Challenges in making blockchain privacy compliant for the digital world: some measures

Due to the pandemic, most of the personal transactions relating to finance, commerce and healthcare services have gone online making privacy preservation a critical requirement. Consequently, privacy has been made a critical parameter in Data Protection Regulations leading to the search for such a privacy compliant system which is also resilient to attacks. A detailed analysis of the Blockchain technology, which is becoming popular for secure applications in the finance sector, indicates that there are several challenges relating to user identity, transaction linkability, crypto-keys management, data privacy, usability, interoperability, and post- quantum compliance of privacy regulations which need to be resolved before its widespread adoption. Being a decentralised system, there is a need to analyse the vulnerability to attacks of each layer in the Blockchain architecture. This paper discusses the development flow of some of the privacy enhancement mechanisms like ZKPs, SMPC, Ring signatures, Mixing, Homomorphic Encryption and quantum resilient computing, bringing out their features and lacunae. There is a detailed discussion of the privacy mechanisms adopted by blockchain platforms like ZCash, Zerocoin, Hyperledger, Wanchain, Coin Party, Monero, Cryptomate, MixCoin, Coinshuffle, PICNIC and New Hope. Every platform has some limitation or the other and it is essential that researchers come out with mitigation steps for the existing mechanisms and come up with improved new Privacy Enhancement Techniques. One such architecture using PET has been proposed.