{"id":827607,"date":"2025-02-17T08:12:25","date_gmt":"2025-02-17T14:12:25","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2025\/02\/17\/business-cannot-thrive-on-radically-transparent-blockchains\/"},"modified":"2025-02-17T08:12:25","modified_gmt":"2025-02-17T14:12:25","slug":"business-cannot-thrive-on-radically-transparent-blockchains","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2025\/02\/17\/business-cannot-thrive-on-radically-transparent-blockchains\/","title":{"rendered":"Business cannot thrive on radically transparent blockchains"},"content":{"rendered":"

\"Business Business cannot thrive on radically transparent blockchains<\/span> Matthew Niemerg \u00b7<\/span> 15 hours ago<\/span> \u00b7 3 min read<\/span> <\/span> <\/span> <\/span> <\/span><\/p>\n

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For millennia, businesses have relied on a careful balance of confidentiality and transparency to operate, unless we fix that balance, enterprises won\u2019t adopt blockchains, says Matthew Niemerg of Aleph Zero.<\/p>\n

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3 min read<\/span><\/p>\n

Updated:<\/span> Feb. 15, 2025 at 1:24 pm UTC<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Cover art\/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.<\/p>\n<\/div>\n<\/div>\n

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The following is a guest post by Matthew Niemerg<\/span>, Co-founder of\u00a0Aleph Zero.<\/span><\/em><\/p>\n

In the grand halls of Florence\u2019s Palazzo Medici, during the Renaissance, the legendary banking family conducted their affairs with an intricate dance of transparency and secrecy. While their ledgers tracked every florin with meticulous precision, access to these records was guarded as carefully as the gold in their vaults. This delicate balance between accountability and confidentiality wasn\u2019t just good business\u2014it was essential for survival in the complex web of Renaissance politics and commerce.<\/span><\/p>\n

Five centuries later, as blockchains are innovating both finance and business, we appear at risk of forgetting that fundamental lesson. The idea that all transactions should be permanently visible on public ledgers isn\u2019t just naive\u2014it\u2019s catastrophic for business adoption.<\/span><\/p>\n

Businesses Take Privacy for Granted<\/b><\/h2>\n

Consider a modern manufacturer negotiating with suppliers. In traditional banking, while transactions are verified and recorded, the details remain confidential\u2014known only to the parties involved and their financial institutions. Now, imagine conducting these same negotiations on a public blockchain where every payment, every contract term, and every business relationship is visible to competitors, customers, and market manipulators. It\u2019s equivalent to forcing businesses to publish their entire accounts payable and receivable in real-time, complete with transaction amounts and counterparty identities.<\/span><\/p>\n

Transparency should mean verifying that transactions follow agreed-upon rules, not exposing every business decision to public scrutiny. Just as Netscape\u2019s introduction of SSL in the 1990s made e-commerce viable by securing online transactions, blockchain networks need robust privacy mechanisms to achieve mainstream business adoption.<\/span><\/p>\n

In a 2020 <\/span>McKinsey survey<\/a><\/strong>, healthcare and financial services achieved the highest score for trust from consumers. Both industries are also two of the key adopters of blockchain. Without secure and confidential infrastructure, these sectors risk eroding the very trust they\u2019ve spent decades building. A doctor\u2019s prescription, a patient\u2019s treatment plan, or a company\u2019s financial restructuring can\u2019t be broadcast to the world on a public ledger\u2014no matter how secure the verification mechanism might be.<\/span><\/p>\n

The stakes are even higher today. As businesses consider moving more operations on-chain\u2014from supply chain management to intellectual property licensing\u2014the need for confidentiality becomes acute. A pharmaceutical company developing a breakthrough drug can\u2019t risk exposing its research investments through transparent blockchain transactions. A retail chain shouldn\u2019t broadcast its inventory management strategies to competitors through visible smart contracts.<\/span><\/p>\n

