The modern internet has made it possible to connect like never before. However, younger generations have not experienced true privacy. Even the older generation has forgotten what it was like before all of our actions and thoughts were recorded.
Web3 is a trustless, open and permissionless internet that allows users to interact peer-to-peer with one another without relying on intermediaries or losing their privacy.
Blockchains are a key tool in this vision. They remove the need to trust third parties and create a direct relationship between users, service providers and users. By recording the rules and interactions on immutable ledgers, and even storing them, they can be used to eliminate this requirement. Blockchains fundamentally change the power balances and structures of data ownership.
Blockchains allow individuals to bypass costly intermediaries and centralized websites, and communicate directly with one another using end-to-end encryption. Individuals can now buy houses and works of art, as well as access public resources and take part in high-level decisions. A decentralized platform makes it easier to manage and control these processes. Third parties cannot access data unless participants consent to allow them to.
This is the theory.
Blockchain privacy is a reality
Today’s blockchains are “pseudonymous” in that users are identified using an alphanumeric string comprising characters called a public key. Pseudonymity can be undermined by the association of transaction activity and metadata. This makes blockchain’s main benefits ineffective and exposes all network participants to sensitive information.
Although we may not be able to identify Satoshi Nakamoto, we can track transactions associated with their addresses. CipherTrace, Elliptic and other blockchain forensics firms use the digital ledger regularly to track financial activity on the Blockchain.
Related: Web 3.0 requires more users and not more investors
Recently, a seemingly unrelated phenomenon was observed in the rapidly growing world of blockchain-based market, where trades visible to miners become subject to “front running.”
This type of attack is not related to privacy, but it allows miners to access the plain-text transactions on-chain, and to insert their transactions before users. They get the best deals, and leave the rest of us with less. The maximum-extractable value (MEV), is the value miners can extract from the system by front running — less value than users would receive.
Since January 2020, hundreds of millions of dollars worth of Ethereum users’ value has been extracted by miners. This is a problem that the industry must address.
This raises the question: What blockchain layers deliver true privacy?
Related: Browser cookies do not give consent: Privacy after EU data regulations fail
The implementation of privacy is not being given the importance it deserves. The blockchain community instead chose to address other priorities, including scalability and speed issues that are holding blockchain back from widespread adoption.
Web3 privacy is possible already
This is not a case of willful neglect. It is not just willful negligence that makes web applications today unable to run on existing blockchain architectures. Every participant on a blockchain must re-execute every transaction to verify its state. This means that each service is time-sharing one finite global compute resource.
Privacy is also difficult to ensure, which is why it hasn’t been prioritised. Privacy tools were slow and inefficient historically, making it difficult to make them more flexible. Privacy is not a priority just because it’s difficult to implement.
First, make privacy easier for users. Privacy in crypto shouldn’t require complicated cryptography, complex workarounds or obscure tools. Optional privacy should be possible on all blockchain networks, smart contract platforms included.
These calls can be answered by blockchain technology, which offers security measures that ensure privacy and social accountability.
Two technologies that can transform the way we see internet privacy are secure multiparty computations (sMPCs) and zero-knowledge proofs.
Related: How the crypto industry has ruined privacy
Both options will enable the internet to be a place where sensitive data can only be released with our consent. Each solution comes with its own set of drawbacks.
Blockchain privacy: Kinks
ZKPs are able to transfer basic information, but they don’t allow multi-user interactions. sMPC can support multiple users but it can be slow. Combining the two technologies is a good way to eliminate the pitfalls and create an efficient, secure, private environment from which to launch Web3 projects.
The best way to view web privacy is to say that we have finally reached the end of a massive log jam. Although the destination, which is a more private form of privacy that allows users to control their own privacy, was not in doubt there were still other fish to be caught.
The jam was caused, understandably, by a focus on speed, cost and scaling, and leaving too little investment and energy to protect privacy. That’s all the past.
This article is not intended to provide investment advice. Every trade and investment involves risk. Readers should do their research before making any decision.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Adam Gagol, co-founder of Web3 venture studio Cardinal Cryptography, and Aleph Zero (a Swiss organization that offers scalable privacy-enhancing smart contracts infrastructure suitable for enterprise-grade apps), is Adam Gagol. Adam holds a PhD in mathematics for his research on probabilistic methods in combinatorics. Adam’s accomplishments in the blockchain space include the design of Aleph Zero’s consensus protocol which was peer-reviewed and approved by the Association for Computing Machinery.
Eileen Wilson –Technology and Energy
My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.