Advancements in Privacy Solutions to Meet the Growing Demand for Blockchain in Business
The blockchain technology market is projected to reach $187 billion by 2034, according to recent findings from Precedence Research. However, privacy remains a major concern for enterprises adopting blockchain solutions. Paul Brody, Global Blockchain Leader for Ernst & Young (EY), stated that privacy technology is still relatively underdeveloped, which poses a challenge as privacy is the top priority for enterprise users and institutional investors. Public blockchains lack native privacy features, making private blockchain networks more appealing to enterprises. Wipro’s research indicates that 40-60% of enterprises have deployed private blockchain networks, which offer more centralized access.
However, privacy solutions for public blockchain networks are also advancing rapidly. For example, EY has created an Ethereum Layer 2 (L2) network called “Nightfall,” which enables businesses to move tokens confidentially. In addition, EY has developed an application called “Starlight” that allows businesses to convert a solidity smart contract into a customized zero-knowledge circuit, providing a higher level of privacy.
Data Ownership Protocol (DOP) is another solution that addresses the issue of balancing transparency and data ownership in public blockchain systems. DOP offers “selective transparency,” allowing users to control the amount of information shared on the blockchain. This feature enables organizations to share only necessary information with stakeholders while keeping sensitive data protected. DOP can be integrated with popular wallets and blockchain platforms, making it a versatile solution.
Hedera, an open-source public ledger, provides public permissions through its “Hedera Consensus Service” (HCS). HCS ensures transaction privacy by submitting only a hash of the transactions to the public ledger, maintaining confidentiality while benefiting from the security and trust of a public blockchain. Private transactions on Hedera’s network can be anchored to the public Hedera Layer 1 network for consensus, ensuring security and decentralization without compromising privacy.
However, there are challenges to overcome in the adoption of privacy solutions for public blockchains. The complexity of the math behind these solutions leads to high gas fees, so reducing the cost of transactions is crucial. Additionally, customized digital contracts still require significant human support. The goal is to simplify the process to the point where users don’t need to understand the underlying technology, but can rely on its functionality.
Balancing transparency and confidentiality is another challenge, as businesses require privacy for sensitive transactions while benefiting from the immutability and verification of public blockchains. Regulatory compliance, particularly with privacy laws like GDPR, presents additional challenges.
Despite these challenges, enterprise blockchain adoption will continue to thrive. Institutions are expected to solve challenges related to digital identity, liquidity, and regulations in the near future. The urgency to adopt blockchain technology to prevent a global liquidity crisis is driving the adoption among institutions and enterprises. The efficiency and benefits that blockchain brings to operations are becoming more apparent to enterprises.
