How Is Data Privacy Maintained on an Immutable Ledger That Is Also Used for Regulatory Audits?
Privacy is maintained through a combination of techniques, primarily encryption and permissioning. Data can be encrypted before being written to the ledger, so only authorized parties with the correct decryption key can view the sensitive details.
Furthermore, private blockchains are permissioned, meaning access to the ledger itself is restricted, and regulators are typically granted only read-only access to specific, necessary data sets, not the entire, raw transaction history.
Glossar
Immutable
Integrity ⎊ Immutable characteristics within cryptocurrency, options trading, and financial derivatives fundamentally address data veracity and tamper-resistance, crucial for trustless systems.
Data Privacy
Transparency ⎊ Data privacy on public blockchains presents a paradox, as all transaction data is transparently recorded on an immutable ledger for public verification.
Ledger
Provenance ⎊ A ledger, within cryptocurrency and derivatives, functions as a tamper-evident record of all transactions, crucial for establishing ownership and facilitating settlement, differing from traditional centralized systems through its distributed nature.
Privacy
Anonymity ⎊ Privacy within cryptocurrency and derivatives contexts centers on obscuring the link between transaction origins and identifiable entities, a critical distinction from traditional finance’s reliance on Know Your Customer (KYC) protocols.