Rethinking Privacy in the Blockchain Era

The original public blockchain model is being replaced by private networks, as seen in Tempo's recent proposal for private enterprise stablecoin transactions. This shift is driven by the need for institutional investors to maintain confidentiality in their transactions. However, the question of what kind of privacy to build remains. The problem with public blockchains is that all transactions are visible, which is a major concern for institutions. Tempo's solution, Zones, offers private parallel blockchains connected to the main network, but this model relies on trusting an intermediary. Alternatively, zero-knowledge cryptography provides a different approach, allowing for verifiable privacy without revealing underlying data. The choice between these two models will determine the industry's risk surface, compliance posture, and exposure to failure modes. Ultimately, the decision on what type of privacy to build will have significant consequences for the future of blockchain technology.