The Sword of Damocles in the Blockchain Industry: Privacy and Regulation

Original source: X Research DAO

In the past few years, the development of the privacy track has gone through about three stages, including privacy coins in 2014–2017 The outbreak of privacy computing in 2017–2020, and the privacy transaction network from 2021 to the present have won a lot of capital favor. Even so, the privacy track has never really become the mainstream track of blockchain development.

The article summarizes the development of the blockchain privacy track and the value of privacy. become more and more important. The article divides the privacy track into three categories: privacy coins, privacy platforms, and privacy applications. Starting from these three categories, the principles, advantages and disadvantages, and representative projects of various privacy protection technologies are analyzed.

At present, the privacy track is still in the super early stage. With the recent sanction of Tornado Cash, more privacy and regulatory issues have been widely discussed. This article studies the regulatory attitudes and policies of various countries on the blockchain industry and the privacy track. Although there are no bills related to the blockchain privacy track, traditional data privacy protection laws and regulations and anti-money laundering programs are still relevant to the area. The blockchain privacy track applies. In terms of the censorship of privacy agreements, a regulatory privacy agreement is the consensus of the new privacy protection agreement project and will also become the development direction. In terms of privacy applications, transaction privacy and on-chain data privacy are currently the main directions, especially in terms of asset protection against MEV and giant whales. In the future, with the development of new application scenarios, such as DID and social networking, and the entry of traditional institutions into the blockchain, there will be an explosion point belonging to the privacy track.

1. When we talk about privacy, what are we talking about

in a broad sense Privacy is mainly two:

(1) Realize anonymity.

(2) Realize privacy. Anonymity is the invisibility of the user's identity, and privacy is the invisibility of data information such as user behavior and activities.

In the information age, all our information and behaviors are presented in the form of digital carriers. At the same time, once any system that stores digital information is connected to the Internet, it becomes a possible target for all hackers in the world, and we have "nowhere to hide." Especially for sensitive financial and personal health information, data privacy and security are even more important.

1.1 Privacy and development on the blockchain

Since the birth of Bitcoin, Decentralization has always been the most basic attribute of blockchain. The underlying distributed ledger can effectively record data and transactions on the chain in a verifiable and permanent manner, realizing permanent storage of data on the chain, which cannot be tampered with and is transparent . User addresses can be identified by public keys, which guarantees the anonymity of users on the chain to a certain extent. However, with the gradual development of applications, various on-chain analysis tools appear, making the addresses on the chain unable to guarantee the privacy of personal information. The transparent nature of the blockchain also allows anyone to view the user's transaction data and activities on the chain, and the user's sensitive information may be easily obtained. .

Privacy is an early track in the blockchain world. The privacy track first appeared in 2013, when Nicolas van Saberhagen published the "CryptoNote" protocol, based on which Monero was born in 2014, and then a variety of privacy coins based on different anonymous technologies for anonymous transactions on the chain born. With the improvement of the programmability and scalability of the public chain, other private data of users also needs to be protected, and privacy computing projects have emerged, such as Oasis network, Phala network, Platon network, etc. In addition, a large number of public chain-level projects based on private transactions will also begin to appear in 2021. Compared with other tracks, the overall development of the privacy sector is relatively slow, but from the perspective of institutional financing, this track has always been favored by top VCs. According to the author's incomplete statistics, since 2021, the total financing of public chain-level projects related to privacy transactions has exceeded 600 million US dollars.

< p>

1.2 Reflection of the value of privacy

In the current information age, privacy and data protection have become One of the most frequently discussed and concerned issues, privacy is considered a basic human right, and data protection has therefore been legislated in many countries to protect basic rights at the legal level. If data privacy is leaked or abused, it may cause harm to the user's personal and property.

However, nowadays users expect personal data to be protected on the one hand, but turn a blind eye to the leakage of private data on the other hand. We are currently using many popular social software, such as Twitter, whatsapp, etc. These social software have been obtaining our personal data or being resold by hackers, but we have not given up on the use of social media because of this. After multiple large-scale data breaches, the number of users of related social media has not decreased. The main reason is the monopoly of these social media and the insufficient recognition of the value of their own data by users. In the field of Web3, most of the knowledge is new, and the privacy-related data involved are different, and the number of users with data protection awareness is even smaller.

