Mixers. Computational data layers. Zero-knowledge proofs: these are
just a few of the technologies being leveraged to enhance privacy on the
ethereum blockchain.
Privacy for a public blockchain network is a bit of an oxymoron,
given that, by nature of the technology’s design, data must be shared
and widely distributed on the network in order to be considered valid.
What’s more, for a high-profile public blockchain network like ethereum,
several blockchain analytics websites and data scraping services exist
to proliferate this data beyond just the users of the network.
Itamar Lesuisse, the CEO and co-founder of crypto wallet tool Argent,
describes the matter of privacy on the ethereum blockchain as an issue
for even “the most simplest use case” on the platform.
“If you just look at the most simplest use case, if I say, ‘Hey
Christine, can you send me ten dollars [worth of ether]? Here’s my
wallet address.’ Now, you know how much money I have.” Lesuisse said
during an interview with CoinDesk.
By virtue of sharing one’s public ethereum address, the amount of
funds being held within that address is easily uncovered. Of course, a
user could hold several cryptocurrency wallets with different amounts of
ether held within them. However, disclosing the wallet address of one
of them may jeopardize the identity of all wallets owned by a user
especially if funds had previously been transferred between wallet
addresses.
“I’m talking here about friends who I asked to send me some money.
They would instantly know how much I have,” emphasized Lesuisse. “It’s
so transparent, which is a great picture of blockchain, but for some
users, it might scare them away to use it at scale.”
This is why Lesuisse and others are working towards better tools for
making private transactions and even private computations in general on
the ethereum blockchain. Ultimately, the aim is to encourage greater
adoption of the ethereum blockchain by larger groups of people such as
enterprise corporations.
Speaking to enterprise use cases on the ethereum blockchain, EY global innovation leader for blockchain Paul Brody said in a past interview with CoinDesk:
“It’s fundamentally essential if you want corporations
and large scale investors. If you want them to use public blockchains,
you’ve got to provide them with privacy … We believe that without
privacy you won’t have a lot of serious enterprise users.”
Getting serious about privacy
There are a number of privacy projects that have newly launched this year.
The blockchain team at EY released code dubbed ‘Nightfall’ last month on GitHub as an experimental solution to enable anonymous transactions on the ethereum blockchain.
It leverages a well-known technology in the crypto space known as
zero knowledge proofs (ZKPs) first conceived in the late 1980s by
researchers Shafi Goldwasser, Silvio Micali, and Charles Rackoff in a
paper titled “The Knowledge Complexity of Interactive Proof-Systems.”
Later in 2016, privacy coin Zcash launched on mainnet and became the
first widespread application of ZKPs used to send “shielded
transactions” anonymizing users across a public blockchain network.
More recently, after the release of Nightfall in May, the developer team at blockchain startup 0xcert
has started to iterate on the code release and add new features for its
specific implementation with non-fungible ERC-721 tokens.
“An important thing we added to [Nightfall] is selective
verification. I’m not going to expose everything if I don’t want to,”
explained 0xcert chief strategy officer Urban Osvald. “Nightfall and all
the tooling we provide combined really makes a combination of tools and
features widely applicable not just for game items and collectibles…but
they pave the pathway for large scale enterprise use case.”
Speaking to the motivations behind the initiative, Osvald remarked:
“The biggest goal for us is widespread adoption of
non-fungible tokens and obviously blockchain in general … Adoption is
slow and we want to expedite it as fast as possible.”
The here and now
Apart from transactional privacy on the ethereum blockchain, another
ethereum-based startup called Enigma is dedicated to creating an
off-chain computational environment for any type of data privacy.
“When we talk about computational privacy, it’s going beyond the idea
that you can protect the anonymity or the amount of a transaction and
you’re actually able to do computations on encrypted data,“ said Tor
Bair, head of growth and marketing for Enigma, in a past interview with
CoinDesk.
Bair added:
“You could do decentralized credit scoring that protects
data from specific users that’s trying to establish their
creditworthiness … For gaming, data needs to remain private from certain
individuals within the game or you may want to produce random numbers
in a secure fashion. These are all potential applications in future for
our protocol.”
On Tuesday,
Enigma released its second test network solidifying “the developer
experience,” according to Bair, of using the protocol which has yet to
see a mainnet launch.
In the meantime, Julien Niset, chief science officer at Argent,
argues that a basic privacy tool on ethereum ready for deployment
immediately is needed.
“There’s need for a lot privacy solutions on Ethereum addressing
different needs and different requirements,” said Niset. “We really
tackle the first one and the one needed most today which is how can I
send funds from A to B privately.”
Hoping for a more private future
The tool being talked about by Niset is called Hopper. It is a open-source mixer for making private transactions on the ethereum blockchain using a mobile iOS device.
In essence, Hopper is a smart
contract that users can deposit notes of 1 ETH to and withdraw funds
from privately without revealing any public account addresses. It also
leverages ZKPs in order to prove recipients of private transfers.
“Users can deposit notes of 1 ETH into a mixer smart contract and
withdraw them later to a different account by only providing a
Zero-Knowledge proof (zkSNARK) that they previously deposited a note
into the mixer, without revealing from which account that note was
sent,” the official GitHub page describes.
While immediately deployable, Niset warns that Hopper is by no means the ultimate privacy solution for ethereum.
“We don’t want to claim that we solved that problem for Ethereum.
This is not what it is. This is an open source community,” said Niset.
“The thing that is really important is that people collaborate. We used
the development of some other people and saw we could make it a viable
product for mobile wallet.”
As such, CEO of Argent Itamar Lesuisse emphasized that from his
perspective, Hopper is a privacy product solution that “can work today”
but will be just one of many in existence in the years to come.
Lesuisse concluded:
“There are many solutions out there that are on the way
and will become way more advanced in a few years…From a product
perspective, we wanted to solve the problem today but there may be many
more solutions in future.”
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