This is a special article about privacy blockchains brought to us by David Freuden, a blockchain advisor at Monsterplay.
While encryption is the best way to protect your privacy, you should be the one making the first move. Only through the lens of data ownership can we begin to answer the question of: “Who/What will protect my privacy?” It won’t be legislation, as governments themselves are often those who are seeking more information on their citizens. This may be taking place either directly or indirectly via coercion, legislation or subpoenas directed at the ever-growing number of corporations that collect, store and share your personal information.
The new field of blockchain-enabled encryption offers significant opportunities to improve privacy and the controls around it. However, it is important to understand that not all blockchains are privacy-conscious, and fewer still are those that are privacy-centric.
Privacy Blockchains: By Approach
Looking at blockchain through the lens of privacy, two categories are to be discussed. Transparency and Privacy.
Transparency: Bitcoin & Ethereum hide no information. This is good for blockchain analysis and honesty, but it is bad for user protection and privacy. Block Explorers, an open-source web tool, allows anyone to view information about blocks, addresses, and transactions on these blockchains.
It is relatively easy using solely blockchain analysis and the addresses of known public entities (businesses, organizations) to discern what address a person may be associated with, and where the funds are coming from/going to. Worse yet, when you pay someone from an address owned by you, reverse lookups are possible using a blockchain explorer. This means anyone you send bitcoin to can then look-up your address and, in turn, know precisely the amount of bitcoin stored at that address.
Privacy: Monero & Zcash. These use different approaches in comparison with Bitcoin and Ethereum, but it is worth noting that they both…