In this installment of our education series, we refocus on foundational blockchain concepts and talk about blockchain “transparency” and “anonymity.” These two concepts are often mentioned together, and on the surface they are very easy to understand — but very few people truly understand them deeply.

On one hand, blockchain is described as a transparent system where “the entire ledger is public, anyone can check it, and it cannot be tampered with.” On the other hand, it is also seen as synonymous with “anonymous transfers, decentralization, and being impossible to regulate.” In many mainstream narratives, these two seem naturally conflicting: the more transparent, the less anonymous; the more anonymous, the more dangerous.

But the truth is far more complex than this binary opposition.

Transparency and anonymity are not “advantages vs. disadvantages” of blockchain. They are two structural properties that exist simultaneously in its underlying design, and they must be dynamically balanced. Understanding this relationship is the key entry point to understanding governance, compliance, privacy, security, and even the future form of finance in the crypto world.

At the technical level, blockchain transparency does not mean “everyone’s personal information is exposed.” It means the verifiability of transactions and state is public. Specifically, blockchain transparency is reflected in several core dimensions:

In public blockchain systems, all transaction records, block heights, transfer paths, and smart contract execution results can be verified by anyone through nodes or block explorers. This kind of transparency is not “allowed to be seen,” but “cannot be hidden.”

The consensus mechanism, block rules, issuance logic, and smart contract code (at least the on-chain execution portion) are auditable. Rules do not rely on trusting a specific institution, but on verification by the entire network.

Once a transaction is confirmed and written into blocks with sufficient depth, it is nearly impossible to be modified unilaterally. This “time transparency” ensures that any historical behavior leaves a permanent trace.

It is precisely this transparency that gives blockchain a property traditional financial systems cannot achieve: results can be verified without trusting intermediaries.

Contrary to many people’s intuition, most mainstream public blockchains are not “anonymous,” but “pseudonymous.” Blockchain anonymity mainly manifests in the following ways:

An address itself is not directly bound to a real identity. It is simply a string of characters controlled by a private key. The system does not care who you are — it only cares whether you have signature authority.

On-chain, the system only verifies “whether you have the right to spend this asset,” not “who you are,” “where you came from,” or “why you did it.” This forms a special state: behavior is fully transparent, but identity is absent by default.

And because of this, blockchain can be described as “fully transparent,” and also criticized as “highly anonymous,” and both statements are true within their respective contexts.

One of the biggest misunderstandings about blockchain is equating “ledger transparency” directly with “personal transparency.” The reality is the opposite.

• In traditional financial systems: your identity information is fully transparent (KYC, real-name accounts), but fund flows, system rules, and internal settlement processes are highly opaque.

• In blockchain systems: transaction paths and asset flows are fully transparent, but participants’ real identities do not appear at the protocol layer.

This is a structural inversion. And because of this inversion, blockchain creates unprecedented challenges for regulation, compliance, and law enforcement: for the first time, regulators face a system where “you can see the money, but you may not be able to see the person.”

For example, suppose on a public blockchain, Address A transfers 1 Bitcoin to Address B. The transaction time, amount, block height, and other information are like being carved onto a public stone monument — anyone can query it through a blockchain explorer.

But who is behind these two addresses? Is it Jack or Trump? Is it an individual or an institution? If there is no additional information — such as the address holder voluntarily completing identity verification and making it public, or being linked through other off-chain channels — then no matter how closely you stare at this transparent transaction record, you still cannot directly identify the real identity.

It is like you see a car (an address) driving from Location A (the source address) to Location B (the destination address) on a highway, and you have the full driving trace recorded (transaction history), but you do not know who the driver is — unless you have a database that maps license plates (identity identifiers) to vehicle owners (real identities). And the blockchain protocol itself does not provide this “license plate–owner” mapping database.

This feature — “you can see traffic flow, but you cannot clearly see the driver’s face” — is exactly the vivid embodiment of “transparency ≠ identifiability.”

In real-world discussions, transparency is often treated as absolute justice. But in the blockchain context, extreme transparency can instead undermine system security and individual freedom.

Here are a few easily overlooked issues:

Market-making strategies, institutional portfolio adjustments, DeFi protocol positions, liquidation logic — these can all be “watched” in advance by on-chain analytics tools, and then arbitraged, attacked, or targeted for manipulation.

Once an address becomes linked to a real-world identity, all historical transactions will be permanently “retroactively exposed,” which creates a highly asymmetric power structure in real society.