Although privacy is a very important and long-standing field, it has not been paid enough attention by users. For small and medium users, if the cost is not low enough, They would rather sacrifice privacy. In fact, privacy should not be a cost consideration, but should become a unique attribute of the platform. This is the same as the mobile phones we often use. With the development of mobile Internet, mobile banking, and online shopping, the privacy protection function of mobile phones has become one of the selling points. In short, the importance and value of privacy is reflected in the Web2 field. There is still a big cognitive gap.

2. Integration of privacy protection technology and Web3

Multiple sub-tracks of privacy track The content of emphasis is very different, and there is no clear classification at present. In this article, it is divided into three categories, including privacy coins, privacy platforms, and privacy applications.

2.1 Privacy coins

Privacy coins refer to cryptocurrencies that natively support anonymous transfers. The confidential scope of privacy includes information such as the sender, receiver, transaction amount and transaction IP of the transaction. This information cannot be viewed through the blockchain browser, that is, it is not visible on the chain, but only visible to the parties to the transaction or the third parties designated by the participants. The characteristics of privacy coins are:

(1) Generally, smart contracts and related applications are not supported, and only transaction transfer functions are available;

(2) Such currencies were born from 2014 to 2017, and the project development is relatively mature and rich. Well-known privacy coins include Monero, Zcash, DASH, Litecoin, MobileCoin, Horizen, Verge, Decred, Firo, BEAM, and Grin.

(3) The general development of privacy coins is generally average, and the transaction volume is significantly smaller than most public chains, DeFi and other track projects (Figure 2, data from Coingecko volume on September 7, 2022).

< p>

Privacy coins use a variety of technologies to achieve anonymous transactions, mainly including the following four categories, such as Monero using hidden addresses + ring signatures, Dash choosing the coin-mixing mechanism CoinJoin, Grin and BEAM use Mimblewimble technology, Zcash, Tornado Cash and ZEN use zero-knowledge proof, etc. The technical characteristics adopted by privacy coins are shown in the table below.

< p>Monero XMR is the most emerging and most representative privacy coin. It adopts the anti-ASIC PoW consensus algorithm, and uses the combination of hidden address + ring signature to achieve privacy protection. The hidden address is also a one-time address. Whenever a transaction is initiated, a brand new, ephemeral receiving address will be randomly generated. Thereby protecting the privacy of the payee. Ring signature technology means that the sender uses his own private key and the public key of everyone in the group to sign the transaction. In this way, the transaction may come from anyone who participated in the signature, thus protecting the privacy of the sender.

Monero's current cryptocurrency ranking and trading volume have been on a downward trend. Currently, Monero's total market value ranks 29th, and its daily trading volume hovers around $50 million to $100 million. Recently, MineXMR, the largest mining pool for Monero, was shut down on August 12. The shutdown of MineXMR, which controls 44% of Monero’s computing power, could also lead to a 51% attack on Monero.

Strictly speaking, privacy coins only fulfill the first requirement of privacy, that is, anonymity. Since privacy coins do not have smart contracts, this is the main reason for limiting their development. For ordinary users, privacy coins do not have a great application scenario, and the privacy of regular transaction information is not of much value. In addition, the user experience of some privacy coins is poor, and there is often insufficient liquidity in the mixed coin pool. Users who really have greater needs should be institutions, and for them, the single function of privacy coins cannot meet their needs for on-chain interaction behaviors, such as NFT purchases, lending, social networking, etc., so there is a privacy platform The necessity of existence.

2.2 Privacy Platform

Privacy platform projects are mainly privacy public chains, these projects It is in the early stage of ecological development and the valuation is high. Whether it is private computing or private transactions, the privacy protection technologies they adopt are based on technologies such as zero-knowledge proof, multi-party secure computing (MPC), homomorphic encryption (HE), and trusted execution environment (TEE). Among them, ZK, MPC and HE are privacy technologies based on cryptography, and TEE is based on hardware design. The privacy public chain supports private smart contracts on the underlying architecture, but native tokens are not privacy coins.

Privacy computing refers to the protection of privacy from the aspects of data generation, collection, storage, analysis, utilization, and destruction, while ensuring that the data provider does not disclose the original On the premise of data sharing, the data can be shared and circulated under different subjects in a "available and invisible" manner, so as to meet data compliance supervision and prevent privacy leakage. In addition to applications in the blockchain field, privacy computing has been widely used in big data, finance, medicine, and AI industries. Platforms for privacy computing include Oasis Network and PlatON.

