Aptos Labs founding engineer Sherry Xiao said the newly launched Aptos privacy coin could fix the long-standing trade-off between protecting user privacy and maintaining transparency to ensure compliance.
“Confidential APT” went live on the Aptos mainnet on Friday following a management proposal to integrate privacy features passed in an almost unanimous vote. It uses zero-knowledge proofs to hide token balances and transfer amounts while still allowing transaction verification.
Source: Apartment
While blockchains offer a level of transparency that most established ledgers do not, the lack of privacy has slowed adoption by individuals and businesses due to risk of disclosure sensitive financial information.
In an interview with Cointelegraph, Xiao said that Confidential APT – which is pegged 1:1 to Aptos (APT) – reduces the risk of users being exposed to wallet profiling or targeted fraud:
“Wallet fraud, social pressure from visible holding companies, personal security – these are the problems people face today.”
Confidential APT can hide salaries and business strategies
Xiao said the confidential APT token also solves an lively problem in the workplace.
“If a company maintains a systematic payroll with visible amounts, each employee’s pay is permanently public — to co-workers, competitors, recruiters and everyone else,” she said.
“The same goes for treasury movements, settlement flows, trading strategies,” Xiao said, noting that the lack of privacy on blockchain is an “operational deal breaker” for many companies.
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However, “confidential balances solve this problem directly,” Xiao said.
The backdoor feature can be enabled for investigative purposes
Xiao said that confidential APT can still adhere to the “know your customer” principle and anti-money laundering checks in case of investigation or subpoena using auditor’s keys.
She noted that auditor keys can only be authorized after a successful onchain governance vote:
“This approach allows relevant parties to access information, such as transfer amounts, for investigation purposes, while maintaining users’ default privacy.”
Although confidential APT hides token balances and transfer amounts, wallet addresses and transaction verification remain perceptible, which distinguishes it from other privacy-focused cryptocurrencies such as Monero (XMR).
Xiao said she expects individuals to adopt confidential APTs faster than businesses, noting that it will take time to incorporate the privacy coin into the tax reporting process and comply with regulations.
That said, “If Confidential APT has been running on the mainnet for six months with solid volume and without any issues, that is proof that it shortens the sales cycle in the enterprise,” Xiao added.
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