As I delve deeper into the world of Web3, I've been working my way through foundational concepts to have a better understanding of the industry (check out my last five posts on the Midnight Dev Diaries!). This week, I dove into one of the most practical and privacy-focused ideas I’ve encountered so far: selective disclosure.
Selective disclosure is more than just a technical feature—it’s the working expression of a broader idea known as rational privacy. It allows individuals to prove or reveal only what’s necessary in a given interaction, keeping everything else private. In an ecosystem where trust must be earned without a central authority, this ability to protect personal data while still meeting legal or operational requirements is critical.
This post examines how selective disclosure operates, its benefits, and how platforms like Midnight are implementing it through privacy-first smart contracts.
What Is Selective Disclosure?
In the Web3 world, privacy doesn’t mean keeping everything secret—it means sharing only what’s necessary. Selective disclosure is a privacy-preserving technique that enables individuals to disclose specific information for a given interaction while keeping all other personal data confidential.
This approach is a practical expression of a broader concept known as rational privacy. Rational privacy is the idea that privacy shouldn’t be absolute or all-or-nothing—it should be contextual. It recognizes that in many real-world scenarios, users want to share some data to gain access to services or meet legal obligations, but they shouldn't be forced to give up all privacy and security in the process. It’s about striking a balance between personal control, usability, and regulatory compliance.
Selective disclosure is the technical implementation of rational privacy. It gives users and developers the cryptographic tools to protect sensitive information by default, while still enabling the right level of transparency when it’s required. This makes it especially relevant for public blockchain networks, where data is immutable and visible by design.
A typical example of selective disclosure in action is the use of Verifiable Credentials (VCs). VCs allow users to prove attributes—like age, residency, or educational background—without revealing the entire credential. This aligns with the principles of data minimization and privacy by design, ensuring individuals remain in control of their information.
This balance between usability and privacy is what makes selective disclosure so powerful—and so relevant for real-world blockchain applications. But beyond the technical implementation, it's worth asking: what are the practical benefits of using selective disclosure in the first place?
Benefits of Selective Disclosure
When integrated thoughtfully, selective disclosure brings both technical and human-centric advantages to decentralized systems. It enables individuals and organizations to meet privacy expectations and compliance standards without sacrificing functionality. Implementing selective disclosure offers several advantages:
- Enhanced Privacy: Selective disclosure enables users to share only the data necessary for a specific interaction, rather than disclosing full credentials or identity documents. This dramatically reduces the surface area for privacy breaches and surveillance. Whether you’re accessing a service, submitting a form, or interacting with a smart contract, your unnecessary personal data stays out of view.
- Data Minimization and Compliance: This principle, core to privacy laws such as GDPR and HIPAA, requires that only the minimum amount of personal data necessary for a task is collected or processed. Selective disclosure naturally enforces this, making it easier for developers and organizations to design privacy-respecting systems by default.
- User Empowerment and Control: In traditional systems, users often hand over their entire dataset for one small verification (e.g., uploading an entire ID just to prove their age). Selective disclosure flips that dynamic, giving users the power to control what they share, when, and with whom. This supports a more user-centric data model, where individuals become the custodians of their credentials.
- Reduced Risk of Data Misuse: The less information that’s exposed, the lower the risk of that data being lost, stolen, or misused. Selective disclosure reduces the need for centralized data storage (e.g., big ID databases), limiting attack vectors for fraud and identity theft. Even if a transaction or credential presentation is intercepted, only the minimum disclosed attribute is visible, keeping the rest safe.
- Lower Liability and Operational Overhead for Businesses: Many organizations would prefer not to collect or store sensitive user data due to the associated risks, regulatory requirements, and administrative burdens. Selective disclosure offers a path forward, enabling users to demonstrate eligibility or compliance without requiring businesses to retain or manage that data. This can reduce costs, simplify operations, and improve overall data security posture.
While selective disclosure introduces a powerful model for user-centric privacy, it also comes with its own set of technical and usability challenges. Understanding these limitations is essential for builders and organizations aiming to adopt it responsibly.
Potential Drawbacks
While selective disclosure strengthens privacy and control, implementing it in real-world systems isn’t always straightforward. Here are some of the common challenges:
- Complexity in Implementation: Selective disclosure relies on advanced cryptographic techniques, often zero-knowledge proofs or similar privacy-preserving protocols. These require careful design, precise execution, and deep security expertise. For developers new to Web3 or cryptography, like myself, the learning curve can be steep, and mistakes in implementation could compromise the intended privacy protections.
