Balancing User Privacy and Legal Demands while Conducting Businesses on the Blockchain

Author: Wezi Bonono Chipeta & Abdullahi Adaviriku Malik

Issue: Spring Issue, 2024

Abstract

Blockchain technology offers a promising way to improve business processes by providing a secure and transparent transaction platform. However, using this technology brings its own set of challenges, especially when trying to balance user privacy with legal and regulatory needs. This article explores the challenges of keeping user information private, adhering to regulatory frameworks, and fulfilling legal requirements on the blockchain. A key point in this research is the challenge of keeping or maintaining confidentiality while being transparent. The article also discusses the issues of applying legal rules to a system not controlled by one central authority, the risks of privacy and security breaches, and the need to follow data protection laws. The article highlights how some blockchain-based companies have tackled these challenges, mainly through smart blockchain management and innovative technology, by looking at real-world examples from major companies like IBM, Bitpay, Ripple, and Coinbase. The systematic literature review (SLR) methodology involved reviewing literature from the past 15 years (2008-2023) from trusted sources like Google Scholar, ACM Digital Library, IEEE, Springer, and Science Direct. The findings indicate that cutting-edge technologies prioritizing privacy, such as zero-knowledge proofs, ring signatures, and encryption methods, would enable Bitcoin (BTC) platform operations to maintain or balance privacy and transparency. Furthermore, the study indicates the importance of clear privacy guidelines, adhering to relevant regulations, working closely with regulators and law enforcement, and educating users. In summary, it is crucial to approach blockchain carefully, prioritizing user privacy while meeting all legal and regulatory requirements.