Despite forging new paths for boundless opportunities to implement transparency, blockchain technology is not entirely void of some native challenges, particularly one deeply rooted in data privacy. So the question arises, can blockchain technology be both – transparent and ensure data privacy?
Eliminating Obstacles for Complete Privacy
One of the few drawbacks to implementing blockchain technology is the process by which end-user data is being stored, which is done on publicly accessible ledgers.
Public blockchains such as Ethereum, ETH smart contracts, Cardano, and Binance Smart Chain, among others, are the most predominantly implemented on-chain systems.
However, these systems are flawed because every data input, including transactions, is stored immutably, which implies that they can not be modified or altered; more so, they will remain on the system forever.
While this helps achieve transparency, which is not entirely possible in a centralized system, it exposes end-users to other risks and exploitations by third parties. Some such hazards include Alpha extraction, front running attacks, MEV attacks, or in other instances, bias in negotiation between different parties.
While this has been the status quo for most blockchain systems, Panther Protocol, an innovative blockchain project, has looked inwardly and seeks to eliminate this fundamental industry-wide flaw.
In an exclusive interview with Oliver Gale, Co-founder and CEO at Panther Protocol, the blockchain enthusiast discussed the startup’s proprietary approach to solving the prevailing problem.
In addition to storing end-user data on a publicly accessible ledger, public blockchain creates a profile for end-users or any entity that uses the technology over time. It increases the risk of exploitation by third parties who may analyze the resources or data set for unethical reasons.
Data Privacy Is as Important as Free Speech
Gale compared on-chain privacy to having freedom of speech. According to him, “the paradigm of why users’ privacy is important is intimately connected to why a person’s freedom of speech is important.”
"So what does it mean to have your privacy undermined? It means you've been put in a position where you don't have a choice, where you don't have sovereignty. As a result, on an individual level, as a typical user, your privacy may not be a priority,"
Gale noted while trying to explain the current situation of things with most public blockchain systems.
“When you aggregate that data across many many people, you create huge imbalances in our society and this is evident when you look at the surveillance economy and the super power organisations that hoover up our data and store them in social media platforms and search engines and communications companies. And the end result of that is a huge undermining of democracy and equality.”
When asked how Panther Protocol is different from others in its approach to solving the surveillance problem, Gale emphasized the role of regulations. According to him, regulations primarily serve as a means to attain consumer protection.
The secondary purpose of the regulation, which is an “unintended consequence,” is the introduction of barriers in competition, something which is considered unhealthy for the market.
Gale assures that Panther Protocol is designed so that it is entirely compatible with all existing compliance regulations. This further implies that access to user data is solely the end-user’s responsibility.
"It's on the individual to make their disclosures, and those disclosures might pertain to things like their tax payments or like a source of funds when you want to interact with a financial services provider,"
For instance, Panther Protocol acts as the secure channel that links actors (i.e., end-users) to the DeFi world. In other words, a user can interact with a DeFi project privately.
"On the side of the financial service provider that's using Panther Protocol, they have an obligation to adhere to their regulated status. And what Panther does is it facilitates the negotiations between the actors at the time that they use the service,"
What Panther Protocol also does is help end-users to negotiate the type of data that can be provided and made accessible during compliance processes such as KYC for specific DeFi projects.
According to Gale, what that negotiation means is simply that a user signs, or partially signs, a transaction or disclosure proof, and it is there and available for the third party to finish signing.
Depending on the agreement, Panther Protocol subsequently broadcasts a portion of the transaction history, which will only be accessible by the third party for the specific purpose that is agreed upon.
Panther Protocol employs the bouncer analogy in its compliance approach, consisting of three tiers of compliance and data disclosure. The first requires an end-user to disclose all personal information; the second tier involves disclosing details upon request. The third tier, dubbed “zero proof,” allows users to verify a data set without revealing the data itself.
Panther Protocol aims to achieve compliance enforcement in the most cost-effective way possible. Its proprietary approach provides financial institutions with a clear path to compliantly participate in the DeFi economy.
On The Flipside
- The current situation with data compliance and disclosure is considerably over-reliant, and that in itself could trigger paranoia among users who may be reluctant to consent to data-sharing.
- By requiring users to sign a partial disclosure form, Panther Protocol cannot eliminate every doubt of third-party hacks.
- Panther Protocol employs novel selective disclosure schemes, implying that the technology is still very much at a pivotal state and may be subject to modifications.
Why You Should Care?
The current compliance landscape is flawed with various challenges ranging from third-party hacks to the high cost of enforcement. By leveraging a platform like Panther Protocol, all stakeholders, including end-users and regulators, stand to benefit significantly.
Watch the full interview here: