The Ethereum Foundation has recently launched an initiative called "Ether's privacy shift" to include comprehensive "privacy by default" capabilities across the whole network stack.
Launched in the second half of 2025, this project makes privacy-related tasks more integrated into the network, making them more accessible to institutions and regular people.
Even if it's great for auditing, Ethereum's present transparency exposes important user information, which is a problem for corporations and regular people who want to keep their finances and identities secure.
The latest update is prompted by the belief that Ether might become a "foundation for worldwide monitoring" if robust privacy safeguards are not put in place.
In his keynote presentation at Devconnect in Buenos Aires, Argentina, this week, the Canadian computer programmer and co-founder of the world's second-largest token by market cap, explained that privacy shift.
Speaking at Devconnect, which is an extensive week-long event that brings together the Ethereum community, featuring a variety of activities tailored for developers, researchers, artists, and creators, Buterin emphasised why Kohaku is central to Ethereum’s new privacy expansion plan.
What Are the Key Drivers?
With the introduction of a new organizational framework, the Ethereum Foundation has formed a specialized team called the "Privacy Cluster."
Igor Barinov, founder of Blockscout, heads this group of 47 engineers and researchers who are responsible for ensuring thorough privacy implementation.
The Kohaku Wallet: At the heart of this initiative is Kohaku, a reference wallet and SDK (Software Development Kit) that prioritizes open-source principles and privacy preservation.
The design aims to enhance user privacy effortlessly by incorporating established tools such as Railgun and Privacy Pools, while also offering functionalities like multiple keys and risk-based controls for substantial transfers, all without the need for users to manage additional seed phrases.
Private writes integrates secure, decentralized financing and voting systems. It simplifies private transactions to be as easy and inexpensive as public ones. Protecting sensitive information during blockchain search operations. Taking precautions to hide wallet transactions and IP addresses from RPC nodes.
The goal of private proving is to make it easier and cheaper to generate zero-knowledge proofs (ZKPs) using standard hardware, so users can validate data while protecting the privacy of the underlying data.
This latest update is in response to the growing concern among users about the security of their data and the increased attention from regulators following instances using older mixing systems like Tornado Cash.
The Ethereum Foundation's goal is to promote more widespread and secure adoption of blockchain technology by making privacy a core and easily accessible feature, rather than an afterthought.
This will help establish the standard for future blockchain applications.
Key Goals
One positive aspect of blockchains is their inherent transparency, which allows users to see all of their financial activities.
On the other hand, this transparency can also lead to worries that blockchains could become a "backbone of global surveillance," as anybody can see everyone's financial transactions.
Institutional and individual players alike will be hesitant to embrace it due to its lack of openness.
The goal of the project is to make private transactions and identity verification easier by using advanced encryption like zero-knowledge proofs (ZKPs).
This method keeps users' core privacy intact while also satisfying regulatory requirements for selective disclosure to authorities.
Another key objective is to ensure that privacy is integrated smoothly and intuitively, eliminating the need for users to manage various wallets or navigate through complex processes, which has been a significant limitation of current privacy solutions.
Finding the Right Balance Between Privacy and Compliance: A group called the "Institutional Privacy Task Force" is trying to make sure that new privacy solutions are compliant with regulations while also protecting users' privacy and preventing unauthorized access.
Buterin spoke about the technical roadmap, with the outlined plan including an Institutional Privacy Task Force.
To ensure that the new privacy solutions meet the needs of large businesses, this dedicated team transforms broad compliance expectations into detailed technical specifications.
Buterin Warns of Institutional Capture Through ETF Concentration
During a panel at the Funding the Commons event at Devconnect, Buterin outlined two critical threats from growing ETF concentration. Wall Street firms now control over eighteen billion dollars in Ether through ETFs, with analysts predicting institutions could hold more than one-tenth of Ethereum's total supply.
The first threat is alienating Ethereum's core developer community. When large asset managers gain excessive influence, they risk driving away builders who prioritize decentralization over institutional finance applications.
The second involves technical decisions that compromise accessibility. Buterin warned institutional pressure could push for changes like extremely fast block times optimized for high-frequency trading, making it impossible for ordinary users to operate nodes outside major financial hubs.
His solution: focus on what makes Ethereum valuable: a truly global, permissionless, and censorship-resistant protocol maintained by a community committed to these foundational principles.
Quantum Computing: An Existential Timeline
Buterin also delivered a warning about quantum computing threats at Devconnect, cautioning that quantum computers could break the elliptic curve cryptography securing Ethereum and Bitcoin before the 2028 U.S. presidential election.
In August 2025, he estimated a 20% probability that quantum computers capable of breaking modern cryptographic systems could emerge before 2030. Once quantum computers reach sufficient power, attackers could extract private keys from public ones, destroying wallet security and enabling transaction forgery.
The urgency stems from the reality that blockchain networks require years to implement fundamental security upgrades through global consensus. Buterin's timeline significantly accelerates previous industry estimates, which typically placed quantum threats decades away.
At Devconnect, he proposed that Ethereum could ossify different layers at different speeds, allowing the consensus layer to lock down while maintaining flexibility elsewhere. The message is clear: preparation must begin well before quantum threats become practical, and Buterin urged the community to move Ethereum onto quantum-resistant foundations within a few years.
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