When it comes to privacy protection in blockchain, many people instinctively think "privacy = black box = regulatory risk," but this perception might be too absolute. Some projects are exploring another path: hiding transaction information while maintaining compliance auditing, achieving both the convenience of financial privacy and necessary regulation.

To achieve this balance, a robust tech stack is required. First and foremost is the powerful tool of zero-knowledge proofs. For example, the PLONK proof system is very elegant—you can prove that your transaction is legitimate without revealing sensitive data like transaction amounts or participant identities. In plain language: I can prove I haven't violated any rules, but you can't see the details.

Coupled with Bulletproofs zero-knowledge proofs, it can verify that amounts are within a reasonable range, preventing fake assets from entering the system at the source; adding MLSAG ring signature algorithms makes the sender completely anonymous... Layer by layer, the key information of transactions is protected tightly, and users no longer need to worry about their data being scraped clean.

But the brilliance here is that privacy is never unlimited. By developing protocols like Citadel, which bring autonomous identity systems on-chain, and pairing them with off-chain privacy KYC modules, users have the choice—disclose what they want, protecting personal privacy while also meeting institutional compliance requirements. This is the long-term viable direction.