Composable Privacy: Integrating Selective Disclosure Credentials with Fully Homomorphic Encryption

Abstract

Privacy-preserving systems have traditionally faced a fundamental tradeoff between data utility and confidentiality. Selective Disclosure Credentials (SDCs) enable users to prove specific attributes without revealing underlying personal information, while Fully Homomorphic Encryption (FHE) enables arbitrary computation on encrypted data without exposing plaintext. Although both technologies address critical privacy challenges, they solve different problems and are rarely integrated into a unified architecture. This paper introduces the concept of Composable Privacy, a layered framework that combines selective disclosure credentials, zero-knowledge proofs, and fully homomorphic encryption into a cohesive privacy architecture. The framework separates privacy concerns into three functional layers: an authentication layer using selective disclosure and zero-knowledge proofs, a computation layer using homomorphic encryption for confidential processing, and a verification layer that provides cryptographic assurances of computation correctness. The paper examines the cryptographic foundations of BBS+ signatures, Coconut threshold credentials, lattice-based homomorphic encryption schemes, and post-quantum security considerations. It further evaluates the practical feasibility of the architecture through applications in decentralized finance, healthcare federated learning, confidential governance systems, and blockchain-based identity infrastructure. Performance trends, scalability challenges, interoperability requirements, and future hardware acceleration pathways are also analyzed. The proposed Composable Privacy framework demonstrates how selective disclosure and encrypted computation can be combined to create privacy-preserving digital systems that maintain verifiability, confidentiality, and regulatory compliance simultaneously. The work provides a conceptual foundation for next-generation privacy architectures in blockchain, decentralized identity, and distributed computing environments.