Organizations Won't Embrace Web 3 Without Privacy Options, Says Web 3 Executive
November 28, 2024
Organizations are hesitant to adopt Web 3 technologies because of the very transparent nature of public and open blockchains. That’s why Avidan Abitbol, project manager of the Data Ownership Protocol (DOP) privacy solution, explained to Cointelegraph that selective disclosure via zero-knowledge technology solves this problem.
“Transparency increases the risk of theft for organizations, increases the targeting of fraudsters, and puts these organizations at a disadvantage during business negotiations,” said Abitbol. The project manager explained:
“Organizations want to hide payments, workflows, and day-to-day operations, as well as the names of those they pay and when they pay. If you have Bitcoin or Ethereum balances, these things become very relevant to others.”
In addition, transparency can create many risks in the market, as traders use the holdings or transactions of large institutions as an indicator to manipulate asset prices, according to Abitbol.
Privacy as a form of security
Transparency in blockchain is a major barrier to enterprise adoption. In September 2024, Paul Brodie, global blockchain leader at technology consulting and services firm EY, told Cointelegraph that privacy is essential to protecting corporate operations.
The executive noted that the lack of privacy in blockchain has implications beyond corporate finance and extends to other sectors, such as healthcare — where patient and customer confidentiality is paramount and medical records must be kept private.
In October 2024, blockchain provider Chainlink launched private transactions for enterprises, which included a suite of privacy-enhancing features, including a blockchain privacy manager and a private transaction encryption tool (CCIP).
ANZ Bank was among the first institutions to test Chainlink’s privacy features for settling real-world tokenized asset transactions.
In addition to the above, transparency in the blockchain increases the problems of maximum extracted value (MEV). Maximum extracted value (MEV) refers to the arrangement of transactions within a block by miners or validators, to obtain the maximum economic benefit.
Block producers use highly visible data on public, open blockchains to extract economic value from investors and traders — a problem that privacy solutions, such as data masking, can mitigate.
