Privacy in Web3. Web2, the modern internet, has always had privacy concerns. Unwanted data harvesting, tracking, and identity theft are commonplace experiences for users. According to a Pew Research survey from 2023, more than 80% of adults in the US believe they have no control over the amount of personal data collected by the government and private organizations.
But there’s new hope for people worried about their data privacy with Web3. In contrast to existing web platforms, Web3 architecture is focused on improving user privacy. But how true is the promise of Web3 data privacy, and how much hype surrounds it? Web3 data sovereignty is a serious topic, and this essay examines it.
The History of Blockchain and Privacy in Web3
Data centralization is the main feature (and downside) of Web2 frameworks. Facebook, Google, and Apple gather user information and keep it in a database. Since users can’t see or regulate data use, corporations and the government can use it however they want.
However, Web3’s design is built around the idea of security and data privacy, so it may be viewed as a decentralized version of the Internet that promises secure data exchange. With the integration of blockchain technology, AI, and the IoT, Web3 guarantees a private and decentralized browsing experience.
While using the Internet, semantic web users have complete command over their data and personal information. The move toward Web3’s decentralized identification and storage gives users greater control over the network’s future while protecting their privacy and anonymity.
The Impact of Web3 on Privacy
Reasonably it is reasonable to predict that users will have access to the decentralized privacy options that are classified as follows:
User identity protection in Web3
Users can regain control of their identities with Web3’s decentralized identity (DIDs). Since DIDs allow individuals to be identified for verification purposes without disclosing their identities, centralized identity providers are unnecessary.
To facilitate identification verification while protecting user privacy, Polygon ID uses DIDs and zero-knowledge proofs (ZKPs). Users may keep all of their data under their control and not depend on any one identity provider. People can use these tools to verify their identity without disclosing any personal information. Thanks to Web3’s integration of these encryption technologies, users can choose when to reveal their identities.
With Web3, you can implement AI and KYC solutions to monitor your network for potential threats. These tools do background research, filter keywords, and analyze digital footprints in real time to forestall breaches. Another new technology is self-sovereign identification (SSI). Users can select a public or decentralized key to use as their digital identity. They can decide what information to share with validators to facilitate identification, eliminating the need for centralized authorities.
An anonymous collection of digital signatures can be created using ring signatures and cryptographic techniques. Group members can sign anonymously on behalf of one another without disclosing their signature key.
Personal data security in Web3
Smart contracts that prioritize user privacy can verify ownership of digital assets. They cannot record ownership facts in a way that cannot be changed, creating a verifiable claim to ownership. Smart contracts are currently the subject of intense development to enable private calculations without disclosing user data.
Some networks use differential privacy to defend against different assaults. To make data more secure, they add noise to it. This method preserves the privacy of individuals whose data is processed while enabling data collection and analysis.
One further cryptographic method is secure multiparty computing (SMPC), which allows several participants to start collaborative input data calculations while keeping the input private. By using SMPC, participants can conduct distributed analyses of sensitive material without disclosing the data themselves while working together on computations. Users can also depend on decentralized application storage solutions that prioritize user privacy, such as Storj, a safe data storage, retrieval, and sharing platform.
Web3 privacy protocols
To make the Web3 ecosystem more secure, it uses technologies that prioritize user privacy. Among these developments are Web3’s zero-knowledge proofs, which enable users to demonstrate their knowledge of a statement’s truth without disclosing any more information.
CEnigma makes computation on encrypted data impossible. To do computations without decrypting encrypted data, it uses homomorphic encryption, a cryptographic technique. When the encrypted data is decoded, the computation results will be identical to those of the unencrypted data.
A secure hash function (SHF) takes in data and returns a hash result of a predetermined size. To ensure that records cannot be altered, a blockchain system uses a series of encrypted blocks using hash algorithms. Each block builds upon the one before it. A block’s hash changes whenever data is added or removed, notifying other network nodes of suspicious changes.
With the Interledger Protocol, users’ private information may be securely transferred when transferring assets between blockchains. Another technology utilized in Web3 and private transactions is mimblewimble. It conceals information about amounts transacted, often shown on a blockchain, and uses cryptographic promises to verify transactions without revealing the quantities moved.
Privacy Challenges in Web3
The creation of Web3 apps may need to incorporate new decrees introduced by privacy legislation, even though the two seem to be reading from the same script. No federal privacy regulation is in place in the US, so there is a mishmash of laws at the state level. Businesses have a significant hurdle when ensuring their applications adhere to the myriad of rules and regulations across the 50 states (and perhaps beyond, as other states pass their own legislation).
Phishing scams and rug pulls are the most typical problems in Web3, and private blockchains are the most popular target of these attacks. Public blockchains are more robust and resistant to malicious actors because they include more participants than private networks with fewer validators.
Additionally, Web3 relies on the existing P2P network protocol (IP), which has built-in privacy problems. By tying a user’s public address to their IP address and revealing their identity and location using IP-tracking tools, a third party can trace a user’s Bitcoin transactions, for instance. This opens out the user’s complete transaction history to the world.
Future of Anonymity in the Decentralized Web
There seems to be a bright future for privacy in blockchain networks. In contrast to Web2, which gives governments and large tech companies free reign to acquire and profit from users’ data without their knowledge or agreement, Web3 puts consumers back in charge of their data.
Because of this, there may be a new age of greater internet anonymity. As time passes, Web3’s privacy features will most likely adapt to meet user expectations and government mandates for data protection. Web3 projects will likely incorporate privacy during development following a well-established unified data protection strategy.
Industries that require secure private data handling, including healthcare and banking, can benefit from incorporating technology like smart contracts, which enable computations while concealing user data.
It is possible that moving from IP-based networks to content-based networks (CBN) will fix the shortcomings of IP-based networks. To prevent IP-based attacks and limit access to personal information, CBN-based networks rely on the information contained in the message to authenticate the user’s identity, while IP-based networks mainly rely on identifying the IP address associated with the message.
