By Jeremy Bradley, COO at Zama
Talk to anyone working in blockchain development and you’ll find the vast majority are obsessed with one of the following things: making transactions faster, fees lower, networks bigger, or rules clearer. Harder, better, faster, stronger, as Daft Punk once sang, except no one’s dancing.
Everyone wants speed. Everyone wants scale. Everyone wants certainty. Meanwhile, transparency – blockchain’s original selling point – is taken for granted, and the fallout of a feature that sees every transaction visible to all goes under the radar. I’m talking, of course, about privacy; something even a certain robot helmet-wearing, media adverse French electronic duo understood the value of.
It might not be flashy, or easily measurable in TPS or gas fees, but it is quietly and stubbornly essential. Because as blockchain technology matures and seeks mainstream adoption, all the speed in the world won’t mean much if the data (and the people behind it) aren’t protected.
I’m not suggesting transparency isn’t important: it enables trustless verification, eliminates the need for trusted intermediaries, prevents things like double-spending, and creates an auditable trail of all activities. However, a lack of privacy drastically limits blockchain to applications where transparency is either desirable or tolerable, cutting the rest out of the picture.
Look at personal finance for example. If your bank account balance and entire transaction history were publicly visible to anyone who knows your account number, would you be keen? It’s the same story in the commercial world. Imagine a bank conducting a discreet client trade, a hedge fund managing sensitive portfolios, or wealth managers handling confidential transactions involving significant capital, it would be a huge problem. Exposing financial details, trade secrets, supplier relationships or pricing strategies not only risks breaching client privacy – even seemingly innocent transactions can reveal patterns that malicious actors could exploit – but it also completely undermines any competitive advantage.
Other industries reveal a similar pattern. In healthcare, blockchain could create portable, patient-controlled medical records, but without privacy, putting health data on a public blockchain would be catastrophic. The same applies to supply chain management (protecting competitive advantages), voting systems (preserving ballot secrecy), and digital identity (preventing surveillance).
Privacy needs to be bumped up the priorities list
The above points are precisely why I believe the next leap for blockchain shouldn’t be focused on moving quicker or shaving off a few cents, but on preserving data safety, commercial confidentiality, personal autonomy, and equal participation.
And that’s not a fringe view: the European Union’s GDPR, California’s CCPA, and similar regulations worldwide already recognise privacy as a fundamental right, mandating that organisations protect user data and give individuals control over their personal information.
But how can you exercise your ‘right to be forgotten’ if every transaction is permanently etched into an immutable ledger, and how are businesses supposed to comply with data protection laws while using fully transparent blockchains?
Technical innovations making privacy more practical
Some may assume that to create privacy on blockchain it’s just a matter of encrypting data. However, the challenge is, of course, a little tricker than that – we must find a way to maintain privacy while also preserving verifiability, immutability, and decentralisation; all the properties that make blockchains valuable.
With this goal in mind, a number of approaches have emerged, with the most promising including:
- Zero-knowledge proofs (ZKPs): they allow users to prove something is true without revealing the underlying information. For instance, you could prove you have sufficient funds for a transaction without revealing your actual balance.
- Ring signatures and stealth addresses: they obscure the link between senders and receivers by mixing transactions together and creating one-time addresses for each transaction.
- Secure multi-party computation (MPC): this enables multiple parties to jointly compute functions over their inputs while keeping those inputs private, and could allow blockchain networks to process private data without any single party seeing the complete picture.
- Fully Homomorphic Encryption (FHE): this advanced encryption technology permits computation on encrypted data without decrypting it first. While still computationally intensive, advances in this field could enable truly private smart contracts. Enabling processing data without having to decrypt it, FHE is well suited to solve the transparency paradox and newly launched solutions like the Zama Confidential Blockchain Protocol show how to leverage FHE to create a cross-chain protocol for private smart contracts, reconciling confidentiality and transparency onchain.
- Layer 2: solutions like state channels and sidechains can provide privacy by moving sensitive transactions off the main blockchain, while still leveraging its security guarantees.
While it’s clear why we should be prioritising privacy, and that technical innovations are making privacy more practical, what’s not clear is if we will give it the attention it deserves.
For now, many are still hyperfocused on speed, cost and scale – as mentioned – but there are signs suggesting a turning point. For one, regulatory pressure is mounting, with some financial regulators now recognising that some blockchain privacy is necessary for compliance with existing laws; user demand is also growing alongside increased privacy awareness; and institutional adoption – which will be crucial for blockchain’s mainstream success – simply won’t happen if corporations and financial institutions don’t have robust privacy solutions.
In short, privacy isn’t the enemy of blockchain, and it’s not about secrecy – it’s about personal control, choice, and unlocking potential. The next generation of blockchain platforms must be built with privacy as a core feature, and not a bolted-on afterthought – a truth even Daft Punk’s Thomas Bangalter instinctively knew when he said: “The only secret to being in control is to have it in the beginning.”
