Blockchain
A blockchain is just a ledger.
My bank also maintains a ledger of account balances and transactions.
However, unlike the Bitcoin and Ethereum blockchains, my view of that bank ledger is limited only to information pertaining to me. When I check my bank accounts, all I see is my balance, not how much money my neighbor has in this bank, or my boss’s savings account, or the balance of a random stranger. With today’s non-crypto financial system, there is an implied level of privacy implied.
But this is different from how today’s public blockchains work.
As innovative as Blockchain’s concept of “programmable money” is, it is arguably the most invasive technology we’ve ever created from a user privacy standpoint.
We’re definitely early
These are still early days in blockchain, which often invites comparisons to the early eras of the internet.
The early web was completely useless for transactions because there was no end-to-end encryption to protect consumers’ payment information as it passed between HTTP servers. This made it vulnerable to “man-in-the-middle” attacks where a prowling hacker could easily steal anyone’s credit card information.
Netscape, the first web browser, played a vital role in solving that problem by creating the Secure Sockets Layer (SSL) protocol, which encrypts traffic between parties over the Web.
Today, almost every website uses these encryption protocols by default, as do many popular messaging services.
Crypto has come a long way since the cypherpunk days of Bitcoin, and an even longer way since the days when sending transactions over the early web left you vulnerable to credit card fraud.
But are we satisfied with the mostly speculative use cases that dominate Web3 today? Or do we believe that Web3 can change not only the financial world, but also the way we interact online?
If we accept the premise that blockchain is a privacy-invasive technology at its core, then it is clear that in order to become truly useful, blockchain needs an equivalent of the SSL innovation that brought Web2 out of its essentially unusable era of lack of achieved privacy.
Zero-knowledge cryptography, and the protocols that integrate it, is the best chance this industry has of having a scalable, secure, and compliant infrastructure.
By functionally encrypting the blockchain ledgers and enabling users to prove facts about their data using zero-knowledge proofs, we can protect sensitive user data while ensuring regulatory compliance.
Zero-knowledge proofs open up a whole new design space and exponentially increase the available market of blockchain-related products. By integrating this technology, next-generation blockchains can provide users with the privacy they are accustomed to and often legally entitled to, while improving regulatory compliance.
These are the “use cases” that blockchain skeptics have long been calling for.
Alex Pruden is the Chief Executive Officer at Aleo, where his areas of responsibility include outreach, operations and strategy. Prior to joining Aleo, Alex was an investment partner on the Andreessen Horowitz team, specializing in cryptocurrencies, decentralized protocols, and blockchain technology. Alex also served 9 years in the US Army as an infantry and special forces officer and developed an interest in blockchain and cryptocurrency due to his work with Syrian refugees in 2015-2016. He received a bachelor’s degree from the United States Military Academy at West Point and an MBA from Stanford University.