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!