Transparency, which is one of blockchain’s biggest selling points, also hinders widespread adoption and applications in fields like business and medicine, Eran Barak the CEO of Midnight — a privacy sidechain for Cardano — told Cointelegraph.
The CEO said that blockchain metadata reveals much about an individual or entity that allows them to be easily identified, traced, and modeled by threat actors and big data collectors.
Barak gave the hypothetical example of onchain medical records and said that if an individual does not have privacy, the frequency of visits to a doctor could signal that something is wrong to any outside observer.
Metadata from individuals within a broad organization can also compromise the security of the whole organization by providing forensic clues that give a threat actor a more comprehensive picture of the intended target.
The Midnight CEO added that the privacy problem is even more pronounced in the age of AI, where AI can assemble heuristic clues about an individual or entity and statistically model probable outcomes about them.
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Businesses and institutions need privacy to conduct commerce
Paul Brody, the global blockchain leader at IT services firm EY, previously told Cointelegraph that businesses need privacy solutions to embrace blockchain or Web3 applications in their operations.
The executive said businesses — particularly large corporations and market movers — require privacy to shield sensitive data on competing pricing strategies or business contracts from prying eyes.
Failure to protect this data can result in attacks on competitors or even downturns in global capital markets.
Avidan Abitbol, the project director for the Data Ownership Protocol (DOP) privacy solution, echoed this viewpoint and added that businesses need to protect data generated through daily operations such as payments, asset holdings, and workflow.
David Holtzman — a former military intelligence professional, author, and White House adviser — also warned that AI is set to disrupt centralized information systems and privacy.
Holtzman argued that the solution was decentralizing information systems through blockchain while simultaneously shielding that data to ensure privacy and security in the age of machine intelligence.
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