Privacy transactions mainly focus on the application and transaction data on the chain (the type and quantity of currency held or traded) for privacy processing, through zero-knowledge proof, etc. The technology natively supports users to conduct private transactions, ensuring that users' private data will not be viewed by the outside world. Since 2021, many blockchain networks related to privacy transactions have emerged and received support from mainstream investment institutions, making them one of the most popular tracks in the capital market. Representative projects of privacy trading platforms include Secret Network and Ethereum Layer 2 protocol Aztec Network, etc.

The establishment of the privacy platform meets the common needs of Web3 for privacy and multi-chain. First of all, the privacy public chain platform provides an environment for deploying privacy smart contracts, enriching various privacy-based applications; secondly, it provides the possibility of interoperability, allowing the privacy chain ecology to blend with the non-privacy chain ecology.

2.3 Three major privacy technologies and their use cases

Zero-Knowledge Proof

b>

The purpose of ZKP technology is that the prover does not need to provide direct information to the verifier, but it can convince the verifier that a certain result is correct of. Currently in the encryption industry, ZKP technology is widely used in Ethereum Layer 2 expansion solutions. The operator of ZK Rollup collects transaction information and compresses it into a ZK certificate, which is sent to the Ethereum mainnet as a proof of the validity of the transaction. This short proof takes up very little storage space, so ZK Rollup is considered to be the most promising Layer 2 solution. The ZK proof includes information such as transaction parties, time, assets, etc., but this information is private in the proof and has a natural trustless mechanism. Therefore, in addition to the expansion of Ethereum, the value of ZK technology also includes private computing. There are three applications of zero-knowledge proof technology in the field of encryption: zkSNARK, zkSTAR and Bulletproof.

 Secure Multi-Party Computation

Security Multi-party computing was first proposed by Yao Zhizhi in 1982. The main problem of this technology is how to design a function without a trusted third party, so that multiple parties can safely get the output without disclosing any information. That is, how to protect and ensure the correctness of the data of each participant among the data participants. This can be explained by the "Millionaire Problem" (Figure 3). Alice, Bob, and Sam need to inform the protocol of their assets, and then through a function, the protocol will directly inform the result without revealing information about either party.

< /p>

The protocol in secure multi-party computation needs to ensure:

1. Absolute privacy, any None of the participants can know the rest of the information except the result.

2. Correctness, the agreement guarantees the correctness of the output results to the participants.

3. The input information is independent of each other to prevent some participants from doing evil.

4. Ensure the transmission of output results to the participating parties. It can be seen from the above that MPC requires a large amount of calculation and communication, which is costly and consumes a large amount of bandwidth. With the increase of participants, the consumption will further increase. Therefore, computing efficiency and communication are bottlenecks in the development of MPC.

Trusted Execution Environment

Password Based The privacy protection technology of learning is too dependent on a large number of complex calculations, so there is a performance bottleneck. Another type of privacy protection technology is the trusted execution environment, which implements secure computing based on memory isolation based on hardware-secure CPUs. The basic idea of TEE is to allocate an isolated memory for sensitive data in the hardware. All sensitive data calculations are performed in this memory. Except for authorized interfaces, other parts of the hardware cannot access this isolated memory. information in . TEE is already in the mass adoption stage, such as fingerprint and face recognition for mobile phones.

The above three privacy protection technologies are currently widely used in the blockchain field, and homomorphic encryption is still in the theoretical development stage. ZKP and MPC can be proven safe through mathematically difficult assumptions, with high reliability, but because of this, the improvement of security also leads to higher computational and communication complexity, and limited availability. TEE technology not only includes the basis of cryptography, but also combines the security of hardware and system, avoiding additional communication and computing overhead. Its disadvantage is also that its security depends largely on hardware implementation, and software and hardware need to be updated and upgraded. Moreover, the TEE technology of each manufacturer is different, and its security standards are not clear.

Privacy Technology Use Case

Oasis Network is The public chain-level privacy computing network uses Intel SGX to provide a trusted execution environment (TEE, Trusted Execution Environment), which is also used in the avalanche bridge. The ParaTime layer is the smart contract execution layer, which realizes the privacy protection of smart contracts and is compatible with EVM. Oasis Network currently has a complete ecosystem, with more layouts in privacy computing and public chain ecology.