If all on-chain actions are forced to bind to identity, then blockchain will not be freer than traditional systems — on the contrary, it may evolve into an unprecedented panoramic financial surveillance network.

This is why more and more technical routes have begun to re-discuss the necessity of privacy protection.

Over the past few years, a very obvious — but often overlooked — change has been happening: the industry is no longer obsessed with the extreme opposition of “anonymous vs. real-name.” Whether it is regulators, institutional capital, or developer communities, all have gradually realized that this is not a black-or-white problem, but a systems engineering problem that must be carefully decomposed and redesigned.

The true core is not “whether to be anonymous,” but “who, under what conditions, can see how much information.”

In the traditional financial system, the default compliance method is only one: first fully expose identity, then obtain service eligibility. The identity requirements are extensive: who you are, where you live, how much you earn, what your assets are — these are stored long-term by platforms and even repeatedly circulated between different institutions. This model used to be effective in terms of efficiency and risk control, but in the data era, its privacy risks and abuse risks are rising rapidly.

Blockchain technology provides a new way to solve this: instead of proving “who I am,” prove “I satisfy a certain condition.” This is precisely the value of zero-knowledge proofs (ZK) and selective disclosure technology: you do not need to tell the system your full background; you only need, in specific scenarios, to prove to specific parties that:

• I have passed KYC, but I do not reveal my ID number

• I am a compliant user of a certain country, but I do not reveal my residential address

• I am not on a sanctions list, but I do not reveal my full identity

• My funds are from a lawful source, but I do not disclose my transaction history

This is a paradigm shift from “full exposure” to “minimum necessary disclosure.”

Decentralized identity (DID) is often misunderstood as “anonymous identity,” but in reality, it solves a deeper question: who controls identity in the first place?

In the Web2 world, your identity data is scattered across countless platforms:

• Securities exchanges

• Banks

• Social platforms

• E-commerce websites

These platforms are both “verifiers” and “storers,” and even “users.” Once a data breach or abuse happens, individuals have almost no power to fight back.

The design logic of DID is: identity credentials are held by the user, and platforms only verify when needed, rather than permanently storing them.

This means:

• Identity is no longer “copied and pasted” everywhere

• Different scenarios can use different credentials

• Compliance does not equal permanent surveillance

• Identity becomes a “tool,” not a “shackle”

From a system perspective, this actually improves security, because data is no longer concentrated in a single point.

Another important change is the shift in regulatory logic itself. Early regulatory approaches often tried to write rules directly into the protocol layer:

Address whitelists, on-chain real-name systems, mandatory freezing logic… But practice has proven that this approach easily destroys the neutrality and composability of decentralized systems.

A more mature path today is: keep the protocol layer neutral and general, place compliance requirements at the entry (fiat → chain) and exit (chain → fiat), and then satisfy regulatory needs through interfaces, modules, and service layers.

The benefits of doing this include:

• On-chain infrastructure is not frequently politicized

• Different jurisdictions can adopt different compliance strategies

• Innovation will not be killed by “one-size-fits-all” policies

• Regulators gain clear, executable enforcement handles

This is also why more and more regulators are beginning to accept “compliance interfaces” rather than “protocol-level real-name identity.”

From a more macro perspective, the game between transparency and anonymity is not essentially a technical problem — it is a power-structure problem.

Blockchain does not deny the necessity of regulation, nor does it deny the importance of security. What it truly challenges is this: is it necessary, for system security, to keep every individual permanently under surveillance?

The “middle state” the industry is exploring today is not to weaken transparency, but to:

• Turn the power of “seeing everything” from a system default setting into a condition-triggered capability

• Return “information ownership” from platforms back to individuals

• Shift “trust” from people and institutions to mathematics and mechanisms themselves

This is not an easy road, but it may very well be the only road for blockchain to truly enter the mainstream world without betraying its original intention.

The true value of blockchain is not absolute transparency, nor absolute anonymity, but the fact that it gives humanity, for the first time, a programmable trust structure.

In this structure:

• Rules can be transparent

• Behavior can be verified

• Identity can be selectively disclosed

• Power does not have to be concentrated

The key question for the future is not “should we be anonymous,” but:

• Who has the right to request disclosure?

• Under what conditions should disclosure happen?

• To what degree should disclosure occur?

The battle between transparency and anonymity is far from over, but one thing is certain: it will determine whether the next generation of financial systems moves toward freedom, or toward more sophisticated control.

