The benefits of anonymity and privacy are not limited to Blockchain users. If a user’s digital asset is lost as a result of a cyber assault, locating the attacker and restoring the item will be difficult. There is no doubt, however, that Blockchain has elevated the issue of user privacy to a new level. The level at which the protection of users’ personal information takes precedence above all other considerations.

One of the most pressing challenges in today’s technological environment is privacy. Even the most astute observers could not have guessed that the issue of digital privacy would become so important. In fact, it could be argued that in today’s digital communications and commerce environment, maintaining privacy has become the most important need for the majority of users. The explanation for this is crystal evident. Every year, billions of people make their personal, professional, and familial information public online. The news that Facebook was selling user information has revealed a new facet of privacy. This event was so successful that after the news of the users’ information being sold was confirmed, the value of Facebook stock plunged by more than ten billion dollars. Privacy has evolved into a concern about people’s personal rights, as well as a moral and even economic issue.

The advancement of Blockchain technology provides promise for a better environment in which to protect privacy in the digital world. Blockchain avoids the interaction between a third party and the sent messages and transactions by having a decentralised and transparent ecosystem as well as encrypted communication. These characteristics make large-scale censorship, manipulation, and surveillance of digital information challenging.

Using private and public keys is one of the most important aspects of maintaining privacy in Blockchain. The process of employing public and private keys plays a significant role in safeguarding Blockchain users’ privacy by ensuring anonymity. To use Blockchain services, the user must first generate a set of public and private keys. Other network users will be able to see the public key, but only the user will have access to the private key. Despite the fact that public and private keys are mathematically connected, it is impossible to find the private key by using the public key. The communication will only be decrypted by the other key once it has been encrypted by one of the keys. Following the generation of public and private key pairs in the Blockchain network, each user is assigned an address, which is the user’s public key hash.

The address is used to transfer assets in Blockchain, and the addresses can be used to track the history of transactions. Each user is identified by his or her address. Similar addresses function similarly to random IDs in that they conceal the user’s true identity from others. Furthermore, the user can change his or her pair keys at any time to prevent activity tracking. Private keys are used to verify a user’s identity in order to gain access to his or her possessions. No information about the user’s identity is retained, such as their name, contact information, or address; nonetheless, each user is present in the network with at least one address, as previously stated.

Each block of Blockchain provides transaction transparency by revealing the sender’s, receiver’s, and transfer volume addresses. Although the users’ true identities are masked behind private and public keys, many people believe that transparency contradicts privacy protection, and they are unwilling to provide such information in the network. As a result, in recent years, new versions of Blockchain have been offered that were able to guarantee a higher level of privacy preservation for users by utilizing encryption scientific advancements. Two instances of such structures are Monero and Zcash.

Monero has joined this sector by providing a Ring Signature-based structure that protects privacy better than its competitors. In the field of cryptography, Ring Signature was originally introduced in 2001 at the Asiacrypt conference. Each group member can sign a message using this encryption approach without revealing who signed it. The sender, receiver, and amount of transactions are not specified for other persons in the Monero network; additionally, users’ assets cannot be calculated. It is impossible to specify two transactions with the same origin and destination.

Zcash uses a mechanism called ZKP to keep the sender and receiver’s addresses, as well as the amount of transactions, concealed (Zero-knowledge proof). This technique allows a person to prove that they are aware of message X without disclosing it to the other. Zcash uses a variation of ZKP called zk-SNARKs.

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The importance of maintaining privacy in Blockchain technology has drew the attention of Dark web users. Currently, the majority of black market financial transactions are carried out utilizing various cryptocurrencies on this network. The use of cryptocurrency in criminal trades such as drug and money laundering has always been a source of concern for governments as they develop this technology. On the one hand, concealing names will make collecting taxes from persons who acquire and trade cryptocurrency more difficult. To counteract these issues, Japan has made it illegal to provide services to crypto-exchanges without knowing the main identity.

The benefits of anonymity and privacy are not limited to Blockchain users. If a user’s digital asset is lost as a result of a cyber assault, locating the attacker and restoring the item will be difficult.

There is no doubt, however, that Blockchain has elevated the issue of user privacy to a new level. The level at which the protection of users’ personal information takes precedence above all other considerations.

Written by Pooyan Ghamari

Founder of Counos Platform

Other projects;

Counos Exchange

Xbit Project