Secret Network is a representative privacy transaction network based on the Cosmos ecology. It launched the main network in September 2020 and is the earliest A blockchain platform that supports programmable smart contracts for private transactions by default. In terms of data privacy, three key technologies are adopted: key management, encryption protocol, and TEE. The hardware and software of all validating nodes must support these technologies, but no one, including the nodes, can access the original information. Secret Network's smart contracts are private by default, with all inputs, outputs, and data states encrypted. It uses the Trusted Execution Environment (TEE) to ensure that the transaction data remains safe and private during execution. The outside world can only view the time information of the transaction through the block browser, but cannot know the specific transaction information, even for the verifier, unless the user Data access is granted through the viewing key, otherwise others cannot view it. This ensures that users can fully control their private data on the chain, and at the same time use the viewing key to share relevant transaction data in tax declaration and other ways. At present, the public chain already has a preliminary chain ecology, including cross-chain bridge Secret Bridge, private DeFi protocol, private transaction protocol, Bitcoin privacy protocol, Opensea's on-chain NFT anonymous transactions and other applications.

< p>

Aztec Network is a privacy trading platform based on zk-Rollup privacy technology Plonk built on Layer 2. The main network will be launched in November 2020. The current main applications of Aztec Network include zk.money and Aztec Connect. At the same time, Azteck can also be used as a privacy middleware to integrate 2-tier applications to realize the protection of transaction data. zk.money is a Layer2 privacy payment application that Ethereum users can use to send and receive Layer 2 assets anonymously. Aztec Connect is a Layer2 privacy cross-chain bridge that allows users to interact anonymously with DeFi applications on the Ethereum chain. In addition, Aztec, as a privacy middleware, has been integrated with multiple Layer2 applications, such as Aave, Lido, Compound, and Element Finance.

The development of privacy platform technology is difficult. its own high performance. It is mainly reflected in: 1. The research and development of the above three technologies in the blockchain field have certain limitations, and the underlying virtual machine needs to be developed to realize smart contracts; 2. Under the multi-chain structure, the compatibility and interaction with other platforms Operability also needs to be considered by developers; 3. All activities on the chain require privacy calculations, which may increase costs.

At present, the privacy and security technologies of various projects are in the early stage of development, we can continue to pay attention to the following aspects of these projects:

< br>

(1) Whether the cost of privacy computing fits the economic model.

(2) Whether privacy technology is friendly to ecological developers.

(3) Whether there are unique ecological applications that combine privacy, especially in the fields of DeFi, NFTfi, and social.

(4) Whether the interoperability with other platforms is flexible.

2.4 Privacy application

Privacy application in this article refers to the Layer1 or Layer2 protocol On top of that, applications that provide users or DApps with privacy protection functions in different application scenarios and anonymous transaction applications on the chain, such as communication, email, advertising data privacy protection, and currency mixing protocols. There are many such projects, and representative projects include Status, Dmail and Tornado cash.

Status is an open source decentralized communication platform, which builds Whisper on top of devP2P technology, and provides privacy-protected routing and messaging, and finally realizes peer-to-peer End user communication encryption and email encryption. Dmail is a Web 3.0-based mail system built on the Difinity public chain. It integrates functions such as decentralized identity authentication, communication, asset management, and data storage. Through the measurable random function of the Difinity public chain, non-interactive threshold signatures and so on to achieve data privacy.

Tornado Cash is a private transaction application implemented on Ethereum based on zero-knowledge proof. It is also the most well-known Ethereum coin mixer, which can hide the sending address . Users can deposit ETH into their smart contracts and then withdraw via credentials, which do not reveal the initial address. In fact, this anonymity still has certain limitations. This is reflected in three aspects:

(1) Users still need to use the network layer during the deposit and withdrawal process, so that the Internet service provider (ISP) It is still possible to record the time stamp when the information was sent and associate it with other transactions, which can be solved by using network proxy;

(2) If the deposit and withdrawal time If the interval is too short, it may lead to transaction association;

(3) Users need to pay gas when withdrawing money, this fee may expose relevant information, which can be used Repeater network solution. Because Tornado Cash has been used by the North Korean hacker group Lazarus Group to carry out large-scale money laundering while helping illegal activities money laundering, it poses a threat to the national security of the United States. Tornado Cash was sanctioned by OFAC last month and $437 million in on-chain assets were frozen.

2.5 Current Development Difficulties in the Privacy Track 

Privacy Project Lack of attractiveness to ordinary users

Ordinary users have insufficient awareness of personal privacy, and we may feel that privacy has been violated in the Web2 field Leakage hazards, harassing phone calls, advertising push, etc. But in the blockchain world, we are deceived by the "anonymity" of addresses on the chain, and with the continuous enrichment of ecological applications and the continuous improvement of data analysis tools, our "digital identity" will have nowhere to hide.

