We all know the problems with public ledgers. Most of us who live inside the cryptocurrency ecosystem don’t really feel like saying that.
But if you find a regular person on the street who has some knowledge about blockchain (good luck), they’ll tell you straight up. It’s public. The public ledger is public.
We’ve spent almost 20 years selling pork pies to vegans, touting “public” as a virtue when people actually crave privacy.
In the real world, standard people don’t see radical transparency. Many people recognize insanity. They witness data breaches. They have no doubt that sharing a permanent and immutable record of every transaction they have ever made is completely ridiculous.
If your neighbor could see every transaction you made, you wouldn’t use your credit card. You wouldn’t be able to run your business if your competitors could know exactly who your suppliers are and how much you’re paying them.
Simply put, on-chain is too public, off-chain is too private. Balance is required. Some information must be made public for audit and regulatory purposes. In order for a business to function effectively, some information must remain private.
Companies need to protect their unique moves from competitors while providing a “view key” to regulators and auditors. The balance between complying with the law and functioning effectively in the marketplace is important.
There are several good reasons why institutional finance has not fully embraced blockchain. Why haven’t the Treasurys of hedge funds, asset managers, and companies investing billions of dollars been cashing in? One of the reasons is, of course, that they don’t want to hand over their unique strategy to the whole world, and they simply can’t. It’s like broadcasting an alpha version for free.
Corporate fact-finding survey
Stablecoins promise speed and efficiency for B2B transactions. The cost is low, but the price is high. privacy. A transparent ledger means everyone, friend and foe alike, can see your company’s business. Vendors used, order quantities, and price per unit. There are no secrets. Everything is on display and the entire supply chain is effectively leaked. Businesses need to find ways to get around the problem by increasing privacy while remaining compliant.
What we need is the blockchain equivalent of the internet’s SSL moment. We didn’t have a functioning web until encryption became a standard layer, allowing the entire world to send credit card information without monitoring.
From theory to practice
We will finally see this infrastructure move from white paper to the real world. For example, Canton Network has had some success in introducing privacy into corporate finances, albeit in a permitted form. I have been involved in the latest advances in privacy. This is the newly announced plan to launch strkBTC on Starknet. We have been treating Bitcoin as digital gold for years. While it is a great store of value, it is mostly static and completely exposed if you try to use it in DeFi.
For the first time, Bitcoin can be secured by a “layer of secrecy” that protects balances and trading partners from public view. This is the first evidence that we can have an “active” Bitcoin that respects the commercial need for privacy and has all the selective disclosures for reasonable risk management.
the way to go
One of the values of early cryptocurrency adopters was privacy, but without building the systemically important flows of capital that power the world, that ambition will remain unfulfilled. Public blockchains will only scale if they can support private finance.
Through selective disclosure and protocol-level confidentiality, we do more than just add functionality. A system that can actually be used around the world is finally being built. Technology is here. The question that remains is which network will set the standard for the next era of global finance.
