A blockchain is a common public database that collects transactions between two sides. It utilizes cryptography to secure the information in a blockchain network.
Blockchain technology achieves network data privacy using below methods
- Blockchain technology utilizes asymmetric cryptography or public and private keys to encrypt and decrypt information on the blockchain network. Each blockchain consumer has a public and private key. The public key can be held open as it does not contain his owner’s personal data, but private key should be retained confidential as it includes his owner’s personal information and can process any transactions when coupled with its public key, thus providing a way to a secret transaction. However, the private key cannot be determined from the public key. Each user on the blockchain network has an address derived from hashing their public key and is used to represent their past transactions without showing the owner’s personal data.
- Peer-to-peer network: in the blockchain network, every node on the network saves a copy of all transactions. To add these transactions to the blocks, the nodes must confirm that the transaction is valid and that the owner has not spent or spent more than he has by cross-checking his past transaction data. Once the nodes validate a transaction, miners further validate it by handling agreement algorithms like job evidence, stake evidence, etc.
- Zero Knowledge Proof: Zero-knowledge proof is a protocol of consensus in which transactions can be valid by one party without revealing any party’s personal information through the use of complex cryptographic algorithms. Recently this was launched to blockchain technology using Zk-Snark protocol.
In sectors such as finance, healthcare and legal, privacy in blockchains is required.