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Transparency in Blockchain is a Double-Edged Sword, Says DOP Head of Protocol

Last Updated January 12, 2024 5:18 PM
Josh Adams
Last Updated January 12, 2024 5:18 PM
Key Takeaways
  • Contrary to popular perception, blockchains are neither opaque or anonymous.
  • This means user data is open for anyone with the skills to look.
  • The solution to this? Selective data transparency, says DOP.

In the early days of blockchain technology and cryptocurrencies like Bitcoin (BTC), transparency was paramount. The idea was that by having a decentralized public ledger visible to all, blockchain-based systems could establish trust without centralized authorities. 

However, as cryptocurrencies and applications built on blockchain continue maturing, some trade-offs around radical transparency have become apparent.

Transparency Isn’t Always A Good Thing

Enter DOP, or the Data Ownership Protocol , a decentralized app (or dApp) which is pioneering an approach it calls “selective data transparency.” As explained by Matan Almakis to CCN, DOP’s Protocol Lead, selective data transparency means “giving users control over what transaction information they share publicly. It’s a middle ground between complete transparency and total privacy.”

Why is selective transparency important? While transparency establishes trust in blockchain networks, according to Almakis, total transparency means all transaction details are public, which presents privacy concerns. “For many users, this level of openness can feel intrusive and risky,” he said. Handing control back to users addresses these concerns while still maintaining blockchain’s inherent security and auditability.

Moreover, government surveillance of blockchain networks and crypto transactions is more prevalent than ever. Authorities are monitoring activity to crack down on organized crime and to ensure proper tax compliance on crypto gains.

In Almakis’ view, selective data transparency is about “giving users control over what transaction information they share publicly. It’s a middle ground between complete transparency and total privacy, where users can disclose certain transactions while keeping others private.” This empowers users with choice and control, which Almakis—and many others—see as crucial for widespread adoption of web3 technologies.

Blockchain And Crypto Aren’t Private

Outside observers often assume cryptocurrencies guarantee privacy, but, in fact, the opposite is generally true. In reality, blockchains offer pseudonymity—or hiding someone’s real name or personal details by using a fake name or identifier, like a blockchain address. Contrary to myth, “most blockchain transactions are transparent and traceable,” added Almakis.

“In practice, this means anyone with some know-how can view transaction histories and wallet balances,” observes Almakis. DOP flips the script using advanced cryptography like zero-knowledge proofs, empowering users to selectively disclose data depending on the context. A welcome change to the lack of user control that web2 giants introduced.

Almakis admits that poor user experience remains a significant barrier to mainstream blockchain adoption: “The biggest challenges arise from complexity and accessibility. Many web3 platforms are not intuitive for users accustomed to the streamlined experiences of web2 applications.”

Like many in the industry trying to make things easier for new users, DOP too is trying to simplifying processes to be more accessible while maintaining blockchain’s “security and functionality”.

Building On Top Of Ethereum

For the team at DOP, building on top of Ethereum was a no-brainer. It’s the ideal foundation for DOP due to its position as the leading platform for decentralized applications, “not just in terms of its size but also its vibrant developer community and ecosystem.” Building on Ethereum also integrates DOP with an extensive existing user base and applications. (Currently, there are over 250M  unique Ethereum addresses). Moreover, Ethereum’s compatibility with additional blockchains and layer 2 solutions means DOP is “positioned perfectly to broaden our reach and capabilities.”

In 2024, DOP plans to continue enhancing user control over data by expanding integration across EVM-compatible blockchains and layer 2 solutions for greater accessibility. The company also has collaborations in the works to showcase selective transparency’s benefits across industries.

Rather than opposing blockchain’s original transparency focus, DOP believes it is adapting to users’ evolving needs. So far, it’s approach has proved a success, with the protocol reaching one million testnet users on January 11. “We’re not going against the spirit of crypto; rather,” added Almakis. “We’re adapting its principles to the realities of today’s digital world.”

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