Why Web3 Isn’t Truly Private

Every year, we’re getting more innovations across scientific fields, and nearly all of them are now deeply intertwined with our computerized space.  Mankind is definitely progressing, but this development may lead to some unexpected consequences. The traditional Web2, in other words, the internet we use today, is known for its centralized nature. A handful of corporations dominate how information flows, how data is stored, and even how users interact online. 

In response, the growing concern over total control has given rise to a new vision — a decentralized architecture. This concept aims to distribute power and data ownership among users rather than corporations. 

Yet it’s worth asking whether Web3 truly fulfills its vision of a private, user-owned internet.

To understand why Web3 might not be as private as it seems, it’s worth looking back at how the web evolved. It was a static page in the beginning, or to be more exact, it was the network of motionless pages connected by hyperlinks. Users could read information but not interact with it. This web period is a so-called Web1. Websites were hosted independently. At that time, there was far less corporate control, as the internet was still in its experimental phase; big companies were only beginning to understand its potential. Although there were big players like Microsoft and Netscape, control was still far less concentrated than it is today. 

Around 2004, everything changed: Web2 happened. This time internet has brought dynamic sites, social media platforms, and the start of massive data collection. However, not only did these great things happen, but also companies that took over by tracking, analyzing, and monetizing user behavior. Tech giants such as Google, Meta, Amazon, and Apple started controlling data and algorithms. According to the EU’s Digital Markets Act, these companies are officially recognized as “online gatekeepers.” They earned this status because they dominate online services and shape how billions of users interact with the web. Their business model is built on data control with the main goal of driving sales. 

Web3 is an attempt to fix this imbalance. Built on blockchain technology, it promises a decentralized internet where users own their data, digital assets, and online identities. Web2’s flaws can disappear if Web3 replaces intermediaries with smart contracts and redistributes control. In theory, Web3 puts ownership back into the hands of the user — no central servers, no corporate filters, and full transparency. But the reality is more complex. Many Web3 platforms still depend on centralized infrastructure. True decentralization is difficult to achieve, and privacy protections are often secondary to innovation speed.

What does privacy mean in this context? Privacy is about control. It’s the ability to decide what personal information you reveal online, and to trust that it won’t be exposed. Privacy by design means that privacy is built into a system from the very beginning, not added later. According to GDPR’s Article 25, “data protection by design and by default” means that systems should include built-in safeguards, minimal data collection, and privacy-friendly defaults. If every company followed this, we’d live in a much safer place.  

So, how does privacy work in Web3? Firstly, end-to-end encryption is used to make messages and data only accessible to the allowed parties. With smart contracts,  transactions can occur automatically, so intermediaries are not necessary. Next, decentralized applications (dApps) and self-sovereign identity systems empower users to manage their identity and determine the data they wish to share. Some technologies use advanced solutions such as zero-knowledge proofs or maintain data off-chain to conceal sensitive information. Lastly, the principle of privacy by design makes privacy an inherent feature.

However, despite these actions, Web3 cannot provide absolute privacy since public blockchains render transaction details visible and allow for the tracking of user activities. 

The technical privacy mechanisms in Web3, explained earlier, may sound persuasive, but they are far from perfect.

Smart contracts, for example, operate according to their code, but any logic flaws can be exploited. Transactions recorded on the blockchain are immutable, which is good for transparency, but it also exposes patterns that can de-anonymize users. Some DeFi apps rely on third-party web services that can access users’ Ethereum addresses. Thus, it creates a dangerous environment. 

Cryptocurrency wallets can be compromised. Social engineering attacks trick users into revealing seed phrases or private keys. Threats like cryptojacking, ice phishing, and other forms of attack further increase the stakes. In case of key management errors or loss of access, there is no central authority to restore access. The reason is the self-sovereignty of Web3.

Web3 often depends on open-source code, so anyone can contribute, intentionally or accidentally. It means lots of user mistakes and software bugs. Public blockchains make transactions visible, so even pseudonymous wallet addresses can be analyzed through timing, amounts, and interaction graphs. Data on the blockchain cannot easily be changed or deleted. Users who don’t understand digital identity or how to protect themselves are especially unsafe. Web3 leaders need to educate users and provide equal access to the instruments.

There must be an approach that finally puts users first. At the core of this approach is self-sovereign identity (SSI). It is beneficial for users as they can decide how, when, and with whom their personal information is shared. Digital identity is a fundamental human right, so everyone must be aware of how to use and control it properly. Let’s look at some mechanisms:

• Decentralized identity (DID) solutions let users prove who they are and share only the information they choose, across different platforms and services.
• Zero-knowledge proofs (ZKPs) let users verify facts or transactions without revealing the underlying data itself. With them, privacy and authenticity are proven.

• Privacy coins and privacy-focused networks hide transaction details such as amounts, senders, and recipients.
• Proxies hide users’ IP addresses. They anonymize the connection path, conceal the origin of transactions, and don’t let anyone track your activity. All you have to do is just to choose the right proxy provider. 

Web3 systems will work best when privacy and user protection are integrated from the very beginning. Web3 systems must follow privacy-by-design principles, provide transparent governance, and most importantly, educate their users.

In summary, Web3’s promise of privacy and user empowerment can be achieved, but only if privacy, security, and transparency are treated as core values rather than optional features.