In this installment of our education series, we refocus on foundational blockchain concepts and talk about blockchain “transparency” and “anonymity.” These two concepts are often mentioned together, and on the surface they are very easy to understand — but very few people truly understand them deeply.

On one hand, blockchain is described as a transparent system where “the entire ledger is public, anyone can check it, and it cannot be tampered with.” On the other hand, it is also seen as synonymous with “anonymous transfers, decentralization, and being impossible to regulate.” In many mainstream narratives, these two seem naturally conflicting: the more transparent, the less anonymous; the more anonymous, the more dangerous.

But the truth is far more complex than this binary opposition.

Transparency and anonymity are not “advantages vs. disadvantages” of blockchain. They are two structural properties that exist simultaneously in its underlying design, and they must be dynamically balanced. Understanding this relationship is the key entry point to understanding governance, compliance, privacy, security, and even the future form of finance in the crypto world.

At the technical level, blockchain transparency does not mean “everyone’s personal information is exposed.” It means the verifiability of transactions and state is public. Specifically, blockchain transparency is reflected in several core dimensions:

In public blockchain systems, all transaction records, block heights, transfer paths, and smart contract execution results can be verified by anyone through nodes or block explorers. This kind of transparency is not “allowed to be seen,” but “cannot be hidden.”

The consensus mechanism, block rules, issuance logic, and smart contract code (at least the on-chain execution portion) are auditable. Rules do not rely on trusting a specific institution, but on verification by the entire network.

Once a transaction is confirmed and written into blocks with sufficient depth, it is nearly impossible to be modified unilaterally. This “time transparency” ensures that any historical behavior leaves a permanent trace.

It is precisely this transparency that gives blockchain a property traditional financial systems cannot achieve: results can be verified without trusting intermediaries.

Contrary to many people’s intuition, most mainstream public blockchains are not “anonymous,” but “pseudonymous.” Blockchain anonymity mainly manifests in the following ways:

An address itself is not directly bound to a real identity. It is simply a string of characters controlled by a private key. The system does not care who you are — it only cares whether you have signature authority.

On-chain, the system only verifies “whether you have the right to spend this asset,” not “who you are,” “where you came from,” or “why you did it.” This forms a special state: behavior is fully transparent, but identity is absent by default.

And because of this, blockchain can be described as “fully transparent,” and also criticized as “highly anonymous,” and both statements are true within their respective contexts.

One of the biggest misunderstandings about blockchain is equating “ledger transparency” directly with “personal transparency.” The reality is the opposite.

• In traditional financial systems: your identity information is fully transparent (KYC, real-name accounts), but fund flows, system rules, and internal settlement processes are highly opaque.

• In blockchain systems: transaction paths and asset flows are fully transparent, but participants’ real identities do not appear at the protocol layer.

This is a structural inversion. And because of this inversion, blockchain creates unprecedented challenges for regulation, compliance, and law enforcement: for the first time, regulators face a system where “you can see the money, but you may not be able to see the person.”

For example, suppose on a public blockchain, Address A transfers 1 Bitcoin to Address B. The transaction time, amount, block height, and other information are like being carved onto a public stone monument — anyone can query it through a blockchain explorer.

But who is behind these two addresses? Is it Jack or Trump? Is it an individual or an institution? If there is no additional information — such as the address holder voluntarily completing identity verification and making it public, or being linked through other off-chain channels — then no matter how closely you stare at this transparent transaction record, you still cannot directly identify the real identity.

It is like you see a car (an address) driving from Location A (the source address) to Location B (the destination address) on a highway, and you have the full driving trace recorded (transaction history), but you do not know who the driver is — unless you have a database that maps license plates (identity identifiers) to vehicle owners (real identities). And the blockchain protocol itself does not provide this “license plate–owner” mapping database.

This feature — “you can see traffic flow, but you cannot clearly see the driver’s face” — is exactly the vivid embodiment of “transparency ≠ identifiability.”

In real-world discussions, transparency is often treated as absolute justice. But in the blockchain context, extreme transparency can instead undermine system security and individual freedom.

Here are a few easily overlooked issues:

Market-making strategies, institutional portfolio adjustments, DeFi protocol positions, liquidation logic — these can all be “watched” in advance by on-chain analytics tools, and then arbitraged, attacked, or targeted for manipulation.

Once an address becomes linked to a real-world identity, all historical transactions will be permanently “retroactively exposed,” which creates a highly asymmetric power structure in real society.

