How Can Crypto Achieve Mainstream Financial Significance?

Anand Agarwal
4 min readMay 4, 2020

When Bitcoin (BTC) was invented in 2009, staunch supporters (read maximalists), cypherpunks, cryptography specialists, enthusiasts, free-thinkers, and denigrators of legacy financial systems thought that the flagship cryptocurrency is destined to become the global standard for monetary transactions.

Becoming the de-facto financial standard may be too far fetched for Bitcoin. But the first-ever crypto asset has gained quite some popularity as a ‘safe-haven’ asset during this ongoing economic crisis, and has also become highly regarded as a prominent tradeable asset apart from gold, oil, and stocks.

Does this rising popularity of BTC, ETH as high risk/reward assets make them mainstream finance alternatives? Are these digital currency protocols ripe for mass adoption?

Well, these digital currency protocols operate by foregoing privacy. It’s an appreciable fact that blockchain infrastructures such as Bitcoin and Ethereum, etc are a huge improvement over already existing centralized financial models wrt to network vulnerability. But a whole lot of transactions, actually information pertaining to every single transaction on these decentralized systems is out in the open for the world to see.

Lack of transaction anonymity and confidentiality compromises the identities of the parties involved and the transaction amount.

Cryptocurrencies such as Monero and ZCash have attempted to address the lacuna of privacy in public blockchain networks through introducing confidentiality and anonymity in transactions but have gone a bit too far.

Although transaction data and user information is concealed through avant-garde encryption methods, complete anonymity presents a roadblock for auditability, which is a crucial property for scenarios that require regulatory compliance and dispute arbitration guarantee.

Co-existence is the Key

It so appears that totally public and private decentralized blockchain networks have a low chance of replacing established systems of trade and commerce due to their vastly extreme protocol characteristics. Maybe replacement is not the best solution, but co-existence.

Cryptocurrencies have been mostly seen in the same light as the World Wide Web when it was made public. Everyone tried understanding it’s possible use case since it was mostly a wild wild west scenario then, much like the crypto space now. But over time, with corporations like Amazon showing confidence in the internet and with appropriate regulatory intervention, it has become an inseparable aspect of our personal as well professional lives.

Likewise, crypto networks can gain mainstream financial significance by being open to regulatory compliance. With a middle of the road approach, there is a possibility for a digital currency system to exist which can ensure confidentiality in transactions with a provision for auditability.

The PGC or ‘Pretty Good Confidential’ project is trying to achieve exactly that.

Enter PGC: Decentralized Confidential Payment System

PGC or Decentralized Confidential Payment System intends to put in place a financial environment that offers transaction confidentiality with a privacy-preserving audit option in which an external party can specify a set of transactions and then request the participant to prove their compliance with a large class of policies.

According to the project’s whitepaper,

We present a generic construction of an auditable DCP system from an integrated signature and encryption scheme and non-interactive zero-knowledge proof systems. We then instantiate our generic construction by carefully designing the underlying building blocks, yielding a standalone cryptocurrency called PGC. In PGC, the setup is a transparent trusted setup, transactions are less than 1.3KB and take under 38ms to generate and 15ms to verify.

Since there is a high potential for private cryptocurrencies offering complete anonymity to be leveraged for money laundering, the PGC system has made it possible to keep such unlawful activities in check.

In an attempt to strike a balance between cryptocurrency technology and the existing financial system, the PGC system with the provision of complete end-to-end encryption of user identity and transaction data has made it possible for prominent regulatory authorities to control illegal movement of funds on the network.

To look at it from a technical perspective, twisted ElGamal, a homomorphic public encryption scheme sits at the heart of the PGC system. This, in turn, allows easy production of zero-knowledge proofs for basic correctness of transactions as well as various application-dependent policies in a modular fashion.

An Ethereum based project, PGC’s intention to harmoniously coexist with the already existing financial system is pretty commendable. The project participants are working tooth and nail to make their regulatory complaint cryptocurrency system see the daylight of reality. How the project is received by institutions and users yet remains to be seen.



Anand Agarwal

Founder MrCryptoIndia | Thought Leader Hackernoon | Educator OctaFX | Price Action Trader