Messari: Overview of Fully Homomorphic Encryption Projects
FHE can perform computations on encrypted data without decrypting it, which essentially means that sensitive data can be processed without being exposed.Author: Sami Kassab, Messari Researcher
Compiled by: Jinse Finance 0xjs
Fully Homomorphic Encryption (FHE), often referred to as the holy grail of computation and black magic, is so for a reason. (See Jinse Finance's previous report: Why Fully Homomorphic Encryption is the Next Big Narrative in Crypto)
FHE allows computations on encrypted data without decrypting it, which essentially means that sensitive data can be processed without being exposed.
The transparency of blockchain presents challenges for enterprises to adopt it, as most companies are reluctant to disclose various aspects of their operations on public chains. Using FHE to encrypt and compute on-chain data may be a solution to this problem.
Will ZKP solve the privacy issues of cryptocurrencies? Probably not.
ZKP is not a great privacy solution for two reasons:
For most applications, a third party with more powerful machines is needed to generate proofs, thereby exposing user data. Users must trust these entities and their data.
ZKP is not suitable for applications that require both global and private states simultaneously. Using ZKP for privacy works for simple single-client use cases like Zcash, but not for applications like Uniswap that require global state.
Returning to FHE, the recent surge in its development has been driven by tech giants (like Meta, Google, Amazon) responding to strict data laws such as GDPR and increased funding from government agencies in the face of rising cyber threats.
The collaborative efforts of Web2 industry leaders have led to the creation of numerous SDKs and open-source libraries specifically for FHE. Coupled with broader advancements in the field, this paves the way for FHE to integrate into the blockchain space.
The most anticipated breakthrough is the support for FHE in Layer 1, which will provide end-to-end encryption for public chains. This means that all on-chain data is private. Even validators will not understand transaction data, eliminating MEV. Fhenix is one such project.
Using FHE can enable many other use cases, including: private payments and smart contracts, trustless games like poker, private DAO voting, private machine learning, private databases, and a private data economy.
FHE is not a panacea. Many implementations require the synergy of ZK and multi-party computation technologies to provide a comprehensive privacy solution. It also faces many resistances to widespread adoption, including the need for substantial computational resources and "noise."
