How to keep data private on a blockchain

With an increasing number of blockchain applications going in to production privacy is a concern which, in most cases, still remains unanswered. A number of solutions are now emerging which look to address the issue of ensuring privacy of data on blockchains.

Why is privacy a concern when using blockchain technology? Unlike centralized systems where one centralized party can view all the data and control the access to it, the premise of a decentralized system is that the transaction data is shared with all participants. This sharing is required to enable all parties to agree on the validity of the transactions, a process called consensus. Disclosing information to multiple parties in order to have them validate the transactions introduces a problem if that data also needs to remain private.

For instance if I buy a pizza and pay with Bitcoin the whole world (well, everyone with access to a Bitcoin node) can see my payment-transaction as it is shared with all Bitcoin nodes. In public blockchain networks like Bitcoin and Ethereum this means that all transactions are shared with all nodes. And although it is hard, it is not impossible to reveal the real-life identities of the person involved in the transaction. In permissioned blockchain networks where only identified parties can participate, all identities are immediately known by definition.

The problem of disclosing private information in order to have multiple parties validate the transactions can be addressed in various ways, this article describe the 3 most common ways:

The concept of trusted computing originates from gaming where a gaming console can have more information about a game than the actual player who owns the gaming console. For instance in a first-person shooter game the fact that an adversary is hiding behind a wall may be hidden to the player even though this information is present on the gaming console.

Intel Security Guard Extensions (SGX) a feature found in modern Intel CPUs uses a trusted execution environment (TEE), an isolated part of the memory that can only be accessed through specific APIs. The TEE cannot be accessed by any other process, not even by the operating system or BIOS. The TEE is therefore sometimes nicknamed secure enclave (see purple square in…

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