data confidentiality on blockchain

Question

How does blockchain promise data confidentiality when the data is not encrypted?

Or data confidentiality is not part of blockchain feature?

Answer 1

The traditional answer for Bitcoin to this question is "pseudonymity, not anonymity".

All the data published on the blockchain is necessary for the world to validate that transactions are valid, no theft occurs, no money is being printed, ... but not more. In particular, there are no identities on the chain, and reuse of (otherwise visible) addresses is discouraged.

Of course, this is a very brittle and delicate balance. It turns out that it is in fact very hard to publish enough to let the world validate, but simultaneously not reveal enough to leak substantial portions of information.

Systems like Monero and Zcash go a step further. They "encrypt" certain portions of the transaction data, but include a complicated mathematical proof that the encrypted data is still valid. This lets them hide amounts, and the links between transactions. However, such techniques come with their own tradeoffs in performance, bandwidth, and scalability in general.

Answer 2

Most blockchains do not promise confidentiality.

Those that do usually employ some form of zero knowledge or encryption, such as with ZCash. The exact specifics of the implementation will vary wildly case by case.