A digital society is taking shape — coded, governed, and lived on-chain. But even in this brave new architecture of transparency, one principle refuses to stay in the shadows: privacy in Web3.
That tension — between transparency and discretion — is no longer theoretical. As blockchain technology scales and AI automates decision-making, privacy has reemerged as the defining challenge of this new era.
In a recent Shy Speaks episode, Shiba Inu’s Shytoshi Kusama and Zama CEO Rand Hindi unpacked what’s at stake, and why the systems we build now must enshrine privacy in Web3 as more than a feature — they must make it a foundation.
What began as an experiment in radical transparency had evolved into a battleground for digital rights. In the latest episode of Shy Speaks, Shiba Inu’s lead ambassador Shytoshi Kusama sat down with Rand Hindi, CEO of privacy tech firm Zama, to explore a rising tension at the core of blockchain’s future: the collision between open systems and personal boundaries.
Kusama described his long-held vision of a “network state” — a decentralized society powered by blockchain, where identity, governance, and commerce operate seamlessly through an AI-enabled digital operating system. Shibizens, as he called them, would navigate civic life using tools built directly into this system, free from bureaucratic friction.
He pointed to SHIB’s collaboration with MASS as a working example — users could launch businesses without traditional red tape, thanks to smart contracts and integrated digital infrastructure. But this efficiency came with a cost: on-chain activity meant that every interaction, every vote, every transaction could be permanently visible.
“Radical transparency is powerful,” Kusama said. “But there are moments when discretion protects democracy.”
Rand Hindi agreed. In his view, privacy in Web3 wasn’t a toggle or feature to be added later — it was foundational. And the most promising solution, he explained, was Fully Homomorphic Encryption (FHE), a technology that allows data to be processed while remaining encrypted throughout the entire interaction.
“You send a request and get a response,” Hindi said. “But now the data is encrypted the whole time — even during processing.”
Kusama and Hindi didn’t just focus on idealistic notions of privacy. They also addressed an existential threat: quantum computing. While still in its early phases, quantum computing was already challenging the assumptions behind today’s digital security. Kusama warned that what had long been considered “military-grade encryption” was quickly losing its edge.
“Military-grade encryption is simply not as good as it used to be because of quantum computing,” he said.
Hindi explained the concern more concretely. A sufficiently advanced quantum computer could, in theory, crack the cryptographic codes that protect sensitive systems today — from financial data to national defense infrastructure. Pair that with the rise of artificial general intelligence, and the result could be catastrophic: algorithms powerful enough to break security protocols in seconds.
This was where FHE stood apart. By removing the need to decrypt data during processing, FHE eliminated one of the most vulnerable moments in any system. Even if an attacker intercepted the interaction, they would only see gibberish — never the raw input or the final result.
Zama had been working to make FHE both performant and developer-friendly, and Kusama revealed that Shiba Inu’s Alpha Layer already integrated the technology. This allowed for confidential rollups — decentralized systems that preserved user privacy without compromising scalability or speed.
For Kusama, the mission was clear: build privacy into the infrastructure itself. “If I’m going to vote for someone in a state — network or actual — I might not want everyone to see my vote,” he said. Transparency without limits, he warned, could turn democracy into surveillance.
While the conversation centered on individual freedoms, both Kusama and Hindi acknowledged a broader force shaping the urgency of privacy: institutional demand.
Hindi observed that the financial sector — eager to tokenize assets and move onto public blockchains — was stuck in a paradox. Open networks offered transparency but lacked confidentiality. Private chains preserved security but lost the shared trust that made public ledgers powerful in the first place.
“With FHE,” he said, “you could put all of these assets on a public blockchain like Ethereum or Solana and still have the same confidentiality guarantees that you’d get from a private chain.”
He predicted that the next $20 trillion in tokenized assets would require privacy technologies like FHE to be viable. Institutions would only make the leap when confidentiality and compliance were guaranteed — not as afterthoughts, but as embedded infrastructure.
Shiba Inu’s own roadmap, he noted, was already aligned with that vision. The Shib Alpha Layer, modular and FHE-enabled, positioned the project as one of the few capable of meeting both retail and institutional needs in the coming wave of adoption.
For Kusama, privacy in Web3 wasn’t a contradiction of decentralization. It was a refinement. By giving people and organizations control over what they chose to reveal, the space could evolve without losing its core values.
Toward the end of the discussion, Kusama posed a quiet but cutting question: “We’ve seen the biggest companies hacked. We’ve seen credit bureaus and DNA databases leaked. So why isn’t this [FHE] top of mind?”
Perhaps, he suggested, privacy had always been reactive — something repaired only after the damage was done. But in an era of autonomous systems, quantum codebreakers, and perpetual traceability, that approach no longer sufficed.
The conversation between Kusama and Hindi didn’t just map a technological future — it offered a cultural inflection point. The tools were here. The risks were visible. And for anyone building the next generation of Web3, the responsibility was unmistakable.
In a world racing toward total visibility, privacy is no longer a right but a design principle. One that, if ignored, might not get a second chance.
