As the blockchain industry continues to expand, privacy solutions are advancing to address the needs of businesses. Recent research from Precedence predicts the global blockchain technology market will reach $187 billion by 2034, with North America’s market alone valued at $8.1 billion last year. However, despite this growth, privacy remains a key concern for enterprises adopting blockchain technologies.
Paul Brody, Global Blockchain Leader at Ernst & Young (EY), highlighted the issue, stating that privacy technology is still underdeveloped. He emphasized that for businesses, sensitive information like transaction details, terms, and conditions need protection, which public blockchains currently lack.
Public Blockchains and the Privacy Challenge
Public blockchains are inherently transparent, which poses privacy risks. Avidan Abitbol, Project Director of Data Ownership Protocol (DOP), pointed out that the open visibility of transaction data on traditional blockchains can leave users vulnerable. As a result, many enterprises are turning to private blockchain networks for greater security and control. Research from Wipro shows that 40-60% of enterprises have already adopted private blockchain networks, which offer limited access and greater centralization.
Jake Claver, Director of Digital Ascension Group, noted that financial institutions often prefer permissioned blockchain systems, such as R3 Corda, which provides enhanced privacy and security.
New Privacy Solutions for Public Blockchains
Despite the popularity of private blockchains, advancements in privacy solutions for public networks are on the rise. Brody discussed EY’s Ethereum Layer 2 network, Nightfall, which allows businesses to transfer tokens privately. Launched in 2019, Nightfall has progressed with the rise of tokenization, providing businesses a way to manage confidential transactions on public blockchains.
EY has also developed an application called “Starlight,” which turns smart contracts into customized zero-knowledge circuits, creating a private “black-box” for business agreements on-chain.
DOP has introduced a solution to balance transparency and privacy through “selective transparency.” This feature enables organizations to control the amount of information shared on a blockchain, ensuring sensitive data remains confidential while only disclosing necessary information to stakeholders.
Recording Private Transactions on Public Networks
Charles Adkins, President of Hedera, highlighted the Hedera Consensus Service (HCS), which enables privacy and decentralized ordering for sensitive data while still leveraging public blockchain benefits. HCS allows private transactions to be recorded on Hedera’s public ledger without exposing the details, ensuring both privacy and security.
Challenges and Future Prospects
Despite progress, challenges remain in making privacy solutions more efficient and cost-effective. Brody mentioned that while EY’s solutions have reduced transaction costs to as low as $0.01, there’s still room for improvement. Simplifying the technology behind privacy tools is also a priority to enhance user accessibility.
Additionally, balancing privacy with transparency and complying with privacy regulations, such as GDPR, remains a complex issue for businesses using blockchain.
The Road Ahead for Enterprise Blockchain
Despite these hurdles, enterprise blockchain adoption is expected to thrive. Claver believes that key challenges, such as digital identity and regulatory compliance, will be addressed by the end of this year. Adkins echoed this optimism, noting that businesses are recognizing the efficiency blockchain can bring to their operations, driving further enterprise adoption.
As privacy solutions continue to evolve, blockchain technology is poised to play an even greater role in reshaping how businesses operate globally.