The privacy track is currently developing slowly, which is also related to the early stage of the blockchain industry. The ecology of the privacy platform is also less. Most people will not use a single-function privacy coin to ensure the anonymity of the transfer. Even if they want to ensure anonymity, most users will choose the Ethereum ecological coin mixer for anonymous transfers. (Currently, Tornado Cash is no longer available), so as to realize the anonymity of various assets of users. This low willingness to use prevents the adoption rate of privacy coins from increasing.

Private transactions are the target of regulatory investigation

< p>Similar to the use of privacy coins, it does provide convenience for blockchain network hackers, allowing them to safely hide the source of funds before entering the CEX. Privacy transactions will involve the untraceability of the receiving and sending of assets, which will inevitably lead to some on-chain transactions involving money laundering and illegal activities, and the supervision of private transactions has not stopped. From the early privacy coins to the currency mixer Tornado Cash on Ethereum, there have been experiences of being sanctioned and delisted by exchanges. This unstable regulatory policy has also led to slow user growth and ecological development of privacy trading projects.

3. Privacy and regulation 

3.1 Regulatory trends in various countries

Since the birth of Monero, the privacy track has been supervised more and more strictly. The main reason is that most projects in the privacy track involve the anonymity of transactions on the chain. , making supervision more difficult, and money laundering and illegal activities becoming more and more rampant.

In recent years, the supervision of privacy coins at the national level has been increasing. Some countries have been in a high-pressure situation in the supervision of privacy projects, such as Japan and South Korea . As early as June 2018, Japan introduced the self-regulatory plan of the Association of Cryptocurrency Exchanges to prohibit the trading of anonymous currencies. Subsequently, in November 2018, the Japan Financial Services Agency introduced new standards for cryptocurrency exchanges, which explicitly prohibited cryptocurrencies with high anonymity and easy money laundering. South Korea is two years later than Japan. In November 2021, it will issue a legislative notice for the implementation regulations of the legislative amendments to the Specific Financial Information Act. According to the implementation regulations, virtual asset service providers will prohibit the transaction of anonymous coins and the processing of virtual assets with money laundering risks, which also means that all anonymous currency assets will be withdrawn from South Korea.

In addition to national-level privacy supervision, some privacy coins that pursue the ultimate, such as Monero, have also been strengthened by many countries and taken off the shelves by many exchanges. As early as 2018, the U.S. Department of Homeland Security planned to design a new system to monitor anonymous cryptocurrencies, focusing on monitoring Monero and Zcash and other cryptocurrencies with strong anonymity. In 2020, the IRS even offered high rewards for cracking Monero. Monero will be delisted by many exchanges in Japan and South Korea in 2018–2020, and it will also be delisted by Bittrex and Kraken in the UK in 2021 and 2022, respectively.

The private transaction application Tornado Cash of the privacy track was also directly sanctioned by OFAC in August 2022. Although this is not the first time that a private transaction application has been sanctioned, But its influence is great, and it also reminds us that some new changes in privacy regulation are coming. Both the privacy transaction platform and the privacy transaction application can realize the privacy transaction of the application on the chain, which is different from the privacy currency that can only realize anonymous transfer. It can realize anonymity in more links from transaction to transfer. More challenges.

At the international level, FATF (Financial Action Task Force on Anti-Money Laundering) will also coordinate various countries to fight crime. Regulatory rules that money service providers need to comply with. According to the requirements of the Travel Rule, as long as there is relevant logic, technology or mechanism that affects the judgment of the identity of the sender and receiver, it can be judged as a privacy coin and should be subject to financial supervision of anti-money laundering.

Before Tornado Cash was sanctioned, the U.S. Securities and Exchange Commission (SEC) has been appearing in the encryption world. The company that sells supervises, supervises and prosecutes tokens and fraudulent behaviors that violate the US securities laws. The SEC’s regulatory stick has caused many encryption project parties to suffer. For example Telegram and XRP. On the non-privacy track, government supervision is also being strengthened. This is not just a privacy track or a regulatory issue involving illegal transactions, but the entire industry needs normative guidance.

