Rethinking Privacy in the Blockchain Era

The blockchain landscape is undergoing a significant transformation, as it transitions from public to private networks. A recent development is the proposal for private enterprise stablecoin transactions by Tempo, a Stripe-backed payment blockchain. This move signals a verdict on the future of institutional chains, which will likely be private. However, the question remains as to what kind of privacy will be implemented. The problem with public chains is that every transaction is visible, making it an existential problem for financial markets. This visibility issue can be addressed through different approaches, including private parallel blockchains and zero-knowledge cryptography. The choice of privacy model will have significant consequences for the industry, including the distribution of trust and the risk surface. As the industry moves towards on-chain deployment, it must carefully consider the type of privacy it wants to build, and who, if anyone, it is willing to trust with sensitive information.