On-Chain Privacy: Two Approaches Compared

Zero-Knowledge Proofs (ZK): The trade-off here is interesting—transaction inputs stay visible on the blockchain, but the proof mechanism keeps the witness data (your private information) locked away. You get selective confidentiality, though not complete opacity.

Fully Homomorphic Encryption (FHE): Takes privacy a step further. Both inputs and computational state remain encrypted end-to-end, never exposed during processing. It's full-spectrum confidentiality—everything stays hidden throughout the entire computation.

The difference? ZK reveals what you're transacting with but protects why. FHE hides both the what and the why. Different tools, different threat models.