Security and transparency contradiction

If there is transparency on the blockchain network - everything can be seen/traced - surely that would affect security, wouldn’t it??

How does sensitive information become protected if the blockchain is completely open?

Can governments/organisations simply create their own closed off blockchain networks (surely not) to protect the data within? But that would make it centralised!?!

I’m now debating myself…

I’ve heard that each individual Bitcoin’s history can be traced back to its beginning.

Is everything traceable and viewable by everyone or is everything encrypted? Confused.

Hi NH1,

I think what will help you understand is if you know the definition of “security” and “transparency”:
Transparency - Blockchain’s greatest characteristic stems from the fact that its transaction ledger for public addresses is open to viewing. However, all transactions are pseudonymous, meaning it is very difficult to identify who is transacting. Here is an example of what a transaction looks like when looking at a blockexplorer:

As you can see, the users are still protected as no one is able to identify who they are.

Since all a user or government could see is the quantity of crypto being sent, there is little “sensitive information” that can be gathered.

As for your question about creating a closed-off blockchain network, this would be an example of a centralized and likely private blockchain. This exists today in businesses and governments. Some companies even form what’s called a “consortium” which is basically a group of companies that make a private centralized blockchain for their own purposes. The data would only be available to those authorized, so all information would be private.

Security - This is not meant as “privacy”, but rather the practical inability to be able to modify the blockchain. Transactions are approved by independent miners who are rewarded in BTC for their efforts, so are acting in their own benefit. Once a block is approved, the transactions within are appended (added) to the blockchain. This means that the transaction was valid, added to the blockchain and no longer be modified.

If I’m unclear or you have any follow-up questions, don’t hesitate to ask!

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Thanks for your time in giving me a detailed explanation.

The snapshot of a ledger that you used as an example is obviously of a Bitcoin ledger. They all divulge a monetary amount and a Bitcoin address…and nothing else.

I can see the security in it 100%

So what would confirming ethically-sourced materials as singular part of a long supply chain look like on a ledger? Exactly the same? (Address + monetary denomination)

My pleasure!

So that’s different than what I sent you. What I sent you above was for a public decentralized blockchain like Bitcoin.

What you’re referring to would likely be a private or public centralized blockchain solution (example: Hyperledger). It would be cheaper and easier to manage this way. If you want any individual to be able to see that materials are ethically-sourced, it could be public. If you want actual customers only to be able to see the details, you could make it private (meaning only available to a specific group of people) with view-only rights. The reason it wouldn’t be decentralized is because of the cost and effort required to find independent third parties to validate the data. It technically is possible to have a delegated person or group of people to do validation, but I don’t think that’d be worthwhile for a company just showing the source of their materials.

The way I think it would work (and other members here, please correct me if I’m wrong) is that you’d create a non-fungible token with the identifiers codified into the token.
FYI - A non-fungible token (NFT) is a special type of cryptographic token which represents something unique; non-fungible tokens are thus not mutually interchangeable by their individual specification.

Each group/person that will handle the material would be assigned a unique public key. This way, when the material moves down the supply chain, all transactions could be identified based on the unique identifier on the material and the individuals/groups that signed-off on the exchange.

So in a way it’s the same in that someone looking at the blockchain could see the original source of the material and who touched it along the way, but in a way it isn’t the same, since it won’t be a “monetary denomination” so much as a token representing the material moving on the supply chain.

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I’ve heard of Hyperledger - not sure where though.

Think it was a suggestion on one of the Q ‘n’ A videos suggesting Ivan make a course on it.

Always good to pick up new related language.

Thanks once again. :grinning:

Hyperledger is a section in the Academy’s Blockchain Business Masterclass as well. If you took that course, that’d be another place you’d have seen it.

Happy to help!