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Cryptocurrency companies are taking significant steps forward in their domains, and Circle is one of them. With the announcement of a new framework, Circle aims to address the growing need for transaction privacy where necessary. What are the details of this new technical development?
Circle News
According to a blog post shared today, Inco Network and Circle Research unveiled the Confidential ERC-20 Framework. Unlike standard ERC-20 tokens, this framework enables the concealment of balances and transaction amounts. While blockchain is transparent, there is an increasing need for privacy features that will become even more critical in the future.
Transparency and Privacy
At the core of blockchains is transparency, which allows traceability. While tracking illegal transactions is essential, user privacy is also a major concern. A certain degree of privacy is necessary for the integrity of the financial system and to address various issues, ranging from fraud to more significant problems.
For instance, securing sensitive financial data is a critical need. Furthermore, businesses are compelled to maintain this privacy to comply with potential legal or regulatory requirements.
The Confidential ERC-20 standard enables existing tokens on EVM networks to convert into a private form. User balances are encrypted, accessible only to authorized individuals. Amounts transferred between addresses can be hidden and remain confidential. While ordinary people cannot access this information unless privacy is compromised, specific government entities such as regulators and law enforcement can see it. Compliance measures can also be programmed within smart contracts to combat money laundering.
“The Confidential ERC-20 Framework offers significant advantages that enhance the functionality and security of financial applications.
It allows the integration of confidential data into various applications without exposing sensitive information.
Similar to how the ERC-20 standard shapes the current environment, Confidential ERC-20 serves as a fundamental component for privacy-focused DeFi and financial services.
It facilitates dynamic integrations while ensuring that privacy measures comply with regulations. The Confidential ERC-20 Framework is a step towards maintaining privacy while ensuring regulatory compliance in blockchain transactions.”
