Busting the Myth of Private Blockchains

17-03-2023

url: https://consensys.net/enterprise-ethereum/best-blockchain-for-business/busting-the-myth-of-private-blockchains/
three types of blockchains
- public
  - middleman is cut off
  - throughput is a challenge
- private
  - middleman is present
  - improves efficiency and transaction speed
  - decentralisation is lacking, incentive structures are not the same as public blockchains
- consortium
  - permissioned, partly private and semi-decentralized
  - improves efficiency and transaction speed, transaction privacy
  - power is not consolidated with one company
  - still a traditional centralized system
permissioning vs privacy
- permissioning includes who has access and control, while privacy denotes shielded transaction data
privacy is not a property of blockchains
- there are layers of privacy that can be applied
- allows for private or shielded transactions
- benefit from decentralized security of a public blockchain
blockchain privacy
towards a public-first approach
- interoperababilty
  - public mainnet - global reach, resilience, integrity
  - other open-source blockchain solutions - future adaption and expansion
  - Ethereum plugs into traditional cloud services and can interact with private and consortium blockchains
    - less complexity and maintenance overhead
    - needs appropriate privacy and confidentiality layers
layers of privacy with enterprise blockchains
- considerations (who has the ability)
  - access
    - read or write
  - visibility
    - transactions
  - storage
    - data
  - execution
    - start, start, restart processes
- challenges with private blockchains
  - enforcing controls around access and visibility becomes more difficult as the network expands
  - channels are used to ensure transaction privacy, a single protected route between two parties
    - a channel must be added for each party pair, adding complexity
  - these networks are not future proofed
    - can they scale and still meet the original objective of the consortium
  - by default these blockchains only ensure that the participants and contracts cannot be viewed by non-participants
- three layers of privacy
  - privacy of participants (participants remain anonymous, inside and outside the network)
    - ring signatures, stealth addresses, mixing, storing private data off-chain
  - privacy of data (transactions, balances, smart contracts)
    - encrypted on or off chain
    - zero-knowledge proofs, zk-SNARKS, Pedersen commitments, off-chain privacy layers like TEEs
  - privacy of terms (terms of contracts between two parties)
    - range proofs, Pedersen commitments
ConsenSys Quorum
- private information is never broadcast to network participants
- private data encrypted
- privacy layers for public and permissioned Ethereum
- enterprise ethereum
key takeaways
- privacy is not binary, should be thought of in layers
- privacy layers must be built on any blockchain and can be built into both public and private chains
- private networks are not future-proofed
  - can they scale and still meet the original objective of the consortium
key terms
- channels
- permissioned vs privacy
- public, private, consortium blockchain
- interoperability
- cryptographic tools
  - ring signatures, stealth addresses, mixing, storing private data off-chain
  - zero-knowledge proofs, zk-SNARKS, Pedersen commitments, off-chain privacy layers like TEEs
  - range proofs, Pedersen commitments