If all on-chain actions are forced to bind to identity, then blockchain will not be freer than traditional systems — on the contrary, it may evolve into an unprecedented panoramic financial surveillance network.

This is why more and more technical routes have begun to re-discuss the necessity of privacy protection.

Over the past few years, a very obvious — but often overlooked — change has been happening: the industry is no longer obsessed with the extreme opposition of “anonymous vs. real-name.” Whether it is regulators, institutional capital, or developer communities, all have gradually realized that this is not a black-or-white problem, but a systems engineering problem that must be carefully decomposed and redesigned.

The true core is not “whether to be anonymous,” but “who, under what conditions, can see how much information.”

In the traditional financial system, the default compliance method is only one: first fully expose identity, then obtain service eligibility. The identity requirements are extensive: who you are, where you live, how much you earn, what your assets are — these are stored long-term by platforms and even repeatedly circulated between different institutions. This model used to be effective in terms of efficiency and risk control, but in the data era, its privacy risks and abuse risks are rising rapidly.

Blockchain technology provides a new way to solve this: instead of proving “who I am,” prove “I satisfy a certain condition.” This is precisely the value of zero-knowledge proofs (ZK) and selective disclosure technology: you do not need to tell the system your full background; you only need, in specific scenarios, to prove to specific parties that:

• I have passed KYC, but I do not reveal my ID number

• I am a compliant user of a certain country, but I do not reveal my residential address

• I am not on a sanctions list, but I do not reveal my full identity

• My funds are from a lawful source, but I do not disclose my transaction history

This is a paradigm shift from “full exposure” to “minimum necessary disclosure.”

Decentralized identity (DID) is often misunderstood as “anonymous identity,” but in reality, it solves a deeper question: who controls identity in the first place?

In the Web2 world, your identity data is scattered across countless platforms:

• Securities exchanges

• Banks

• Social platforms

• E-commerce websites

These platforms are both “verifiers” and “storers,” and even “users.” Once a data breach or abuse happens, individuals have almost no power to fight back.

The design logic of DID is: identity credentials are held by the user, and platforms only verify when needed, rather than permanently storing them.

This means:

• Identity is no longer “copied and pasted” everywhere

• Different scenarios can use different credentials

• Compliance does not equal permanent surveillance

• Identity becomes a “tool,” not a “shackle”

From a system perspective, this actually improves security, because data is no longer concentrated in a single point.

Another important change is the shift in regulatory logic itself. Early regulatory approaches often tried to write rules directly into the protocol layer:

Address whitelists, on-chain real-name systems, mandatory freezing logic… But practice has proven that this approach easily destroys the neutrality and composability of decentralized systems.

A more mature path today is: keep the protocol layer neutral and general, place compliance requirements at the entry (fiat → chain) and exit (chain → fiat), and then satisfy regulatory needs through interfaces, modules, and service layers.

The benefits of doing this include:

• On-chain infrastructure is not frequently politicized

• Different jurisdictions can adopt different compliance strategies

• Innovation will not be killed by “one-size-fits-all” policies

• Regulators gain clear, executable enforcement handles

This is also why more and more regulators are beginning to accept “compliance interfaces” rather than “protocol-level real-name identity.”

From a more macro perspective, the game between transparency and anonymity is not essentially a technical problem — it is a power-structure problem.

Blockchain does not deny the necessity of regulation, nor does it deny the importance of security. What it truly challenges is this: is it necessary, for system security, to keep every individual permanently under surveillance?

The “middle state” the industry is exploring today is not to weaken transparency, but to:

• Turn the power of “seeing everything” from a system default setting into a condition-triggered capability

• Return “information ownership” from platforms back to individuals

• Shift “trust” from people and institutions to mathematics and mechanisms themselves

This is not an easy road, but it may very well be the only road for blockchain to truly enter the mainstream world without betraying its original intention.

The true value of blockchain is not absolute transparency, nor absolute anonymity, but the fact that it gives humanity, for the first time, a programmable trust structure.

In this structure:

• Rules can be transparent

• Behavior can be verified

• Identity can be selectively disclosed

• Power does not have to be concentrated

The key question for the future is not “should we be anonymous,” but:

• Who has the right to request disclosure?

• Under what conditions should disclosure happen?

• To what degree should disclosure occur?

The battle between transparency and anonymity is far from over, but one thing is certain: it will determine whether the next generation of financial systems moves toward freedom, or toward more sophisticated control.