Privacy

Privacy in blockchain can be divided into two main categories based on the type of service required. These categories are the anonymity of the users and the confidentiality of the transactions. Anonymity is concerned with hiding the sender’s or receiver’s identity, whereas confidentiality addresses the requirements of hiding transaction values.

The fundamental reason why blockchains are not privacy-preserving is that every transaction in a blockchain needs to be verified and executed by every participant on the network. While this property of executing all transactions by all nodes gives blockchains their powerful integrity property and execution guarantee, this is also a weakness.

This weakness is the result of inherent transparency in blockchains. As all transaction data, including account details, inputs, outputs, and states are visible to anyone on the blockchain, privacy cannot be preserved.

One solution that comes to mind is that we could somehow...