We need a silencer — for the Blockchains
“Don’t trust, verify” is a double hedged sword.
As we know, blockchains are great for a lot of reasons and a few use cases. Yet they seem impossible to implement on big scale businesses, because you just can’t publish sensitive data publicly.
Of course you’d think “what about private blockchains?” Well, in a lot of situations, where the point is precisely Trust through publicly verifiable information, they’re useless…
If statistical inference can be used to track Tor users, we can be sure that even though public blockchains are pseudonymous, it wouldn’t take long before you make your whole blockchain history crystal clear with a few mistakes.
While it’s great that the FBI and other governments agencies can catch criminals, privacy is still, and should always be, a fundamental right.
As a whole, the last two decades have been nothing less than an unlawful digital far-west, regarding privacy. Fortunately, governments are catching up. For example, the GDPR states that anyone should, at any time, be able to ask a company or platform to delete all its personal information. In this case alone, we can see how using immutable blockchains to store private data can be a pain in the back-end.
Of course, we wouldn’t be talking about all these issues if we didn’t have some countermeasures to solve them. Blockchain technology has a bunch of tricks up its sleeve, and that’s what we’re reviewing today.
Zero Knowledge Proofs
Widely regarded as the best solution for exchanging informations while keeping it safe, ZK can be summarised as : exchanging a proof of the data, not the data itself.
Scaling rockstar company Starkware has built a whole scaling solutions using their very own ZK-sTark protocol — slightly different from the more common ZK-sNark — and Vitalik Buterin himself considers ZK as “the most powerful cryptographic technology to come out of the last decade.”
ZKP allow you to prove an information without having to reveal it. It can either be integrated on the foundational layer, like Mina and its use of SNARKS, on a Layer 2 like the ZK-rollups solution StarkNet, or simply in a smart contract.
Think of a very simple smart contract that would receive your digital ID as an input, could read your date of birth and output a green light if you’re over 18 years old. Impossible to manipulate — considering the inputted data as true — and preventing anyone from accessing the data inside, the contract’s output could be sufficient proof of your majority.
The same would go for an address, a name, past transactions, shares ownership, or anything that could be verified by a program.
Transaction mixers
We’ve talked about tornado cash and I guess you’re pretty familiar with the concept.
One bunch of information you definitely wouldn’t want to share is your whole transaction history. Mixers allow you to hide your transactions on-chain. There exist mainly two types of mixers:
Either the mixer receives your tokens on a first address, and sends an equivalent amount from a second address to a pre-determined third address under your control. Thus, breaking the link between your known first address and the third one.
Or, the mixer receives your tokens on one big pool-address, to which numerous other users send their tokens. Then, from that same pool-address, it resends your funds to a pre-determined address of your choice. In this case, the link between your two addresses is hidden in plain sight, among the numerous exiting transactions.
Some of the mixers are custodial and can represent a great risk for your assets and others are non-custodial, but both could land you in a world of trouble with the IRS, or could they?
Blind signatures
These signatures allow to hide the link between an unsigned message and its signed version.
The message is hidden and separated from the signer, most importantly, once the message is revealed it cannot be retraced to its “blinded” version.
This privacy scheme can be particularly useful for anonymous voting. The ballots could be unreadable at first, yet you could see who they came from to avoid double voting, and once decrypted, they couldn’t be linked to the original signer — or voter — anymore.
Ring signatures
This particular digital signature, cannot be distinguished from a group identity composed of a determined set of private keys.
Meaning that any member of the group can sign a message that will be seen as signed from the group itself. Allowing the group to be represented by any one of its parties and any specific party to remain hidden, which limits personal responsibility and exposure.
Such signatures could be particularly convenient for boards of directors, committees or activist groups.
Pedersen commitments
Commitment schemes are cryptographic algorithms that allow the sender of a message to make it tamper-proof and readable only by a few chosen parties.
The message m and a secret r are both used as inputs for a publicly available algorithm C, creating C(m,r). Once the message is received it can be checked by the people who also received r. The receivers can prove that the message m is indeed the original one by verifying C(m,r).
It can be seen as the equivalent of a mentalist writing its prediction in a sealed and tamper-proof enveloppe before proceeding with the show. At the end, he reveals the content of the enveloppe and proves he knew everything from the beginning. The sole difference being, you could verify that he didn’t change the content of the enveloppe after the information was revealed during the show.
Closing thoughts
Lots of obstacles lie in the path of blockchain mass adoption — or even adoption, per se. Not only because it’s new and complicated but because of some key features of the technology itself.
Nonetheless, the wave of cryptographic hype has brought old — and some new — cryptographic concepts under the spotlight. Unlocking, in the process, endless funds for research and development.
Most importantly, all these innovations — or new use of old concepts — show that, despite the complete chaos in the world and subsequently in the markets, the most knowledgable people in the industry keep on building.
These privacy schemes combined to other protective concepts like Soulbound Tokens and reversible transactions (ok, that concept is only new here) might slowly create a blockchain ecosystem that could help the real world.
Thank you for reading and as always, time will tell.
