A Truly Scalable and Private Blockchain
Enigma
Privacy and Scalability are two of the major factors that are preventing blockchain from unlocking its full potential. Enigma uses an innovative approach to these two challenges in an attempt to create decentralized applications.
Current Problem
Scalability:
Traditional blockchains are an ever-growing ledger of transactions distributed across nodes. This means every validated transaction must be added to every node. When blockchain applications veer from that of currencies there is no way to efficiently scale with traditional methods, there is simply far too much data to be verified and added to all nodes. Through the use of Distributed Hash Tables (DHT’s) and Multi-Party Computation (MPC), Enigma’s network is capable of storage and computation at scale (this will later be explained in depth)
Privacy:
Data Privacy in the development of Dapps is a massive problem being addressed exclusively
by Enigma. In the current semi-centralized internet, major players sell data that is collected from using their platforms. Your individual data is being sold without your permission in the multi-billion dollar industry of data brokering. When I first heard this I laughed at how ridiculous it sounds on the surface, who cares about what I do on Facebook or search on google and who would ever pay for that information?
But in reality, this is an enormous and often misunderstood problem. Industries involved in risk management like insurance and banks use this data to determine premiums and interest rates. If you want to learn more about why your life is now completely public and how that effects you, watch the Ted Talk How Data Brokers Steal Your Identity.
The first step to solving this problem is decentralization, which takes power and in this case data, away from centralized authorities. Blockchain projects all over the world are doing this but there is an inherent inability to privatize data on a blockchain. Everything on the blockchain is transparent and usually traceable with a little bit of work. One technology that overcomes this is Zero-Knowledge Proofs which is an advanced cryptographic technique that allows transactions to be verified without revealing transaction details. For example, if Bob wants to send Sally 10 Zcash, through the use of Zero-Knowledge
Proofs Bob can do so without revealing it to the whole network (Zcash was used in this example because it successfully implements Zero-Knowledge Proofs). This is not exactly what Enigma’s network is doing but it is a similar concept. Instead of transaction information, Enigma uses bundles of data that users have the ability to sell for its computational value without actually revealing the raw data itself. For this concept to make much sense we must first understand how the protocol works and what industry applications find this process useful.
How Enigma Works
The best way to understand the Enigma protocol is by going through the process of a data transaction. This starts with a data provider uploading data to the network or storing it on their own node and applying a set price for a subscription to access that data. DHT’s scalably distribute and store that data by compressing it with a hash function into a key that is distributed throughout the network. An address is created for the data that allows it to be retrievable. In this ecosystem, the data is distributed in a secure and scalable manner. When a consumer wants this data they provide the address that they want to access and pay for the subscription with ENG over some time period. This data can be used for computations which improve already existing algorithms and yield readable analytics. Decentralized Applications are created with contract executing code where public parts of the contract run on the blockchain and private parts run off-chain. This revolutionary feature of Enigma is what they call a private contract, which is a smart contract with off chain capabilities. This technology addresses the problem that prevents smart contract integration in so many industry applications. The Enigma network chose to use MPC because it is scalable due to its utilization of symmetric cryptography while allowing the level of privacy and accuracy of computations necessary. MPC basically distributes computations across nodes in an off-chain network based on reputation and load sharing requirements. This innovative technique protects the privacy of the raw data and eliminates the need to have computations each run across every node. Nodes are incentivised for their storage and computations by collecting fees and malicious nodes are punished with the loss of a security deposit for inaccuracy. Even in the case of a malicious node majority Enigma is protected by SPDZ protocol as an extra layer of security. This MPC technique integrates with secure hardware i.e. Intel's Software Guard Extensions and Trusted Execution Environment both of which provide safe zones or enclaves for private code. This is just another layer of security on the network and is part of the reason for their newly released Intel partnership.
Advantages of The Enigma Network
● Data can be used for computations while remaining private. This makes users release of data is controllable and even reversible because it is only available to that user. ● Distribution or unauthorized reproduction of data is impossible for adversaries. ● Off-chain computation and DHT’s for storage will allow the Enigma network to scale ● Private contracts can apply to financial and other industry applications while maintaining privacy and integrity of involved parties.
Catalyst
Catalyst is the first completed implementation of the Enigma network. Catalyst uses algorithms based on historical data from cryptocurrency price changes. Catalyst was implemented with all of the proposed protocols and is a successful proof of concept. Although Catalyst is tailored toward professional cryptocurrency traders, installation and use of Catalyst is anything but user-friendly, but don't take my word for it, go try Catalyst for yourself on their website. This first implementation is rough around the edges and shows that widely used Dapps on Enigma are probable but not in the short term. More importantly, Enigma has proven that the creation of Dapps that buy/sell private data for improvement of algorithms is already possible.
Use Cases
● Computation and storage of customer information ● Fingerprint, face, and voice recognition computation and storage ● Private key generation and digital transaction signing ● Computation of Healthcare related data analytics ● Spending assessments for credit purposes
(and so much more… These are all inefficiencies that generic blockchain projects are working towards, but none address the high degree of privacy that each requires)
All these use cases are practical but flashy, I am more interested in companies that will one day be forced into using Enigma technologies because of its unique privacy features. Health Insurance Portability and Accountability Act (HIPAA) and General Data Protection Regulation (GDPR) are composed of a series of government regulations that disallow the release of customer data. At the same time, this data is extremely valuable for analytics and it cannot be used because it undermines privacy of customers. Enigmas platform, in theory, could compute useful analytics from this data without ever invading someone's privacy, and funds for the use of this data could be paid to individuals.
Conclusion
The fact that private data could be used without releasing it is a wild concept to wrap your head around, but once you do, an entirely new set of improvements to current systems could be seen. This technology only
available with Enigma (seriously, if you know of any other projects with similar goals leave a comment) which will give them a competitive advantage as the industry continues to grow. I think undervalued is an understatement for ENG, however in extreme undervalued conditions, securities often remain there for a while. In my opinion, Enigma will be facing a very long and bumpy road with development and implementation of this technology. With such an innovative technology and unorthodox approach to an age-old problem, nothing about their progress will be fast. After comprehending the immense potential of Enigma it is clear that the use of its technology (or future improved solution) is inevitable and will be well worth the wait. It seems unimportant that our private information is being sold but that is because we are used to seeing the world through a centralized lense. Currently, the transition from a centralized system to a decentralized system requires increased transparency and decreased privacy in the network. This transition is almost unavoidable because formerly, the centralized entities provided integrity to the system by controlling all private data. In a decentralized system no single entity controls the data, therefore it’s distributed for everyone to see. Enigma is the only project I have found that bypasses this trade-off, and provided that it’s functionality continues to improve, a whole new array of privacy dependant use cases will open to this technology