Blockchain can still serve its purpose while catering to institutional finance needs through privacy technology, says Aztec Labs’ Zac Williamson.
Interview
Blockchain is being pulled between traditional finance and its decentralized ethos as the industry shifts to serve institutional products.
Zac Williamson, CEO of Aztec Labs, said early decentralized governance failures shifted blockchain’s trajectory away from community coordination.
“There is a real risk that blockchain just becomes a slightly more efficient settlement layer than Visa or Mastercard,” he told Cointelegraph. “If we lose the social coordination side of this, then the entire point of the technology gets hollowed out.”
Williamson entered the blockchain field from an academic background. He left particle physics for software engineering, and in 2017, a contact connected through his brother asked him to help build a startup using distributed ledgers. That introduction led him into zero-knowledge cryptography and, eventually, to co-founding Aztec Labs, a privacy-focused Ethereum layer 2.
Back then, blockchain was pushed as an alternative to the existing financial system. Today, the , leaving builders like Williamson wondering whether the technology can still support its roots.
Blockchain’s identity fractured after early governance failures
Williamson described the split in blockchain’s purpose as two competing canons. One canon treats blockchain as a monetary system designed for creating and trading digital assets, generating yield and integrating with traditional markets. The other sees it as a tool for collective action, where groups of people can organize, vote and coordinate without intermediaries.
The latter canon saw its first major test in 2016 with The DAO, when thousands of users pooled funds and attempted to govern a shared treasury onchain.
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The experiment collapsed after an exploit (), triggering a crisis that ultimately split the Ethereum network. One chain chose to reverse the theft, becoming the Ethereum used today, while the other continued without the rollback as Ethereum Classic.
The DAO also exposed how unprepared the governance model was for real-world coordination, Williamson said.
“The DAO governance model effectively is either an autocracy — you vote with tokens [and] you can buy tokens — or it’s an oligarchy where a multisig holds all the power. These are both terrible modes of governance.”
The monetary canon gained momentum as early governance experiments failed. As capital, developer attention and regulatory frameworks rallied around financial use cases, blockchain’s public identity shifted alongside them.
“If blockchain ends up being something that institutions use to settle trades a little bit faster, then nothing meaningful has changed,” Williamson said.
Privacy tech makes onchain organizations work
In the real world, organizations don’t operate with every internal process visible in real time. But every payment, vote and contributor action, much like how early decentralized autonomous organizations (DAOs) couldn’t find a footing without privacy layers.
“You cannot pay contributors, run a ballot or manage internal decisions if every detail is public,” Williamson said. “No real organization operates that way.”
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Privacy here does not mean hiding wrongdoing. It means limiting visibility to those who actually need to see it, while still proving that actions are valid. Zero-knowledge cryptography allows a system to confirm that a vote or payment follows the rules . That makes secret ballots and private compensation possible and brings blockchain governance closer to how real-world institutions function.
Privacy is also what allows institutions to participate without becoming central administrators. Banks, asset managers and corporations cannot expose strategy or sensitive data on a public ledger.
But if they build closed systems, blockchain becomes another private database. Privacy at the protocol level solves this, Williamson argued.
“Privacy is what allows blockchain to serve both individuals and institutions without one controlling the other,” he said.
Preserving user autonomy without rejecting institutional adoption
Blockchain is now at a point where it can either lean fully into institutional finance or return to its original aim of letting users coordinate without intermediaries.
Williamson argued that it does not need to choose between those paths. He said privacy technologies can allow blockchain systems to meet institutional standards .
So has been among several high-profile voices getting behind the Zcash movement. and I continue to unpack this narrative – because it has an undeniable head of steam.
Why is privacy in vogue? Why has Zcash emerged as the privacy protocol of choice? 🤔👇…
— Gareth Jenkinson (@gazza_jenks)
“If we want blockchain to hold fast to that first-generation vision, we need some understanding of identity and belonging. Privacy tech has a huge role,” he said.
Without privacy, any collective operating onchain exposes its internal decisions and strategies to the public, making meaningful coordination impossible and leaving blockchain as little more than transaction infrastructure for banks.
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