The difference between pseudonymity and anonymity: When zero is more

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When Satoshi published his seminal paper 14 years ago, no one had imagined that the technology would change how we communicate and transact.

There is a new way of storing data that is called distributedBlockchain. A cascade of new possibilities are unlocked by transparency and immutability. The two attributes make the system particularly suited for use cases. For many mainstream scenarios that Web3 will need to address to satisfy the broadest segment of users, a data layer that demands this degree of transparency is not a good idea.

Blockchain isn’t as private as you may think

People tend to think that blockchains are more private than they really are because of the stories of black market transactions using them. If they were truly anonymous, the data could not be linked to any one person. That isn't what blockchains typically give.

pseudonymity is offered by theBlockchains. A false name is used to hide your identity. Alexander Hamilton, James Madison and John Jay used the namePublius to promote the United States Constitution.

The truth is that this can feel like anonymity, but it isn't. Every transaction is more personalized with each additional transaction it becomes attached to, because every transaction identifies its participants by a coin address. Anyone who transacts with a person's wallet on a publicBlockchain can immediately access every action that wallet's owner has taken for as long as that chain exists.

Some transactions should remain private, even in a digital world

Most of us have accepted that we will have to give up some of our privacy in order to participate in the digital world. Whether it's our phones tracking and recording our real-time locations in exchange for navigation, search engines maintaining a history of our queries in exchange for convenient access to information, or email services parse our messages to offer us more relevant advertising, consumers increasingly understand that these "free" services are

Privacy is still needed in some cases. It's still not acceptable to reveal our medical data in a way that is permanently and publicly viewable.

The data layer for Web3 is completely transparent. It is not only your internet service provider that has access to what you are doing. Everyone is part of the equation. Though you may not have a choice in what data you reveal, you are at least revealing it to one person.

Everyone is able to see your information. This may make sense for certain use cases. It is difficult for the average user to keep some semblance of confidentiality.

As Web3 utilities become more composable and connected, pseudonymity will become less reliable. The bigger the web of information associated with a wallet address the more vulnerable it is to be exposed. Privacy is a must for the mainstream use cases that users and institutions will want to use. The question of privacy is no longer a question of philosophy. Privileged information is protected by pseudonymity.

Zero-knowledge provides just enough information for proof

Zero-knowledge proof is a new technology that can be used to solve a problem. Zero-technology allows people to prove the truth of an assertion without revealing anything else. This is similar to a person proving they are old enough to buy a beer and not have to reveal their other personal information. Individuals are allowed to expose information as necessary.

Zero-knowledge can be applied to public blockchains to achieve flexibility. For example, someone could prove they have passed a health requirement, earned a degree, or both, without revealing any other irrelevant information, thanks to the combination of theseBlockchains with zero-knowledge technologies. Self-sovereign identity could lead to more secure forms of secure digital voting that reveal only the verified candidate selection while keeping the anonymity of the individual voters.

Zero-knowledge technology makes it possible for users to own and protect the data that is most important to them in a way that is programmable. The viability of the emerging Web 3 sector is at stake.

Alex Pruden is the COO.

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