Web3 faces a major privacy issue that needs to be addressed for its mass adoption, according to Shahaf Bar-Geffen, CEO of confidential computing platform COTI. While the transparency of blockchain technology is well-celebrated, it is also a significant drawback. Confidential computing platform COTI, which is working with the Central Bank of Israel on its central bank digital currency (CBDC), known as the Digital Shekel, is using a different technology called garbled circuits.
It allows encrypted data to be used without decryption and is 1,000 times faster and 250 times lighter than fully homomorphic encryption (FHE). Bar-Geffen explains that privacy is essential for decentralized applications (dapps) and is required by law. Privacy technology has come under scrutiny from governments and law enforcement, but Bar-Geffen emphasizes the distinction between privacy and anonymity, stating that coin mixers do not allow users to prove that legal transactions have been made, unlike confidential transactions, which balance privacy and control.
The DeCC Alliance, an advocacy group, seeks to raise awareness of the technology and differentiate between the transactional privacy offered by coins such as Monero and Zcash and services that use smart contracts with encrypted data on-chain.
