On the privacy of consortium Ethereum networks

There are usually two kind of a consortium networks: the one that was designed as a permissioned network and the other one which is a public network, like Ethereum but it is configured in a consortium scenario. Public networks have however pseudonym visibility by default meaning that all of the transactions are visible on the network, however the real identity behind the keys is not known. This architectural feature will not be changed even if you run your network in a consortium scenario. Your blockchain and transactions will be visible as much as your network is visible. With other words, of you manage to run everything on a sealed network, like with VPN-s and firewalls, it means and increased privacy. If you want achieve more privacy, you have to consider some kind of a encryption on the network, like with zk-SNARKs.  

Notes on digital identity and big data

Considering current trends and algorithms in data mining and machine learning, the concept digital identity is actually not so simple. Virtual identity is not just a set of parameters that are published somehow to the web, instead it is all the digital traces that are left behind by someone. It includes digital traces on google, Netflix, on different dating or music apps and so on. Currently data of such an application remains in the context of the application, however will not necessarily remain the same on a long run. As a consequence, serious data and identity leaks might occur, causing for instance that general browsing characteristic of an individual is considered at a credit or insurance evaluation. 

In this sense, the privacy of an or leak of an identity will be an always increasing problem. There might be two possible answers for this problem: 

1. To get the online traces of an individual independent of the identity, like with the help of private browsers, private search and other privacy tools. 

2. Simulate online behavior to match an expected one with the help of online algorithmic tools, for instance with the help of bots. 

Private Blockchain as high security, high availability system architecture

There is usually some discussions if private Blockchains make generally sense or not. However if we regard Blockchain simply as a possible system architecture without considering some of the mystical or political discussions around it, then private Blockchain as possible system architecture clearly makes sense. 

Let we imagine a use case where a multinational company tries to develop a system that is available in each location. Putting such a system to a private Blockchain and putting one or two nodes at each location clearly has some advantages: 

1. Hacking Resistance: The system is pretty much hacking resistance, even of one or two nodes are hacked neither the voting process nor the existing Blockchain can be influenced. On the other hand, some functionalities are cryptographically secured making even more difficult to hack. Certainly a lof of thing depends on the Consensus mechanism or on the applied cryptography. For instance "Proof of Work" might be an overkill for such a system. 

2. High availability - easy scale up: The system is high available and redundant by design. On the other hand scaling up is easy as well, means installing a couple of additional nodes in a couple of additional locations. 

3. Interoperability: let we supposing that a private corporate software solution has to be extended for other companies, realizing a general consortium solution, or some independent companies upgarde individual private software solutions to a common consortium one. These scenarios can be easily realized if the core technology is a private Blockchain, otherwise they are pretty difficult.

  

Notes on Blockchain privacy and private Blockchains

Blockchain applications like Bitcoin or Ethereum are highly secure by design, despite some of the data that is stored in the Blockchain are actually far from being private. Even in the Bitcoin Blockchain practically every pieces of transaction and account are visible even with a simple browser, like Bitcoin Block explorer. That is certainly not a desired functionality, professional Blockchain 2 Customer or Blockchain 2 Business services would require extended information privacy. Let we just summarize some of the possibilities.

- decentralized public ledger: that is the most basic model, all accounts and all transactions are publicly available, all mining and validating nodes of the network run public as well.  

- private identity: all transactions and accounts are visible in the blockchain however identity behind an account is practically impossible to identify. There are attempts for such a mechanism in Bitcoin protocol with the always newly generated addresses. 

- private transactions: well it is pretty difficult question. On the one hand all transactions have to be validate by all nodes, on the other hand it is a normal customer requirement that certain transactions should be fully analysed only from theirs owner and not from other third party users. If the two requirements technically satisfiable in the same time is questionable.  

  

- private network nodes: processing and mining of information is not available for everyone, but only a certain group has got the privilege to do. 

- private blockchain: the whole blockchain is not available for everyone and does not contain every transactions but only transactions of a certain application and party of member companies are recorded and certainly the information is only for this group visible. 

The major question is certainly if it makes sense to create such a private blockchain applications or is it better to use for such a scenarios classical client server models.