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Gate.io Research: Development Direction of Blockchain Privacy Protection Mechanisms

2020-06-10 13:54:32Read:55475

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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Gate.io
June 10, 2020

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