Pre Comments:

The following is a paper I wrote on the Enigma protocol. I would like to say before anyone reads this, that I am an accountant and do not have a technical viewpoint or understanding of Enigma. Blockchain technology is just something I am generally interested and fascinated by. I decided to do some research on the topic and write this in this from the point of a common person. I am sure that they're some faults in this so I welcome any feedback correcting anything I wrote.

I hope this provides a basic understanding of the utility of the Enigma Protocol . For a more technical paper, I recommend going to the Enigma website (https://www.enigma.co) and downloading their whitepapers. So without any further comments here is my explanation of Enigma:

Enigma: The Second Layer Solution for all Blockchains

What is Enigma?

Without going in to much technical details, Enigma is a second layer solution. What this exactly means that instead of running smart contracts on top of blockchains themselves, Enigma will execute parts of contracts offchain among the nodes in the enigma network.

So why does this all matter? Well, doing so actually solves 2 big issues that are currently plaguing the crypto world. The first, and in my opinion one of the most important, one is the issue of scalability. The second issue is the one of privacy, especially when it comes to sensitive data (think social security numbers, health records, or almost any piece of information you would not want a complete stranger to just ‘Google’ about you).

Scalability:

First and for most, blockchains in their current form process a lot of data. As popularity of blockchains grow the industry faces a major issue with scaling up to meet demand. A major factor in determining scalability is confirmation time for a transaction to post. Let’s take bitcoin as an example. About a year ago bitcoins 7 day average confirmation rate was about 15 minutes. This January that number jumped to over 700 minutes when bitcoin went “mainstream”. What this goes to prove is that in its current form, bitcoin cannot actually be feasible for its purpose right now if it were to face widespread adoption.

Although there are currently many platforms which are working on the issue in their own unique ways such as child chains and parallel chains, Enigma has completely unique approach. Rather than creating a multitude of chains which run off of the parent or main chain, Enigma will do two things. First it will minimize the amount of data that will need to be processed on the main chain. In order to do this the team has created an off chain distributed or decentralized database of information, that can be linked to the main chain if need be. By nature of this method Enigma is able to keep the size of the main chain small while, storing an infinite amount of data offline. This might be the most valuable aspect of Enigma considering that part of their value proposition is that they aim to compile large amounts of data so that they or any other application built on top of Enigma will be able harvest it. The second way Enigma is reducing bloat on the main chain, further allowing it to be scalable is by reducing redundancy in the method of computations. In a typical blockchain every node in a network will perform the same action over the entirety of data, which will ultimately be stored everywhere. The Enigma protocol breaks down the data (or specific parts of the code, depending on how technical you want to get) into subsets and sends them to different nodes across the network. This allows an individual node to execute only a small part of the action rather than the whole operation. In simpler terms, the main chain will not run an computations on data which will cause it to slow down, rather it will “outsource” the computations to the off chain networks. These computations done off chain will be verifiable and results will be broadcast to the main chain. When you consider this on a macro scale, you’re talking about a lot of saved time and space.

Privacy:

It will be perhaps the most important feature of any blockchain in the coming months to see who will be able to give their customers complete privacy. This may seem somewhat counter intuitive to blockchains’ public open ledgers goal, in order to make everything transparent, but when you consider the type of data that will be used by the likes of new blockchain companies from personal financial data to medical records. It becomes very apparent that safeguarding that sensitive data becomes important. A typical example would one of health records. Right now health records are usually held in centralized data bases that are very susceptible to hacks. This happens time after time, and effects millions of peoples’ personal records. Putting that information of blockchains only solves half the problem. It makes it more secure, but typical blockchains do not solve the issue of privacy. If medical data was on a blockchain under the patient’s control, the patient must be able to monetize their data without having to publically release the underlying information in order for this system to work. After all would individuals be okay with releasing their medical, financial, academic records if it meant that it was now open for the world to scrutinize. This is where Enigma comes back to solve the second core issue. The protocol allows for sensitive private information to be utilized without actually publically opening up that information. Secondly as we discussed before, because information would be broken down into smaller packets and sent out to nodes on the network, it would be impossible for any computer to make sense of the information given the information that they are actually given. The bigger picture here is the ability to use personal data for public utility without ever giving up individual’s private information. Sticking with the medical example, currently the pharmaceutical industry goes to doctors, in order to select patients for drug trials. The doctors are compensated for providing patients medical records, and based on those pharma companies select patients to run trials. The patient is never compensated for this information, and his/her medical records are made public to other individuals in the process. If this system were to switched to integrate Enigma and blockchains. The patient would volunteer himself for a study, the pharma company could select patients based on the medical history, they could run a computation on a group of people who were selected without ever knowing who the people were. In this scenario the privacy of individuals is respected, the patients are properly compensated for their information and process becomes more

How it Will be Successful:

Now that we have discussed the utility and value proposition that the Enigma protocol offers, lets discuss what needs to happen for this platform to be successful. First the company needs to showcase the product and its endless applications. The development team behind Enigma has already launched the first application called “Catalyst”, which came out ahead of the projected time indicated in the company roadmap. Catalyst is most comparable to the Bloomberg terminal, which provides users with real time financial market data. Catalyst will offer nearly identical information on crypto assets that will be reliable and also compensate individuals who provide that data. The catalyst application will allow more investors to comfortably start seeing crypto as a real asset and should lead to more widespread adoption. In my opinion this is a great opportunity for Enigma, and I think they need to convince every blokchain platform to use the enigma protocol and Catalyst application, and doing so will bring more credibility to both programs and cause them to become successful. Furthermore, in order to become a successful organization, Enigma will have to advertise its value propositions to customers more. Right now there is a lot of hype in the market surrounding alt coins, and people are basically trading on those alt coins’ future ambitions as most do not have a working product. Enigma, already has a working product, and one that is quite ahead of its time at the moment, but the software would be rendered useless if customers did not understand its purpose. Therefore there needs to be an active dedication to educate the investors about how enigma is not a direct competitor with other blockchains but, is rather a tool for blockchains to use in order to deliver the full value of the technology to the end user. Many people, think that just because an organization has issued a coin, they are competing in the crypto space to solve a problem better. However with Enigma, this is not so accurate, it’s a second layer solution which allows it to be compatible with all blockchains and that is its most unique aspect that people need to wrap their head around.