Where the boundaries are between personal privacy protection versus intrusion for a higher purpose is a hot topic of public debate right now. This is normal, given the technological advances of our society discussed so far.
Privacy is a desirable feature, not just for criminals, but also by regular people and businesses who don't want their personal and confidential information to be compromised and monetized by third parties. Given the transparency of public blockchains, many businesses may not feel comfortable to use them for conducting their operations. There is a lot of sensitive business information such as transactions with suppliers, quantities, and other private supply-chain details, as well as employee pay, which may not be appropriate to be stored on a transparent, public blockchain. Such information usually is kept as a trade secret, as it can be a source of important competitive advantage, after all.
Therefore, in parallel with the technologies powering the information age, solutions have been in development to secure privacy and mitigate risks of personal data breaches. These solutions mostly revolve around cryptography. You probably remember our cryptography overview from Chapter 5, Five Forces of Bitcoin – #2 Cryptography. Here, we'll have a look at several blockchain cryptoassets, which have made advances in their privacy features beyond what Bitcoin offers. They focus, first and foremost, on delivering excellent privacy solutions to the market.
It is a common misconception that Bitcoin is an anonymous currency. Actually, it is pseudo-anonymous, since all transactions can be seen by anyone using a block explorer like those we described earlier. Bitcoin transactions don't show usernames, but they show their public addresses, which can then be linked to the owners. This can be done at any point where users are required to do KYC, or otherwise disclose their identity, in order to transact. Such network nodes can include exchanges, other regulated financial institutions, airlines, e-commerce websites, or other merchants, which may accept payments in Bitcoin.