Privacy protection in terms of blockchain
In the last medium article, we have emphasized the rising privacy awareness around the world [1]. However, what exactly is privacy protection? What are we exactly protecting on blockchain? What are the specific goals of privacy protection in terms of blockchain? This article will answer these questions in a scientific but plain manner.
Privacy protection is the preservation of sensitive information that users do not want to disclose, such as user identity and location information, which is a concrete manifestation of data confidentiality. Regarding privacy on blockchain, people mainly focus on user identity and blockchain transactions. Accordingly, blockchain privacy protection can be further divided into identity privacy and transaction privacy [1].
Identity privacy refers to the relationship between identity information and blockchain addresses (or account addresses)[2]. The blockchain address is the pseudonym (calculated through series of hash operations) used by the user in the blockchain system, which is adopted as the input account or output account of a transaction. The address in the blockchain system is generated by the user and has nothing to do with the user’s identity information. There is no need for a centralized third party to participate in the creation and use of the address. Therefore, compared to traditional accounts (such as bank card numbers), blockchain addresses show better anonymity. However, users may leak some sensitive information when utilizing the blockchain address to participate in the business logic. For example, the propagation trajectory of the blockchain transactions at the network layer may be used by adversaries to infer the real-world information of the specific user.
Thus, it is required that the user’s identity information, physical address, IP address, and public information such as public key, account, or wallet address on the blockchain are not related. Any unauthorized node can not infer any knowledge about the user’s identity only based on the public data on the blockchain. In addition, it should also be guaranteed that attackers cannot track and correlate blockchain transactions and real identities through advanced technology such as network monitoring and traffic analysis.
Transaction privacy refers to the transaction records stored in the blockchain and the knowledge hidden behind them [3]. In the first generation of digital currency application, transaction records are not protected, that is, any user can inquire what they want. However, in the financial fields such as securities and banks, while developers use blockchain technology for business improvement, the financial transaction records are of great significance and need intensive privacy protection. In addition, users’ private information such as asset amounts may be exposed by the exchanged data contained in transactions. For example, the user’s income level, life status and purchase preferences can be easily obtained from the user’s consumption transaction records.
Hence, the data information of the transaction is required to be anonymous to unauthorized nodes. For instance, in Bitcoin, it specifically refers to the transaction amount, the public key of the sender of the transaction, the public key of the receiver, the address of the receiver, the content of the transaction, the balance of assets, and other information. Any unauthorized node cannot obtain transaction-related knowledge through effective technical means. In some blockchain applications that require high-level privacy protection, it is also required to separate the correlation between transactions. Therefore, unauthorized nodes cannot effectively infer the beneficial interrelationship, such as whether the two transactions are related in sequence or whether they belong to the same user. In reality, an intractable issue that is attracting more and more attention is how to protect the privacy of assets in transactions, including the amount of transferred assets and the balances of the sender’s and receiver’s accounts. This point largely determines the willingness of users to participate in finance-related blockchain projects.
In short, identity and transaction protection are the core of privacy preservation on blockchain. With the maturity of blockchain technology and the widespread use of many blockchain systems, the threat of data privacy in blockchain systems has become an extremely important research issue. Fortunately, blockchain technology has some outstanding strengths in privacy protection because of the built-in cryptographic algorithms and decentralized architecture. Thus, it can solve the privacy leakage problem faced by centralized frameworks to some extent, for which it has been applied to many scenarios that need to protect privacy, such as anonymous voting and evidence deposit. Nevertheless, the decentralized architecture and data storage mechanism adopted by blockchain brings some inevitable drawbacks to privacy protection, including but not limited to scalability, performance and latency. As a matter of fact, even if the user finds that part of his address or transaction data has been exposed or maliciously attacked, there are currently no efficient rescue measures, since the data stored in the global blockchain ledger cannot be deleted and forged [4]. Therefore, the blockchain system should pay more attention to privacy issues. More advanced privacy protection measures are supposed to be introduced to improve the situation. We will conduct a deep discussion on the advantages and disadvantages of blockchain technology in terms of privacy protection in the future.
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Reference
[1] Feng Q, He D, Zeadally S, et al. A survey on privacy protection in blockchain system[J]. Journal of Network and Computer Applications, 2019, 126: 45–58.
[2] Can Blockchain Solve Identity Fraud? https://www.forbes.com/sites/forbestechcouncil/2018/05/31/can-blockchain-solve-identity-fraud/?sh=2540b03c7289
[3] Bhushan B, Sharma N. Transaction privacy preservations for blockchain technology[C]//International Conference on Innovative Computing and Communications. Springer, Singapore, 2021: 377–393.
[4] The Privacy Questions Raised by Blockchain, https://www.bradley.com/insights/publications/2019/01/the-privacy-questions-raised-by-blockchain
