01丨What is Web3 privacy?
In general, internet privacy refers to the invisibility of user data such as identity, behavior, and activities.
In the internet age, all our information and activities are presented in a digital format, and once any system storing digital information is connected to the internet, it becomes a possible target for hackers, especially for sensitive information such as financial and personal health data. The privacy and security of data become more important.
According to the development history of the internet, it has gone through different privacy storage channels from Web1.0 to Web3.0:
Web 1.0 is a static internet, mainly used for web media where content is provided by websites and users can only passively browse text, images, and video content without participating in the creation.
Web 2.0 is an interactive internet, the current stage we are in, mainly used for social networks, video platforms, e-commerce, etc., where users can create and upload content for interaction on the platform.
It can be seen that the first two are saved by centralized institutions with data privacy. Just like in the traditional banking model, a centralized third party protects necessary and valuable privacy information.
However, the main features of Web3.0 include public and transparent blockchain ledgers and decentralization. The blockchain records the on-chain data, namely our transactions and the information included in the transactions, generally including the sender, recipient, and amount of the transfer.
If users do not want to reveal this on-chain data information, this is the user privacy that needs to be protected in Web3. But how to protect user privacy?
In the tenth chapter of the Bitcoin white paper, Satoshi Nakamoto spent the entire chapter describing the privacy model of the Bitcoin blockchain network, which is from "banks evolving to the Bitcoin network," and the Bitcoin blockchain solves this problem through asymmetric encryption.
After the user's privacy information is controlled by the blockchain privacy technology, content and applications can be created and led by users, enabling user co-creation and co-governance (DAO, decentralized governance), while users can also share the value of the platform/protocol.
02丨Current Development Status
Based on data, identity, and computing privacy, there are many applications developed in the Web3 privacy field. If we divide them into categories, they can be classified into four major categories: privacy tokens, privacy computing protocols, privacy transaction protocols, and privacy applications, as follows:
Privacy Assets
Privacy assets refer to native encrypted assets that support privacy. External parties cannot view specific transaction types, amounts, and other information between the parties involved in the transaction.
They usually do not support smart contracts and related applications. Relevant projects have emerged as early as 2011.
The most famous project is Zcash. It is the first blockchain system to use the Zk-SNARK zero-knowledge proof mechanism, with the aim of thoroughly solving the problem of tracking transactions and exposing user privacy.
Privacy Computing Protocols
Privacy computing protocols mainly protect privacy in the process of data generation, collection, storage, analysis, utilization, and destruction.
In addition to common scenarios such as DeFi and NFT, with the development of technology, it can also be deeply integrated with the big data and AI industries.
However, the actual application scenarios of privacy computing protocols are still relatively limited, and their development is also relatively average.
Privacy Transaction Protocols
Privacy transaction protocols mainly focus on the privacy protection of on-chain transaction data. They natively support users to conduct privacy transactions through technologies such as zero-knowledge proofs, ensuring that their privacy data is not visible to external parties.
They also support the development of more types of privacy applications on the protocol. Privacy transaction networks include #Layer1 privacy protocols and #Layer2 privacy protocols, but there are not many mainnets currently online, and overall development is average.
Privacy Applications
Privacy applications refer to applications built on top of Layer1 or Layer2 protocols that provide different application scenarios with privacy protection functions for users or DApps, such as transactions, payments, emails, etc.
The decentralized concept of #Web3 gives individuals greater autonomy and privacy protection, giving us more choice and control.
However, for now, people still value industry security more, such as the development of various wallets, and the privacy track still seems to be a niche market.
The user and usage volume of privacy infrastructure and applications is relatively low compared to other tracks within the industry, and most privacy infrastructure and applications are still under development and construction.
However, some people believe that privacy solutions have a strong appeal in attracting more institutional capital to participate in the crypto ecosystem, ensuring that important financial data and business secrets are not leaked.
Therefore, privacy infrastructure is also an important infrastructure for the next wave of the crypto ecosystem's explosion.
Therefore, whether encrypted privacy can win more users in future usage scenarios still needs attention and observation.