The battle for privacy in the Web3 era: It’s time to say goodbye to centralization

The Centralization Crisis: When Downtime Can Destroy Trust

On April 12, 2025, Amazon AWS experienced a brief outage at its Tokyo data center, lasting just 36 minutes but triggering a chain reaction across the global financial system. This incident highlights our high dependence on centralized cloud services (Source: AWS incident log).

Even more worrying is the Internal Revenue Service (IRS)'s plan to launch a project called a "super API" to centrally store and access taxpayer data across the United States. Ostensibly intended to improve efficiency, this centralized data model is, in reality, exposing unprecedented systemic risks—any hack, misconfiguration, or even a simple outage could lead to nationwide financial paralysis and privacy breaches.

“Instead of pursuing efficiency, we are setting the stage for future systemic failure.” —Angie Darrow, CMO of the Web3 Foundation

Web3’s Answer: Redefining Trust

Faced with the risks of centralized architecture, Web3 provides another possibility - a decentralized data verification and access control model.

• Use smart contracts to determine taxpayer compliance without having to look at raw data;

• Privacy protection is achieved through zero-knowledge proof;

• All data operations are verified on the chain and are highly tamper-resistant.

Estonia and some EU countries are already exploring blockchain-based digital identity and government service systems, and are at the forefront of decentralized governance.

Artificial Intelligence: A Double-Edged Sword for Cryptographic Security?

On the other hand, the rise of AI in Web3 development has also brought new variables. Although the Center for Security and Emerging Technologies' 2024 report pointed out that nearly half of AI-generated code has security flaws, many developers still regard it as an important tool to improve efficiency and quality.

According to data from Cointelegraph:

• More than 90% of smart contract developers use AI-assisted programming, and mainstream tools include Cursor and ChatGPT.

• Developers generally stated that AI improved the quality of code comments and documentation, allowing audits to focus more on critical vulnerabilities.

However, if junior programmers rely entirely on AI, the risks may be amplified because they cannot independently judge the security of the code.

Investor Temperature: Who to Trust? Where to Bet?

From the IRS "super API" to AWS outages to AI smart contract assistance, investors face a key question: What will the future trust system be built on?

Centralization is more convenient, but more prone to collapse; decentralization is safer, but more difficult to promote; AI is more efficient, but also more difficult to control.
This is not a battle of technology, but a fundamental game of governance models and social trust.

Data is currency, decentralization is the shield

As governments, businesses, and tech giants all move toward centralization in the name of efficiency, we must renew our vigilance against risky system design. Technologies like decentralization, AI-assisted development, and on-chain verification form the foundation of future data security and financial order.

Whether you are a Web3 entrepreneur, investor, or ordinary user, the war over "who controls the data" has already begun.

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Further reading

• The year of Bitcoin's rise is 2026. Has the four-year cycle ended?

• Tesla offers ride-hailing service to self-driving taxi users in California

• Goldman Sachs and Bank of New York team up to launch token tied to money market funds