In a world that is moving to Web3, the value of privacy networks is of utmost importance. Ignoring smart contract privacy networks today is like ignoring SSL encryption on the internet 20 years ago.
Everything we do on the internet is encrypted – emails, bank transactions, online shopping – and we probably wouldn’t do these things without encryption and data protection. Now entering the Web3 world, the next phase of the internet, we also need to ensure data privacy.
Blockchains are inherently transparent. Although Bitcoin was very often associated with anonymity, the reality is that Bitcoin (and many other networks including Ethereum) are not anonymous at all. Instead, these networks are pseudonymous.
Every Ethereum wallet has an address that a priori is not associated with the real name of the owner, but if Alice sends, ETH, UST, or an NFT to Bob, Bob now knows Alice’s address and can check all her assets and all her previous transactions. There’s total transparency and total loss of privacy.
Currently, the largest privacy coins by market capitalization are Zcash and Monero. These coins allow private and untraceable transactions by using technologies such as zero-knowledge proofs, stealth addresses, and ring signatures.
In this report, we will discuss only the smart contract networks. It’s also important to note that in most cases, private smart contract network native cryptocurrencies – for example SCRT in the Secret network, ROSE on Oasis, and ZEN on Horizen – are not privacy coins. Instead, only other assets that are created within these networks are private by using technologies such as private side chains, TEEs (Trusted Secure Environments), ZK-SNARKS, or homomorphic encryption.
When trying to choose a privacy network solution, developers need to take into account the network complexity, cost, technology readiness, scalability/latency, the level of decentralization, the risk of having to include irrelevant data in the payload, exactly what data is supposed to be kept private, and how these networks manage the access to data and private keys. These networks may require further engineering for maturity and prove that they can manage networks with a large dApp ecosystem.
We will look at 5 privacy smart contracts networks - Secret, Oasis, Horizen, Phala, Dero – and give you a better overview of the technologies that will help the Web3 to be more private.
Most likely, none of the networks analyzed in this report will be the “Ethereum killer”. That’s not the goal. The goal is to create networks that allow assets, people and smart contracts to interact with a layer of privacy.
The full report “Privacy Networks – The Future of Smart Contract Platforms” is available to download here.
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