How are you? By Allah's grace, I'm doing very well.
Homomorphic encryption (he) is the "holy grail" of cryptography, which can take the concept of privacy to a whole new level in blockchain technology. It is a technology for performing calculations on encrypted data without decrypting the data.
1. What is the concept of homomorphic encryption (he)?
Traditional encryption (such as ssl/tls) only protects data at rest or in transit. But when data is used for processing or computation, that data must first be decrypted. This decryption window is the weakest point for data breaches. Homomorphic encryption (he) eliminates this weakness. It allows computations to be performed on encrypted data.
Principle : If E(x) and E(y) are two encrypted numbers, using HE you can calculate a function that will output E(x+y) or E(x \times y). When this output is decrypted, it will be the original result of x+y or x \times y.
Result : No one has seen the original data (x or y), but the required calculation is done using the encrypted data.
Types of Homomorphic Encryption
Partially Homomorphic Encryption (PHE) : It supports only one operation, either addition (+) or multiplication (\times). (Example: Paillier scheme supports only addition).
Levelled Homomorphic Encryption (LHE) : It supports a limited number of addition and multiplication operations.
Fully Homomorphic Encryption (FHE) : It supports an unlimited number of addition and multiplication operations, allowing any complex calculation to be performed on encrypted data. This is the ultimate goal for blockchain.
2. Uses of FHE in Blockchain : Ultimate Privacy
Blockchains are typically transparent, where all transaction details are visible in the public ledger. FHE brings a perfect balance between this transparency and privacy.
A. Confidential Smart Contracts : This is the biggest application of FHE
Computation with confidential input : A smart contract can run on encrypted input data
A DeFi lending contract : The user’s credit score or the amount of assets deposited will be encrypted, but the contract will be able to verify the loan eligibility based on that encrypted data.
Sealed-Bid Auction : The bids of the participants in the auction will be encrypted. The contract will be able to find the winner from all encrypted bids, but other participants will not be able to see the amount of their losing bids.
B. Confidential transactions
Undisclosed amounts and recipients : Using FHE, it is possible to encrypt the transaction amount and sender/receiver addresses of a cryptocurrency.
Maintaining verification : Network nodes can use FHE to verify that the sender has sufficient balance and that there has been no double spending without decrypting the transaction amount. This can further improve privacy coins like Zcash.
C. Data Analytics and Compliance
Confidential healthcare or finance: Sensitive data (such as medical records or financial records) stored on the blockchain will be encrypted. Researchers or auditors will be able to perform statistical analysis on that data without decrypting it, which will help comply with strict privacy regulations like GDPR.
3. Challenges and Current Status
While the concept of FHE is very powerful, its implementation is very difficult
Computational slowness : Computations using FHE can be thousands of times slower than traditional decrypted computations. This severely reduces the transaction throughput of the blockchain network.
Resource intensive : Computations associated with FHE require a lot of computing power (CPU) and memory from nodes, which increases the cost of decentralization.
Early stage : FHE technology is still in its early stages. For its effective use in blockchains, researchers are trying to develop new and faster algorithms, which can help implement it with the help of off-chain processing or hardware accelerators.
Conclusion
In short, homomorphic encryption works with the ultimate goal of turning the blockchain into a public yet private ledger, where transparency and privacy can coexist with each other. Today's discussion concludes here. I hope you've found it interesting. Please share your thoughts on today's topic. Prayers for everyone.
0.000 SRY