensures, computational overhead, and composability with present 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 measurement achieve compounding benefits. Tasks launching privateness options at this time compete not simply on tech specs however on person 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 essentially 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 beneath regulatory strain—notably as governments scrutinize privateness cash—stays the open query a16z did not totally handle.
Picture supply: Shutterstock
