To overcome the problem of lack of privacy in the first generation cryptocurrencies such as Bitcoin, Ethereum, etc., several new cryptocurrencies were designed to guarantee transaction privacy and anonymity for their users (examples include ZCash, Monero, etc.). However, the anonymity provided by such systems appears to be fundamentally problematic in current business and legislation settings: banks and other financial institutions must follow rules such as “Know your customer” (KYC), “Anti Money Laundering” (AML), etc. We propose a novel design principle for identity management in Blockchains. Our design maintains privacy, while still allowing compliance with regulations and preventing exploitation of Blockchain technology for purposes which are incompatible with the social good.
Ivan Damgård, Chaya Ganesh, Hamidreza Khoshakhlagh, Claudio Orlandi, Luisa Siniscalchi, “Balancing Privacy and Accountability in Blockchain Identity Management” CT-RSA 2021, Cryptographers Track at the RSA Conference, 2021, pp. 552-576