The development of network technology has received an ever-growing interest from users when it comes to privacy.
In the case of a ledger being decentralized, blockchain has a natural advantage in protecting users’ privacy, where the information of users will not be submitted to a third party, different from most traditional technologies.
However, on-chain data and information being completely public and
transparent have triggered new issues regarding privacy protection. The
report looks into the pros and cons of blockchain privacy-preserving
mechanisms, explores the ways to improve the privacy mechanism of
blockchain even further, and forecasts the future development direction
of blockchain privacy.
Key takeaways:
- Compared with
traditional technology, decentralized blockchain technology eliminates
the dependency factor that is applied to users when they have to
interact with trusted third parties, enhancing the privacy of user
information.
-Blockchains improve the security of user privacy
by means of P2P network, decentralization, anonymous addresses, etc.
However, data transparency on-chain also provides ways for attackers to
obtain and analyze user data.
-There are three aspects to
improve blockchain privacy-preserving mechanisms. They consist of
network layer, transaction layer, and application layer. In the Network
layer, security verification by nodes and anonymous networks can be
performed and used. In the transaction layer, mixed currency mechanisms
and technologies like zero-knowledge proof can be implemented. In the
application layer, blockchains with highly secure privacy mechanisms,
etc. can be selected.
-It is difficult for a single privacy
protection mechanism to act perfectly. Therefore, the improvement of
future blockchain privacy security depends on it being realized by
coordinating different security solutions all at once. Meanwhile, the
accelerating development of Cryptography, and the coordination between
off-chain scaling solutions and privacy mechanisms, have provided more
possibilities to improve the security of privacy of users.
Disclaimer: Based on the due diligence and objective analysis by
internal staff, the research draws a conclusion based on the observed
market data. However, it should not be treated as the sole basis of any investment.
Click here to download the report
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June 10, 2020