The State of Blockchain Privacy

Privacy remains a chief priority for organizations working with blockchain technology. Whether implementing a public or private blockchain platform, the evolving state of general practices surrounding data privacy keep it a focal point for the successful launch of any venture to protect stakeholder interests while mitigating regulatory and compliance concerns.

Privacy solutions must strike a balance between data access and transparency. In support of industry efforts, Block.one recently led a consortium to better understand challenges with today’s blockchain privacy standards. We launched the EOSIO Data Privacy Working Group, the objective of which is to research, propose, and innovate blockchain-based privacy solutions.

Bringing together experts from across the blockchain and financial services industries, the working group includes contributors from Jack and the Blockstalk, Block.one, dfuse, EOS Costa Rica, Digital Scarcity, Europechain, EOS Amsterdam, Rewired.One, and Gimly among others.

Protocols reviewed include EOSIO-powered systems as well as Hyperledger Fabric & Besu, Consensus Quorum, R3 Corda, and EY’s Nightfall. The group identified the following common themes within these network deployments:

• Use of cryptography is prevalent among blockchain deployments: Most business-facing or changeover privacy solutions use a hashing algorithm.

• On-chain contracts facilitate coordination: A shared public ledger is commonly used to coordinate between data privacy groups and more generally manage identities and access control.
  
• There is a wide range of code sharing practices for transactions: There are a variety of levels of privacy around smart contract code visibility. While some solutions only permit authorized peers to view code, others make the code accessible to members of the shared ledger.

• Innovations around data privacy would help accelerate data migration: There are still significant challenges when using cryptographically stored data in terms of being able to update systems.
  
• Shared ledgers upstage multiple blockchain-based approaches: Using multiple ledgers for each data relationship was abandoned in favor of a shared ledger with private data collections/transactions to improve scaling.

With these themes in mind, the EOSIO Data Privacy Working Group’s roadmap highlighted a set of recommendations on how to evolve a blockchain-based data privacy solution. The group has now published its findings in a peer-reviewed report, based on documentation and open resources as well as conversations with developers, implementers, and companies using blockchain technology to facilitate privacy solutions.

Founder and Consultant for Jack and the Blockstalk, Jack Tanner, contributed to the report. He describes the advantages offered by blockchain-based systems to organizations as more nuanced than generally perceived. “Blockchains are often viewed in terms of open and public, but they actually enable more collaborative relationships by reducing operational friction between organizations and allowing them to retain the ability to withhold private information when necessary.”

Block.one Technical Product Manager, Roshaan Khan, also contributed to the report. He expands on the importance of a privacy stack in the context of blockchain platforms. “Solving for privacy varies from case to case, but the overall conclusion is that privacy in blockchain technology is still evolving, with no one size fits all approach. However, we’re involved with implementing the future of cryptography with EOSIO and are excited to contribute this research.”

We are happy to share the working group’s research findings publicly for the benefit of all. To download and read the full report, please visit here. Please note that the views and opinions expressed in this report belong solely to the authors, and do not necessarily reflect the views and opinions of the authors’, reviewers’ or working group members’ employers.