Vitalik's Confidential Communication Investment: How Local Network Protects Privacy with a Certain Number

Vitalik Buterin sent an important signal on November 26. He donated 128 ETH (approximately $760,000) to two private communication apps called Session and SimpleX. Along with the size of the donation, the choice was also unique: why did Vitalik choose these two projects, and most importantly, what does this say about local network technology?

Vitalik wrote on Twitter: “Cryptographic communication is crucial for protecting digital privacy, and the next big step is enabling anonymous account creation and metadata privacy.” This statement carries a strong message — he believes existing private communication solutions are insufficient. A day before the donation, the European Union Council reached an agreement on the “Chat Control” proposal, which is seen as a direct threat to end-to-end encryption. Vitalik’s choice of these projects at this time is no coincidence — it’s a strategic stance.

Session: Local Node Technology and DePIN Model

Session is a decentralized, end-to-end encrypted communication app launched in 2020, now with nearly 1 million users. Its main feature is no phone number required. During registration, the system creates a random 66-character Session ID and provides a mnemonic phrase for account recovery.

Technically, Session is based on a local network architecture. Every message sent is encrypted through three layers and routed via three randomly selected nodes — these nodes are managed by community members, not official servers. Each node can only decrypt its own layer, meaning no single node can know both the sender and receiver at the same time.

What is this local network model based on? Currently, over 1,500 Session Nodes operate in more than 50 countries worldwide. Anyone can run a node by staking 25,000 SESH tokens. In May 2024, Session underwent a major upgrade — it shifted from relying on the Oxen network to its own decentralized node network. The new network is based on proof-of-stake consensus, with node operators earning rewards through staking SESH tokens. This combines local network stability with an incentive mechanism.

In practice, Session’s interface is almost indistinguishable from mainstream messaging apps, supporting text, voice messages, images, files, and encrypted group chats of up to 100 people. However, notifications may be delayed — because messages pass through multiple local nodes, delivery can take several seconds or longer compared to centralized apps.

SimpleX: Abandonment of Identifier Systems

If Session’s advantage is “no phone number required,” SimpleX goes even further: it doesn’t require a user ID at all.

Almost all market communication apps — Telegram, Signal, or even Session — assign a user identifier. But in SimpleX, this identifier is completely eliminated. Every time you connect with a new contact, the system creates a one-time message routing address. The address used to communicate with A is entirely different from that with B, with no shared metadata. Even if someone monitors both conversations simultaneously, they cannot prove they are from the same person.

Registration in SimpleX also differs. When you open the app, you only enter a display name — no phone number, email, or password is required. This profile is stored solely on your local device; SimpleX servers hold no account information about you.

Adding contacts is also different. You generate a one-time invitation link or QR code and send it to another person — there’s no “search for username” feature, because usernames simply don’t exist. The core design principle here is deep decentralization — no global identifiers.

Technically, SimpleX uses its own SimpleX Messaging Protocol. Messages are relayed through servers that only temporarily store encrypted messages, not user data. Once delivered, messages are deleted. The server cannot see who you are or whom you are talking to. Founded in 2021 in London by Evgeny Poberezkin, and publicly supported by Jack Dorsey in 2022, the app is fully open source and has undergone a security audit by Trail of Bits.

Business Model: Token Incentives vs. Abandoning Financialization

Both apps aim for decentralization and privacy, but their business models are entirely different.

Session follows a classic Web3 approach — it uses tokens to align the interests of network participants. SESH is the native token of the Session Network. Running a node requires staking 25,000 SESH, and node operators earn SESH rewards for routing and storing messages. Future paid features like Session Pro memberships and Session Name Service will be billed in SESH. The logic is straightforward: node operators are economically motivated to maintain network stability, and staking increases the cost of malicious actions.

After Vitalik’s donation, SESH’s price jumped from about $0.04 to over $0.20 within hours, with a market cap exceeding $16 million at times — indicating that the market is pricing in the “privacy infrastructure” narrative.

SimpleX, on the other hand, takes the opposite approach. Founder Evgeny Poberezkin openly stated that no tradable token will be issued, as speculative tokens would distract from the project’s core purpose. SimpleX is currently funded by VC investments and user donations. In 2022, a seed pre-round raised about $370,000, with user donations exceeding $25,000. The team plans to launch Community Vouchers in 2026 — limited-use prepaid coupons for server access. The key difference: these Vouchers are not tradable, not mined in advance, and their price remains fixed. SimpleX deliberately blocks financial speculation.

Main Challenges and Trade-offs of Local Networks

Vitalik’s donation signals awareness of key issues: local network models ensure decentralization but come with costs.

First — latency. Centralized apps deliver messages quickly because all data passes through a single server. Messages passing through local nodes are inherently delayed — a direct cost of decentralization.

Second — multi-device synchronization. In Telegram, logging into a new device restores chat history. But in a local network, data isn’t stored on a central server, making synchronization complex. Switching devices or losing local data means re-establishing contact with each contact from scratch.

Third — Sybil attacks. Centralized platforms filter spam accounts via phone number verification. Without such controls, malicious actors can create many fake accounts to attack the network. Embracing decentralization often requires accepting these risks.

In essence, Vitalik’s message is that these problems are solvable but require investment. It’s not just about advertising; it’s a strategic investment in “privacy infrastructure.” Private communication apps are not yet perfect, but if digital privacy matters to you, considering Session or SimpleX is worthwhile. After all, if Vitalik is truly spending real money on this, it shows it’s not just for geeks.