3.2 Censorship Discussion on Privacy Protocol

With the largest coin mixer in the encryption field Tornado Cash was sanctioned by OFAC of the United States for alleged money laundering and illegal activities on the chain, which triggered a series of chain reactions in the entire currency circle. Both centralized companies and decentralized chain protocols have discussed and adopted compliance-related measures. As a result, a large number of DeFi protocols and centralized exchanges immediately prohibited the front-end interaction and transactions of Tornado Cash-related addresses, such as Uniswap, AAVE, Kraken and Binance Exchange. Circle also immediately froze the USDC of Tornado Cash-related addresses. And some large-scale projects have begun to worry about the harm of censorship to their development. The most discussed are Ethereum and MakerDAO, which will soon switch to PoS. Ethereum core developers discussed in detail strategies for responding to national-level regulatory scrutiny in a developer conference call on August 18, 2022.

Most developers believe that complete decentralization and unregulated is the future of Ethereum. The service provider reviews the Ethereum node and regards it as an attack on ETH. Rune Christensen, the founder of MakerDAO, proposed a more radical plan. In view of the fact that Circle's action to freeze USDC may cause great harm to MakerDAO's collateral, he proposed that DAI no longer be linked to USD and become a free-floating stable currency. Although the appeal has received a lot of response, most people are afraid of the instability caused by the free floating volatility to DAI and oppose this proposal.

As for whether an agreement or project should be censorship-resistant, the author believes that the concept of censorship needs to be clarified first. Regulators do not require all transaction information, but review the legality of transactions. Transactions are vetted, not identities. Transactions can be audited to investigate any misconduct. However, as to whether the review will affect the normal operation of the project, this requires the project party to provide review while maintaining absolute decentralization to avoid single-point problems. For developers of privacy projects, censorship has become a key consideration: whether to choose a pre-established mechanism to accept supervision, or to use encryption technology to resist supervision.

At present, there are some projects that can provide restricted access to private data, and we have sorted out some privacy projects here.

From this sorted table, we found that there are currently few privacy protection agreement projects that can meet the supervision. According to incomplete statistics, there are more than 100 privacy track projects, but only about ten have made transaction data acquisition solutions for compliance (including privacy coins that are optional for anonymous transfers). Most privacy protection agreements do not provide compliance solutions from the perspective of the agreement itself, but hand over the right to data disclosure to users, and users can choose whether to use it for auditing and information disclosure. This seems to be the new privacy protection agreement to cater to supervision. consensus. This solution may become the mainstream of privacy track compliance and anti-money laundering.

The author believes that anti-censorship and anonymity are not inherent attributes of blockchain technology, and that decentralization is the most basic feature of blockchain. The additional financial attributes of on-chain governance brought about by centralization will inevitably lead to the supervision of the entire blockchain industry. There is a certain contradiction between the transparency of data on the chain brought about by decentralization and the privacy protection of data required in reality. How to achieve privacy protection while catering to supervision will be the problem to be solved in the development of blockchain technology in the future.

4. Future development of privacy on the chain

In the blockchain industry, privacy There are two main application scenarios:

(1) Transaction privacy, including personal or corporate secret transfers, dark web transactions, etc. This part of the demand is mainly met by privacy coins, but because there may be strong supervision in the future, and the technical barriers of each project are not strong, and the pressure of competition is high, the author is not optimistic about the development of this area;

(2) The privacy of data on the chain, especially for enterprises and large households, is very necessary. Privacy can prevent shorting or running, especially in a bear market, where the financial status of various institutions and agreements is completely exposed to the public under review.

Specifically, on-chain privacy can be achieved:

(1) Anti-MEV< /p>

Sandwich attacks are very difficult for large households and institutions. In the privacy platform, all transaction information will be hidden, invisible to miners and arbitrage robots, and truly anti-MEV.

(2) Asset protection

The giant whale users who hold blue-chip NFT and large assets do not want their on-chain interactions to be analyzed . On the other hand, giant whales are also worried about being targeted by hackers and targeted phishing attacks.

(3) Interaction protection on the chain

Application scenarios that will continue to develop in the future, such as community governance voting, social networking, unsecured lending, etc. , need to participate in the interaction without providing detailed identity information. It can be realized by using privacy technology, and it is also a direction with great development potential in the future.

With the addition of traditional institutions to the blockchain industry, as well as the explosion of DID and social applications on the chain, there will be an explosion point belonging to the privacy track. Before that, we can keep an eye on the development of this track. As a developer, you don't need to spend too much time thinking about whether it is anti-censorship. The rigid demand for privacy projects is not just for "money laundering", and the privacy track also has greater room for development and imagination.

欢迎加入律动 BlockBeats 官方社群：

Telegram 订阅群：https://t.me/theblockbeats

Telegram 交流群：https://t.me/BlockBeats_App

Twitter 官方账号：https://twitter.com/BlockBeatsAsia