- Verification Difficulties: When only a fragment of a credential or statement is revealed, verifying its authenticity can become more complicated. Systems must be designed to ensure that partial disclosures can be trusted without needing access to the complete original data. This often requires additional metadata or proofs to be included, which can increase the overall complexity of the system and potentially slow down the verification process.
- Interoperability Challenges: Not all decentralized identity systems follow the same formats or standards. As a result, credentials issued by one platform may not be easily verifiable on another, especially when using advanced features like selective disclosure. Without widely adopted protocols and infrastructure, cross-platform compatibility can be limited, reducing the broader utility of selectively disclosed data.
While these challenges are real, they’re not insurmountable. Much of the current work in privacy-preserving blockchain development, including projects like Midnight, focuses on making selective disclosure more practical, developer-friendly, and interoperable across various ecosystems.
Use Cases of Selective Disclosure
Selective disclosure has powerful, real-world applications wherever individuals or organizations need to prove something without oversharing. It’s beneficial in systems that handle sensitive data but also require compliance, trust, and transparency. Here are a few domains where it shines:
- Digital Identity Verification: Imagine proving you're over 18 to access a service—without uploading your driver's license or disclosing your full birthdate and address. Selective disclosure lets you present only the relevant fact (e.g., “over 18”) as a verifiable statement, not the whole credential.
- Financial Transactions: Financial platforms often need to confirm identity or transaction legitimacy (for KYC/AML compliance), but users shouldn’t have to share their entire financial history or wallet activity. Selective disclosure enables sharing only what’s legally necessary—no more, no less.
- Healthcare: Patients may need to prove their vaccination status or medical eligibility without disclosing their entire health record. Selective disclosure lets them share only the required attribute (e.g., “vaccinated for X”) while keeping the rest private.
- Access Control: Whether entering a venue or accessing online services, users may be granted or denied access based on attributes like membership, role, or credentials. Selective disclosure can enforce this access logic without revealing unnecessary identifying information.
Selective Disclosure in the Midnight Network
At Midnight, selective disclosure isn’t just a privacy feature—it’s a core design principle grounded in rational privacy. Rational privacy recognizes that while sensitive data must be protected, real-world applications also require controlled visibility for regulatory, legal, or operational reasons.
Take financial transactions, for example. A decentralized financial platform built on Midnight may want to keep user balances, transfers, and transaction histories private. However, under anti-money laundering (AML) or know-your-customer (KYC) regulations, certain information may need to be revealed—but only to authorized parties, and only under specific legal conditions.
This is where selective disclosure and zero-knowledge proofs come together. Using Midnight's Compact smart contract language, developers can build logic that proves a transaction is valid (e.g., below a certain threshold, or compliant with regulatory filters) without revealing the full transaction details. Meanwhile, if a regulatory audit is triggered, users or auditors could selectively disclose the required pieces of information—nothing more.
In this way, Midnight enables builders to create applications that respect individual privacy and comply with regulatory requirements. It’s a practical application of selective disclosure that mirrors how real-world trust operates: share only what’s needed, only when it’s needed, and only with the right people.
Conclusion
Selective disclosure offers a flexible and powerful approach to privacy—one that meets people where they are, allowing them to control their information. It enables individuals to share just enough information to satisfy requirements, without exposing more than necessary. Whether you're verifying an identity, proving a credential, or complying with financial regulations, selective disclosure makes privacy practical and effective.
At Midnight, this concept becomes more than theoretical. It’s embedded into the platform’s architecture through Compact smart contracts and zero-knowledge proofs, allowing builders to create systems that balance user protection with real-world needs. It’s rational privacy in action.
If you're exploring how to build for privacy in Web3—or just learning how these systems work—I encourage you to check out the Midnight docs and Academy for more examples and technical insight, as well as a detailed list of further reading about selective disclosure below:
- What Is Selective Disclosure? – Identity.com
- Selective Disclosure Guide – Dock.io
- A Refresher on Selective Disclosure and Anti-Fraud Rules – Frost Brown Todd
- Midnight Academy Module 3 – Midnight Docs
- Explicit Disclosure Reference – Midnight Docs
- Digital Assets Use Cases – Midnight Docs
And, as always, if you’ve come across any great learning resources on privacy or identity in Web3, I’d love to see them—drop a comment or reply with your favorites!
I'll be back next week with more insights as I continue unpacking the key building blocks that make decentralized systems work.
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