After the devastation caused by the typhoon, the reality of sending money to my family in the Philippines was a nightmare filled with costs and delays.
By Sarah Drakeley / December 28, 2023 Blockworks
Sara Drakeley is the CEO of cryptocurrency company Sentz. Prior to joining the company, Sara worked at household names such as SpaceX, Engineer Gate, Walt Disney Animation Studios, and was a researcher at the MIT Media Lab. She holds a dual degree in Mathematics, Computer Science, and Comparative Media Studies from MIT. Sara is based in San Francisco, California.
Let’s cut to the chase – the complex world of international payments is a complete mess. Challenges abound for individuals and businesses due to long processing times, high transaction fees, and unpredictable exchange rates.
These barriers in the traditional financial system have severely impacted me and my family at critical times. In 2020, the urgency of sending remittances to my family in the Philippines became a stark reality after the devastation caused by Typhoon Goni.
The traditional method I had to resort to took days; every moment of delay brought potentially dangerous consequences. Making the situation worse was the fee that came with the transaction. Instead of all of the $40 going to help the village purchase necessary resources and supplies, it went into the pockets of the processors.
Then, to collect the money, my family had to navigate flood-damaged terrain because they feared being robbed due to the large amounts of fiat currency they now carried. In the digital age, secure transaction technology was not able to meet their needs. Ironic, wasn’t it?
In the wake of COVID-19, our world is more global than ever, and we are seeing a surge in cross-border transactions for goods, services, remittance support, and the gig economy. We need a payments infrastructure to support these growing demands. Blockchain technology is emerging as a pioneer solution to revolutionize these payments, reducing inefficiencies, providing real-time settlement, and lowering transaction costs.
After diving deeper into the technology, I became determined to help it grow. Creating a simple solution that could help my family during a personal crisis became my passion: using crypto to solve real-world problems for real people.
However, the elephant in the room is the distinct lack of privacy in both traditional systems and blockchains.
The fire we are playing with
While the technology has the potential to transform the sector, we have yet to find a method for value transfer that strikes the delicate balance between transparency for regulatory compliance and privacy for individual protection.
For businesses, the public nature exposes strategy, negotiations and potentially sensitive financial information to competitors and the wider public. For individuals, it can be downright dangerous.
Most existing “trustless” blockchain solutions sacrifice privacy entirely, raising concerns about the impact on successful blockchain payments where anyone can scrutinize the amounts and timing of transactions.
This means that if you pay a freelancer with USDC, you can see how much they’ve made for any other job, or if you buy a cup of coffee with Bitcoin, interaction with the public blockchain means your real-time location is broadcast not just to your friends, but to anyone, anywhere in the world.
On the other hand, transparency in the financial system can be a good thing. It helps dissuade bad actors from doing things like ransomware or funding criminal activity. We don’t want a financial ecosystem where it’s easy to hide malicious activity.
While blockchain offers streamlined solutions for use cases such as remittances, the exposure of transaction details poses risks to senders and receivers, posing threats in both the cyber and physical realms.
Your digital human rights
As technology advances, there is a lot of focus on security measures such as protection against terrorist financing. While this work is absolutely critical, we have overlooked a fundamental principle of digital life in the pursuit of it: privacy is a human right, not a “human choice.” It protects people from unwanted intrusions, identity theft, and even their own physical safety.
Technology itself exists to protect against bad actors while providing privacy to the average person. Assuming that “privacy” is a dirty word is a false dichotomy. A wise man once said, “We should all have something to hide. A world without privacy is a world without progress.”
Financial transactions, regardless of their source or method, should be private and protected from prying eyes as long as they comply with regulations. Many blockchain technologies are designed with transparency in mind, which presents significant challenges. While blockchain is key to ensuring the security of financial transactions, it must continue to evolve to effectively protect the privacy of users.
International Financial Privacy Roadmap
So, what’s next? We need to progress with the global economy, not against it. Payment systems must evolve with global economic trends — a harmonious blend of innovation and regulation, privacy and efficiency.
For every harmony, there are checks and balances. Compliance plays an important role in balancing the privacy rights of customers and adhering to regulatory requirements. To address this, innovative technologies must be adopted to meet both conditions - protecting against potentially malicious transactions and customers' personal information and identities.
As the world becomes more connected, the need for privacy increases. If we want blockchain to succeed in cross-border payments, we must adopt a framework that not only meets today's needs, but is also prepared for tomorrow's challenges. You don't have to choose between speed and security, low cost and privacy.
Sara Drakeley is the CEO of cryptocurrency company Sentz, having joined the company as its third engineering employee in August 2018. With a diverse background spanning animation, finance, and aerospace, Sara found her passion in the burgeoning world of cryptocurrency during the 2017 boom. Her expertise in procedural geometry and her desire to impact people’s lives led her to Sentz, where she played a key role in implementing the SGX certification program, contributing to consensus protocol development, building the company’s initial infrastructure, and the development of MobileCoin Fog, enabling secure mobile transactions without exposing private keys. Previously, as CTO of Sentz, she led the company’s research division, exploring smart contracts, zero-knowledge proofs, and ways to enhance protocols. Prior to joining the company, Sara worked at household names such as SpaceX, Engineer Gate, Walt Disney Animation Studios, and was a researcher at the MIT Media Lab. She holds a dual degree in Mathematics, Computer Science, and Comparative Media Studies from MIT. Sara is based in San Francisco, California.
