Advancements in Privacy Solutions to Meet the Growing Demand for Blockchain in Business
As the blockchain industry continues to progress, recent research suggests that the global blockchain technology market will reach a staggering $187 billion by 2034. While this growth is promising, privacy remains a major concern for enterprises looking to adopt blockchain solutions.
According to Paul Brody, Global Blockchain Leader for Ernst & Young (EY), privacy technology is still in its early stages of development. He emphasizes that privacy is the number one issue for enterprise users and serious institutional investors. Without adequate privacy features, blockchains are simply not suitable for business use.
One major drawback of public blockchains is the lack of native privacy features. Avidan Abitbol, Project Director of Data Ownership Protocol (DOP), points out that the transparency of traditional blockchain networks leaves users vulnerable. As a result, private blockchain networks are gaining popularity among enterprises. In fact, a report from technology firm Wipro reveals that 40-60% of enterprises have already deployed private blockchain networks.
However, there are privacy solutions emerging for public blockchain networks as well. For example, EY has developed an Ethereum Layer 2 (L2) network called “Nightfall” that allows businesses to move tokens confidentially. EY has also created an application called “Starlight” that enables businesses to customize zero-knowledge circuits for added privacy.
DOP addresses the challenge of balancing transparency and data ownership in public blockchains through its selective transparency feature. This allows organizations to choose what information is shared on the blockchain, ensuring that sensitive data remains protected.
Hedera, an open-source public ledger, offers public permissions through its “Hedera Consensus Service” (HCS). This service enables verifiable timestamps, decentralized ordering, and privacy for sensitive information in enterprise applications and consortiums. Private transactions can be recorded on the public ledger while maintaining privacy and benefiting from the trust and security of a public blockchain.
However, there are challenges to overcome in implementing privacy solutions for public blockchains. The complexity of the math behind these solutions often leads to high gas fees, making transactions costly. Additionally, customized digital contracts still require significant human support. The goal is to simplify these processes to the point where users don’t need to understand the underlying technology.
Balancing transparency with the need for confidentiality remains a challenge, as businesses want the benefits of public blockchains while also maintaining privacy. Regulatory compliance, particularly with laws like GDPR, adds another layer of complexity to privacy in blockchain.
Despite these challenges, enterprise blockchain adoption is expected to continue thriving. Experts believe that institutions will overcome obstacles related to digital identity, liquidity, and regulations in the near future. The urgency to adopt blockchain technology is driven by the need to prevent a global liquidity crisis and the recognition that blockchain can greatly improve operational efficiency for enterprises.
