Vitalik Buterin, the creator of Ethereum, recently discussed the main design choices behind Bitcoin at an event in Chiang Mai, Thailand. He pointed out a key trade-off: Bitcoin can’t entirely protect privacy and decentralisation at the same time.
Buterin said that Bitcoin’s architecture, set up in 2008 and 2009, prioritised decentralisation. This aim helped Bitcoin build a highly decentralised network without the need for central authorities. But it came with the trade-off of having few privacy features.
At first, there weren’t many cryptographic tools for Bitcoin. Strong privacy generally meant that centralised groups had to handle sensitive information or mix transactions. It was hard, and often impossible, to achieve strong privacy while maintaining full decentralisation.
So, the people who created Bitcoin chose to give up some privacy to keep it as decentralized as possible. Buterin said that Bitcoin maintains “0% privacy gains” to focus on its main strength: a ledger that anyone with basic hardware can verify and that doesn’t require permission or censorship.
The UTXO model of Bitcoin makes it clear what the amounts and addresses of transactions are on-chain. Even if they are not real names, this openness makes it easier for people to follow flows, especially with chain analysis tools. Layer-2 solutions like the Lightning Network provide some off-chain anonymity, but the base layer remains intentionally exposed.
In the last 10 years, new technologies such as zero-knowledge proofs (zk-SNARKs) have enabled verifying transactions without revealing any information. These tools let you keep your privacy without giving up decentralisation.
Buterin said that some segments of the Ethereum ecosystem have tried out on-chain privacy integrations utilising these new technologies. Ethereum’s more flexible design enables smart contracts and upgrades that leverage zk technology. This makes it easier for apps to strike a balance between privacy and decentralisation than Bitcoin’s simpler programming model.
Bitcoin has explored ways to improve privacy, including Taproot (which makes Schnorr signatures more efficient and adds some privacy) and CoinJoin-style mixing. But these are still limited compared to what zk-based systems can do, and Bitcoin’s cautious upgrade process makes it hard to implement major changes.
Buterin’s comments make a critical point about blockchain philosophy: design choices are never perfect. Bitcoin’s success comes from its strong focus on decentralization, security, and simplicity. These are the things that have made it the most secure and extensively used cryptocurrency.
Adding enhanced privacy at the protocol level could make things more complicated, require more nodes, or put pressure on centralization. The Bitcoin community has chosen to prioritize these qualities rather than seek the highest possible privacy.
If you want more privacy, you can use Monero or Zcash, both of which have built-in privacy features. Ethereum-based projects are also looking into zk-rollups for secret transactions.
Buterin’s comments about Chiang Mai remind the crypto world that no one chain can be the best at everything. Bitcoin’s trade-off has served its purpose, and new technologies are enabling privacy-focused innovations in other areas as well.
