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Problems With Blockchain Privacy: Imperfections That Many Fail To Notice

20:00 16/02/2019
Problems With Blockchain Privacy

Blockchain technology has captured the attention of everyone interested in the tech world ever since it first appeared along with Bitcoin, ten years ago. It caused even more hype in recent years since Ethereum was launched, as this particular platform pointed out many other use cases that were previously not considered.


As a result, companies around the world have developed a significant interest, while many new startups appeared, trying to tackle real-world issues through the use of this tech.


However, while blockchain may have a lot of potential to solve problems and revolutionize countless industries, it also has its own flaws, mainly when it comes to privacy issues.


Blockchain privacy problems


One of the main traits of blockchain technology, which is there due to design itself, is transparency. Transparency was introduced so that there would be no secrets regarding online transactions, which is something that crypto purists praise this technology for. However, since additional blockchain use cases emerged, it quickly became clear that transparency is not always the best way to go, especially when sharing data.


Transactions made on blockchain are public, and anyone can see them at any time. This means that the data is not encrypted and that all of the content is perfectly visible. This is not a good thing when it comes to sensitive personal information, whether it concerns finances or medical records.


Solutions such as storing only encrypted data were proposed, but they also come with their own set of problems. For example, the loss of a decryption key might mean that the data is lost forever. The opposite is also an issue, and the data might get available for everyone once again if the decryption key gets published online.


However, as far as blockchain technology is concerned, there are just as many positives, if not more — just like with any other new invention.


Resolving MITM attacks


MITM stands for “Man-in-The-Middle”, and it is the name of an attack where the Certificate Authority (CA) gets tricked to offer users forged public keys, which might lead to the reveal of sensitive data. One solution for the problem would be for the user to put their public keys in a published block, which would make the key immutable. As a result, it would be very hard for potential attackers to publish fake keys and claim they are the real ones. In addition, the CA would also be distributed, and bringing down the service would become nearly impossible.


Immunity to data manipulation


Every blockchain-based transaction is shared on every participating node. In other words, every node that validates transaction gets its own copy of the information that was confirmed, meaning that no one can manipulate this data without the network noticing and correcting the fake information.


This prevents many problems, including data manipulation, which can be crucial in some industries, such as healthcare. Through the use of blockchain, it will become nearly impossible to do health insurance scams or fake records.


Immunity to DDoS attacks


DDoS attacks were one of the biggest online threats in recent years, with numerous websites and systems suffering the effects whenever someone attacks them. However, if DNS systems were based on blockchain tech, these attacks would be much more difficult to successfully pull off. The system would be additionally secured and transparent, and the DNS infrastructure could not be targeted due to the fact that it is distributed.




Privacy on blockchain technology is an aspect that still needs a lot of work. While blockchain security is a massive improvement compared with other systems, it lacks significantly when privacy is concerned. However, there are solutions for this as well, one of which is the implementation of zk-SNARKs, which were already used by Ethereum and Zcash. The solution allows users to make payments anonymous, as well as to vote anonymously, among providing other advantages.


In the end, it is important to develop a strong and safe system such as the one that blockchain offers, especially now, when online threats continue to emerge almost on a daily basis. Blockchain will not eliminate them all at once, as no universal solution exists. But switching to blockchain technology would solve a large number of the issues, and at least reduce the problems that cannot be solved right now.

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