The Permanently Readable Public Ledger<\/b><\/h2>\n

Moreover, the permanent nature of blockchain records amplifies privacy concerns. In traditional systems, historical transaction data eventually becomes less accessible. But on public blockchains, every transaction remains visible forever\u2014creating an indelible record that could reveal business strategies, pricing patterns, and relationship networks to future competitors or adversaries.<\/span><\/p>\n

The solution isn\u2019t to abandon blockchain technology\u2019s promise of improved verification and automation. Instead, we must embed privacy into these systems from the ground up. Zero-knowledge cryptography offers a pathway, allowing transactions to be verified without revealing their contents. This technology could enable businesses to leverage blockchain\u2019s benefits while maintaining essential confidentiality.<\/span><\/p>\n

Some blockchain purists might protest that this approach contradicts the technology\u2019s founding principles of transparency. But they misread history. Bitcoin\u2019s innovation wasn\u2019t in making all transactions public\u2014it was in solving the double-spending problem without requiring trust in a central authority. Privacy-preserving technologies can maintain this trustless verification while protecting sensitive business information. The two are not mutually exclusive.<\/span><\/p>\n

Merging Trust and Confidentiality<\/b><\/h2>\n

The history of banking privacy, from ancient temples to modern Swiss banks, demonstrates that confidentiality isn\u2019t antithetical to trust\u2014it\u2019s essential for it. Temples\u2019 religious role gave them a reputation for integrity and discretion. Likewise, <\/span>the Medicis<\/a><\/strong> didn\u2019t survive and thrive for centuries by broadcasting their clients\u2019 financial affairs to all of Florence. They succeeded by innovating a double-entry bookkeeping system that kept client information accurate and private, ensuring trust through discretion.<\/span><\/p>\n

As we architect the future of business on blockchain networks, we must learn from this history. The next generation of blockchain protocols must incorporate privacy as a fundamental feature, not an afterthought. Zero-knowledge proofs, confidential smart contracts, and private transaction pools aren\u2019t just technical innovations\u2014they\u2019re essential building blocks for practical business adoption.\u00a0<\/span><\/p>\n

The stakes extend beyond individual privacy concerns to the very architecture of our future financial systems. Without robust privacy solutions, public blockchains risk pushing enterprises toward private, permissioned networks\u2014a trend we\u2019re already seeing. JPMorgan\u2019s <\/span>Kinexys<\/a><\/strong> platform and the Hyperledger-based networks used by Walmart and Maersk for supply chain management demonstrate how major corporations are choosing controlled environments over public infrastructure. While these private networks serve immediate business needs, they fragment the blockchain ecosystem and limit the network effects that make public chains so powerful.<\/span><\/p>\n

Much like how corporate intranets in the early internet era eventually gave way to the public web once security measures matured, public blockchains need privacy-preserving technologies to avoid being sidelined by enterprise-specific solutions.<\/span><\/p>\n

Thankfully, this remains a limited trend, as major corporations like Ubisoft, BlackRock, and Warner Music Group continue to use public blockchains for their business use cases. However, this progress could reverse unless chains build confidentiality into their core infrastructure.<\/span><\/p>\n

The Renaissance bankers understood that privacy wasn\u2019t about hiding misdeeds\u2014it was about creating the trust and security necessary for commerce to flourish. As value increasingly moves onchain, we would do well to remember their wisdom.\u00a0<\/span><\/p>\n

Mentioned in this article<\/h6>\n
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\n Matthew Niemerg<\/p>\n","protected":false},"excerpt":{"rendered":"

Business cannot thrive on radically transparent blockchains Matthew Niemerg \u00b7 15 hours ago \u00b7 3 min read For millennia, businesses have relied on a careful balance of confidentiality and transparency to operate, unless we fix that balance, enterprises won\u2019t adopt blockchains, says Matthew Niemerg of Aleph Zero. 3 min read Updated: Feb. 15, 2025 at<\/p>\n","protected":false},"author":1,"featured_media":827608,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[378,25936],"tags":[],"class_list":{"0":"post-827607","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"category-cannot"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/827607","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=827607"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/827607\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/827608"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=827607"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=827607"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=827607"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}