The Interplay between Decentralization and Privacy : The Case of Blockchain Technologies

Decentralized architectures are gaining popularity as a way to protect one’s privacy against the ubiquitous surveillance of states and corporations. Yet, in spite of the obvious benefits they provide when it comes to data sovereignty, decentralized architectures also present certain characteristics that — if not properly accounted for — might ultimately impinge upon users’ privacy. While they are capable of preserving the confidentiality of data, decentralized architectures cannot easily protect themselves against the analysis of metadata. Accordingly, if not properly designed, decentralized infrastructures intended to promote individual privacy and autonomy might turn out to be much more vulnerable to governmental or corporate surveillance than their centralized counterparts. This paper analyses the case of Bitcoin and other blockchain-based networks, as an example of decentralized infrastructures which suffers from radical transparency. While they provide a series of privacy benefits to end-users, the characteristics of these networks present both advantages and risks to the privacy of end-users. On the one hand, the pseudonymous nature of many blockchain-based networks allows for people to transact on a peer-to-peer basis, without disclosing their identity to anyone. On the other hand, the transparency inherent to these networks is such that anyone can retrieve the history of all transactions performed on a blockchain and rely on big data analytics in order to retrieve potentially sensitive information. The paper concludes that, in spite of the apparent dichotomy between transparency and privacy, there is no real conflict between the two. With the use of advanced cryptographic techniques, it is only a matter of time before people identify news ways to preserve individual privacy in decentralized architectures