Disclosure: The views and opinions expressed herein are solely those of the author and do not represent the views and opinions of crypto.news editorial.
Blockchain is famous for making every transaction, i.e., publicly visible. It’s like a glass house where you can see everything, and that’s the big advantage of this house. But there’s a problem. This transparent world is so revealing. It’s like entering a room with glass walls, forgetting that when we look out, others can also look in. This clear and transparent world reminds me of the old Internet (web1) era when all information flowed freely. Unfortunately, it is starting to resemble a world where Web 1 has become Web 2 and data has begun to be collected, analyzed, and monetized. We live in a world where our online activities have been and are being tracked without our knowledge.
The beauty of blockchain lies in its honesty and integrity, but it also has the shadow of excessive transparency. Similar to web2, where tech giants constantly monitor online activity and collect data, the openness of blockchain means financial data (considered sensitive and encrypted data in web2) is publicly viewable by anyone curious. It allows you to observe digital activity. The very property that underpins the trustworthiness of blockchains—transparency—brings a higher level of exposure than some users might have expected.
Blockchain was envisioned as a revolutionary space that would empower us over our digital existence. However, as technology evolves, there is a middle ground that promises a blockchain experience that respects user autonomy and provides a transparent yet controlled digital environment.
Blockchain’s new level of transparency is revolutionary, but it also comes with some risks. An open ledger becomes a double-edged sword. Users, especially those new to the blockchain world, are exposed to unexpected risks. The visibility of transactions can lead to targeted phishing attacks, where malicious actors exploit transaction data to create persuasive scams.
This vulnerability goes beyond individual privacy concerns and impacts the architecture of the decentralized spirit that web3 advocates. The promise of a decentralized future is built on user empowerment and security, but this level of exposure could centralize power in the hands of those who know how to leverage on-chain transparency.
The spirit of decentralization is rooted in individual empowerment and away from the centralized control that is a hallmark of Web2. However, the current state of blockchain transparency may unintentionally replicate the dynamics it seeks to dismantle. In a world where all transactions are public, power dynamics shift to who can access, analyze, and leverage this information.
This scenario could lead to a new digital divide where a savvy minority holds disproportionate influence over the majority. This challenges the core principles of decentralization, potentially leading to web3 mirroring the centralized and controlled environment of its predecessor.
In the face of these challenges, advocating for on-chain data ownership emerges as an important solution and beacon of hope for preserving the decentralized spirit of web3. Blockchain data ownership shifts the narrative from passive transparency to active control.
This approach gives users control over their digital presence, allowing them to choose what is visible and what remains private. On-chain data ownership addresses the surveillance problem head on by returning control to the users, ensuring that blockchain remains a tool for empowerment rather than a passive ledger of public information.
Giving users control over their data and transaction visibility is key to balancing the transparency and user autonomy needed for blockchain. These controls can be implemented through various means, such as privacy-enhancing protocols or selective disclosure mechanisms that allow users to share necessary transaction information while keeping other details private. These features allow blockchain to achieve its purpose as a transparent and trustworthy ledger without infringing on the autonomy and discretion of users.
Vitalik Buterin brings an exciting twist to the story of on-chain transparency. In his book, Buterin suggests that privacy and regulation are closely related in the blockchain world. He challenges the long-held belief that everything on the blockchain must be public. There is a road that connects the two worlds. Buterin says:
“In many cases, privacy and compliance are perceived as incompatible. This is not necessarily the case if privacy-enhancing protocols allow users to prove certain attributes related to the origin of their funds.”
Think of it as a digital cloak that allows you to show only what you need on the blockchain, such as proving where your funds came from, without revealing your entire life story. It’s like having a magic wallet that shows your ID when you need it but hides your cash. These tools help you make sure everything is legal and reasonable while keeping your data private. This is a game changer because we can be part of the blockchain world without feeling like we are living in a fishbowl.
We are at a turning point in blockchain. Blockchain has been incredibly capable of showing everything, but perhaps too much has been shown. Web3 started to resemble web1 when the Internet was just starting to transition to Web2 and every click started to be monitored, recorded, and analyzed. Do you want to stay in web3, where information is decentralized and users own their data? Or do you want to get into web4 where you can once again benefit from data appropriation? The answer is clear. In web3, you need to give users permission through data ownership.
Now it’s time to pick up the remote control and decide what to show and what to keep secret. Users are not passengers on the blockchain train. They drive it. Blockchain can be a place where everyone can enjoy the scenery without worrying about who is watching.
