Confidential Transactions

Confidential Transactions

Blockchain’s innate transparency imposes many limitations on potential use cases and adoption by exposing sensitive transaction details. Payments, voting, medical records, one’s financial history, and many other use cases require confidentiality, and the list will only expand alongside blockchain adoption. By enabling confidential and yet auditable transactions to take place onchain, both consumer and corporate users of the blockchain users can benefit greatly.

Key Components:

Fully Homomorphic Encryption: Allows for arbitrary computations on encrypted data, yielding a result which, upon decryption, corresponds directly to the outcome of the same operations conducted on the original plaintext. This enables confidential yet auditable transactions.

Encrypted Transaction Details: Transaction amounts and other sensitive data are encrypted to maintain confidentiality and prevent exposure.

Ciphertext: The encrypted, unreadable form of a message or data, produced from encrypting plaintext data.

Privacy-Preserving Protocols: Implement measures to ensure that transaction details and participant identities remain secure and private.

 

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The problem

Privacy Protection

On public blockchains, the transparency of transaction details can expose sensitive information such as identities and transaction amounts. This limits adoption and use cases, such as by having corporate payments or other otherwise sensitive transactions visible. Encryption counters this by ensuring the privacy of such information, thus safeguarding the identities of parties involved, transaction amounts, and other sensitive information.

Enhanced Security

The open nature of blockchain transactions inherently increases the risk of unauthorized access, hacking, and data breaches, posing a significant threat. It also enables personal identities to be discovered, increasing the risk of phishing attacks. Onchain encryption secures transactional data, ensuring it remains tamper-proof and private throughout the process.

Preventing Manipulation & Front-Running

The visibility of transaction details in public blockchains can lead to manipulative practices like front-running, where entities exploit pending transaction information for personal gain. Encryption mitigates this issue by concealing transaction details, thereby preventing such unethical practices and ensuring fair transaction processing.

Regulatory Compliance

The blockchain’s characteristic transparency can conflict with stringent data protection and privacy laws in various jurisdictions, putting entities at risk of non-compliance and associated legal challenges. By encrypting transaction data, organizations can align with these regulations, effectively reducing legal and reputational risks associated with potential data breaches.

Why Fhenix?

Many types of onchain transactions require built-in confidentiality to safeguard sensitive data and uphold transaction integrity. Fully Homomorphic Encryption (FHE) provides complete privacy over transactions, enabling countless use cases such as privacy, voting, and anything relating to sensitive data. This is also a building block for future blockchain applications, as blockchain begins to impact nearly every industry imaginable.

Complete Privacy Preservation: FHE enables computations on encrypted data without ever decrypting it, ensuring complete privacy preservation. Unlike TEE, where data is decrypted within a secure enclave, FHE keeps data encrypted at all stages, reducing exposure to unauthorized access or leaks.

Universal Computations & Broad Potential Applications: FHE stands out for its ability to execute virtually any computation on encrypted data, providing a universal solution for all possible on-chain transactions. This also means that FHE can be utilized across a broader range of applications, enabling more complex and privacy-preserving applications. In contrast, existing technologies like MPC and ZK are often designed for specific types of computations or applications.

No Trusted Third Parties: Both TEEs and MPC technologies may require trusted third parties or trust setup procedures. FHE operates without any need for trusted third parties, increasing security and being fully aligned with blockchain’s decentralization ethos.

Non-interactive: Many encryption schemas such as MPC are interactive, meaning they require coordination amongst parties. This introduces complexity and inefficiencies, whereas FHE’s non-interactive nature ensures computations are streamlined.

Simplified Infrastructure: MPC requires coordination amongst multiple parties, while TEE requires extremely specialized hardware. In contrast, FHE greatly simplifies the infrastructure requirements for secure computations.

Enhanced Regulatory Compliance: With stringent data protection laws, FHE’s robust privacy-preserving feature can aid in data privacy and compliance.

Many types of on-chain transactions require built-in confidentiality to safeguard sensitive data and uphold transaction integrity. Fully Homomorphic Encryption (FHE) provides complete privacy over transactions, enabling countless use cases such as privacy, voting, and anything relating to sensitive data. This is also a building block for future blockchain applications, as blockchain begins to impact nearly every industry imaginable.

Complete Privacy Preservation

FHE enables computations on encrypted data without ever decrypting it, ensuring complete privacy preservation. Unlike TEE, where data is decrypted within a secure enclave, FHE keeps data encrypted at all stages, reducing exposure to unauthorized access or leaks.

Universal Computations & Broad Potential Applications

FHE stands out for its ability to execute virtually any computation on encrypted data, providing a universal solution for all possible on-chain transactions. This also means that FHE can be utilized across a broader range of applications, enabling more complex and privacy-preserving applications. In contrast, existing technologies like MPC and ZK are often designed for specific types of computations or applications.

No Trusted Third Parties

Both TEEs and MPC technologies may require trusted third parties or trust setup procedures. FHE operates without any need for trusted third parties, increasing security and being fully aligned with blockchain’s decentralization ethos.

Non-interactive

Many encryption schemas such as MPC are interactive, meaning they require coordination amongst parties. This introduces complexity and inefficiencies, whereas FHE’s non-interactive nature ensures computations are streamlined.

Simplified Infrastructure

MPC requires coordination amongst multiple parties, while TEE requires extremely specialized hardware. In contrast, FHE greatly simplifies the infrastructure requirements for secure computations.

Enhanced Regulatory Compliance

With stringent data protection laws, FHE’s robust privacy-preserving feature can aid in data privacy and compliance.