Template-Type: ReDIF-Paper 1.0
Author-Name: Raphael Auer
Author-X-Name-First: Raphael
Author-X-Name-Last: Auer
Author-Name: Rainer Böhme
Author-X-Name-First: Rainer
Author-X-Name-Last: Böhme
Author-Name: Jeremy Clark
Author-X-Name-First: Jeremy
Author-X-Name-Last: Clark
Author-Name: Didem Demirag
Author-X-Name-First: Didem
Author-X-Name-Last: Demirag
Title: Privacy-enhancing technologies for digital payments: mapping the landscape
Abstract: How can technology enhance privacy in digital payment systems? This paper presents a systematic evaluation of the interests of privacy-conscious users, commercial data holders, and law enforcement. We classify privacy-enhancing designs along the dimensions of privacy versus auditability, as well as soft institution-based versus hard technology-based solutions. We map existing technologies into this taxonomy and assess them. Sophisticated techniques allow having both hard privacy and limited transparency by employing hard-coded rules that dictate which data remains inaccessible. On balance, there is promise in novel concepts like modern zero-knowledge-proofs, but current technologies also suffer from limitations in terms of security and computational capacity. More technological development is needed in this area. Additionally, efforts could focus on technological development that augments such hard privacy with technologically-enforced access control and systems minimizing the amount of data that is being stored, render abuse transparent and make data holders accountable. 
Creation-Date: 2025-01
File-URL: https://www.bis.org/publ/work1242.htm
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1242.htm
File-Format: text/html
Number: 1242
Keywords: privacy, privacy-enhancing technology, payments, BigTech, fintech, regulation, smart contracts, zero-knowledge proofs, applied cryptography, digital money, digital currency, stablecoins
Classification-JEL: E42, G23, G28, O32
Handle: RePEc:bis:biswps:1242