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Blockchain Semantics Blog How does blockchain maintain privacy?

How does blockchain maintain privacy?

Feb. 5, 2018, 5:55 a.m. GMT

Blockchain is not typically private. Transactional data in Blockchain can be viewed by anyone. Thus everyone in the network knows what a specific address holds. But to link the data of an address to a person is very difficult, almost close to impossible. In that sense, it is private. Technically speaking, this aspect of Blockchain is called being pseudonymous. The word pseudonymous implies using a fictitious identity not linked to your real world identity. In Blockchain, your pseudonym is the address.

Essentially, it is possible to run transactions on a Blockchain without giving any personally identifying information, using only your Blockchain address and keys. However, achieving complete anonymity with Blockchain can be quite complicated and difficult. Running transactions on a  Blockchain is like writing under a pseudonym. Every transaction involving that address is stored forever in the Blockchain. Thus Bockchain uniquely identifies the address but not the person whose address it is.

In the original Satoshi white paper, it was recommended that Bitcoin users use a new address for each transaction to avoid the transactions being linked to a common address, hence a common owner. If a different address is used every time then it would be very difficult to recognize a pattern or that the transactions relate to the same owner owing to same addresses.  This would be the equivalent of writing many books under different pseudonyms. Not doing it does not necessarily give up your identity but doing it definitely improves your anonymity.

To learn more about privacy and how does Blockchain maintains it, pls visit Blockchain and Bitcoin Certification by Blockchain Semantics.


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