What is Web3 privacy? How is it currently developing?

What is Web3 privacy and its current development?

According to the “Security 419” security information media and “Zero Security” network security company’s “2022 Data Leakage Observation Review” statistics, there were more than 20,000 global data leakage incidents in 2022. In recent years, with the development of big data, the Internet, 5G, enterprise digital transformation, and other factors, the digital economy has taken off. As social data stock grows, network attacks are also rapidly increasing.

The issue of privacy protection for current Internet platform users is pressing. As part of the next generation of the Internet, can Web3 improve this issue?

01 Web3 Privacy: What is it?

In general, Internet privacy mainly refers to the invisibility of user identity, behavior, activity, and other data information.

In the era of the Internet, all of our information and behaviors are presented in a digital format, and once any system that stores digital information is connected to the Internet, it becomes a possible target for hackers, especially with sensitive data such as financial and personal health information, data privacy and security becomes even more important.

According to the development history of the Internet, the Internet has gone from Web1.0 to Web3.0, and has also undergone different privacy storage channels: Web 1.0 is a static Internet, mainly used for network media. The content is provided by websites, and users can only passively browse text, pictures, and video content without participating in the creation. Web 2.0 is an interactive Internet, which is the stage we are currently in. The main applications are social networks, video platforms, e-commerce, etc., and users can independently create and upload content for interaction on the platform.

It can be seen that the first two are saved by centralized institutions for data and data privacy. Just like in the traditional banking model, centralized third parties protect necessary and valuable privacy information. The main features of Web3.0 include: publicly transparent blockchain ledgers, decentralization, etc. Use blockchain to record on-chain data, that is, our transactions and the information contained in the transactions, specifically including: transfer sender, transfer receiver, transfer amount. If users do not want to reveal this on-chain data information, this is the user privacy that needs to be protected in Web3. But how to protect users’ privacy?

In Chapter 10 of the Bitcoin white paper, Satoshi Nakamoto devoted an entire section to describing the privacy model of the Bitcoin blockchain network. The model was developed to solve the problem of “banks evolving into the Bitcoin network” and Bitcoin blockchain solves this problem through asymmetric encryption.

Once user privacy information is controlled by blockchain privacy technology, users can create and lead content and applications, and then achieve user co-construction and co-governance (DAO, decentralized governance), while users can also share platform/protocol value.

02 Current Development Status

According to data, identity, and computing privacy, Web3 privacy has developed a large number of applications in the field of privacy track, which can be subdivided into four major sections: privacy tokens, privacy computing protocols, privacy trading protocols, and privacy applications. Specifically:

1. Privacy Assets Privacy assets refer to encrypted assets that natively support privacy, and the outside world cannot view specific transaction types, amounts, and other information of both parties to the transaction. They usually do not support smart contracts and related applications, and related projects emerged as early as 2011. The most famous project among them is Zcash. It is the first blockchain system to use the Zk-SNARK zero-knowledge proof mechanism, which aims to completely solve the problem of transaction tracking and expose user privacy. 2. Privacy Computing Protocols The privacy computing protocol mainly protects privacy from the links of data generation, collection, storage, analysis, utilization, and destruction. In addition to common scenarios such as DeFi and NFT, it can also be deeply integrated with the big data and AI industries with the development of technology. However, the actual application scenarios of privacy computing protocols are relatively limited, and their development is also relatively average. 3. Privacy Trading Protocol The privacy trading protocol mainly processes on-chain transaction data for privacy protection, and natively supports users to conduct privacy transactions through technologies such as zero-knowledge proof, which can ensure that their privacy data will not be viewed by outsiders, and also support the development of more types of privacy applications in the protocol. The privacy trading network includes Layer1 privacy protocols and Layer2 privacy protocols, and there are not many mainnets online, and overall development is also average. 4. Privacy Applications Privacy applications refer to applications that provide different application scenarios for users or DApps on Layer1 or Layer2 protocols to provide privacy protection functions, such as transactions, payments, emails, etc. There are also many projects developing privacy applications, but few of them have stood out.

Section 3

The decentralized concept of Web3 gives individuals more autonomy and privacy protection, providing us with more choice and control. However, in practice, people still value industry security more, such as the development of various wallets, and the privacy track still seems to be a niche market. The number of users and usage is relatively low compared to other tracks in the industry, and most privacy infrastructure and applications are still under development. However, some people believe that privacy solutions have a strong appeal to attract more institutional capital to participate in the crypto ecosystem, ensuring that important financial data and trade secrets are not leaked, making it an important infrastructure for the next wave of crypto breakthroughs. Therefore, whether encrypted privacy can win more users in future use cases is still worth paying attention to and observing.