The Tension Between Blockchain Transparency and Privacy in Smart Contracts: A Comparative Study of Iran and the European Union

Abstract

This study examines the conflict between the inherent transparency of blockchain technology and privacy requirements in the context of smart contracts, and seeks, through a comparative approach, to analyze the legal status of this conflict within the Iranian legal system in comparison with that of the European Union. The primary objective of the study is to elucidate the challenges arising from the immutability of recorded data, transaction traceability, and the self-executing nature of smart contracts in relation to the fundamental principles of personal data protection, including the right to data control, data minimization, and the right to be forgotten. Employing a comparative–analytical research method, and through an examination of legislative documents, European Union regulations—particularly the General Data Protection Regulation (GDPR)—instruments related to electronic identification and trust services, as well as existing laws and practices in Iranian law, this research analyzes the legal dimensions of this conflict. The findings indicate that in the European Union, although blockchain transparency is recognized as a technical advantage, efforts have been made to strike a balance between technological innovation and privacy protection by adopting solutions such as off-chain data segregation, anonymization techniques, and flexible interpretations of certain GDPR principles. In contrast, the Iranian legal system, due to the absence of a comprehensive and explicit framework for personal data protection and the lack of specific regulation of smart contracts, faces significant legal ambiguities and practical challenges. The results suggest that, in order to ensure the secure and lawful utilization of blockchain-based smart contracts, Iranian law requires the development of clear regulations inspired by European Union experiences while remaining compatible with domestic considerations and the structure of the country’s private law system.