Difference between pseudonymity and anonymity: When zero is more

Blockchain Combining these three activities is a generational technology that fundamentally changes the way we communicate, interact, and operate, in a way that no one imagined before Satoshi published his seminal paper 14 years ago.

At its core, distributed blockchain architecture is simply a new way of storing data. But at its core is transparency and immutability, which opens up a cascade of new functions and potentials. These two attributes make blockchain particularly suitable for use cases such as international financial settlements, non-existent tokens or supply chain management. However, for numerous key scenarios Web3 will have to address to satisfy the widest segment of users, a data layer that requires this level of transparency is a non-starter.

Blockchain is not as private as you might think

Perhaps because of its ever-present and fascinating stories cryptocurrency people think blockchains are more private than they really are because they are used to carry out black market transactions without detection. If they were truly anonymous, blockchains would completely mask user identities and actions from being linked to individual people. But that’s not what blockchains typically provide.

Instead of anonymity, blockchains offer pseudonymity. Pseudonymization is the use of a false name or persona to hide your true identity. For example, Alexander Hamilton, James Madison, and John Jay wrote under the pen name “Publius” to promote the United States Constitution.

Similarly, blockchain-based applications require users to provide name, social security number, etc. does not require sharing personal identifiers such as This may seem deceptively anonymous, but the truth is almost the opposite. In Blockchain, instead of anonymity, each transaction identifies its participants with a crypto wallet address, which becomes more personalized with each transaction to which it is added. In short, anyone who transacts with a person’s wallet on a public blockchain can instantly access every action that the owner of the wallet has made during the lifetime of that chain.

Some transactions must remain private even in the digital world

As we spend more and more of our lives online, most of us have come to accept that we will have to sacrifice some of our personal privacy to participate in the digital world. Whether it’s our phones that track and record our real-time locations in exchange for navigation, search engines that store our query history in exchange for convenient access to information, or email services that analyze our messages to offer us more relevant advertising, consumers increasingly understand that “ free” services are provided at the cost of their data.

Nevertheless, there are cases where the need for privacy still prevails. For example, it would still be unacceptable to most of us to release our medical information, especially permanently and publicly.

For better or worse, as a data layer for Web3, traditional blockchains are perfectly transparent. With blockchain-based applications, it’s not just your ISP or search engine that sees what you’re doing. Everyone is. This represents a massive departure from existing web architecture, where you don’t have a choice about what information you expose, but at least you only expose it to one counterparty.

On a public blockchain, your information is visible to everyone. For certain use cases, such as supply chain auditing, contact tracing, or government accountability, this may make sense. But it’s a tough price to pay for the average user who wants to maintain some semblance of privacy.

Furthermore, aliasing will become increasingly inadequate, especially as Web3 utilities become more combinable and interconnected. The larger the network of data associated with a wallet address, the more vulnerable it is to exposing the person behind it. For the main use cases where users and institutions will want to use decentralized blockchain-based solutions, at least some degree of privacy is a must. The privacy issue becomes a security issue, not a philosophy issue. Pseudonyms are inadequate protection for entities that hold privileged information.

Zero knowledge provides sufficient information for proof

Fortunately, there is a new technology that provides a solution: zero-knowledge proofs. A technology called zero technology allows individuals to prove the truth of an established fact without revealing anything beyond that fact. It’s analogous to someone proving they’re old enough to buy a beer without revealing all the other irrelevant personal information on their driver’s license. As a result, it allows individuals to disclose information only when necessary.

Applying zero knowledge to public blockchains allows us to achieve flexible privacy, compatibility and scalability. The combination of these blockchains with zero-knowledge technologies could enable use cases such as self-sovereign identification, so that, for example, someone can confirm that they have passed health requirements, earned a degree, etc. without revealing any other irrelevant information. can prove. Similarly, self-sovereign identity can lead to safer forms of secure digital voting that reveal only verified candidate selection while preserving the anonymity of individual voters.

In short, zero-knowledge technology makes blockchains programmable while allowing users to truly own and protect the data that matters most to them. This technology has a major impact on the viability of the emerging Web 3 sector and the wider internet.

Alex Pruden is the company’s chief operating officer Aleo.