Fully Homomorphic Encryption: The New Frontier of Privacy and Security in Blockchain

The concept of Fully Homomorphic Encryption (FHE) technology dates back to the 1970s, but it has long been difficult to realize. Its core idea is to perform computations on encrypted data without the need for decryption. Initially, only simple addition, subtraction, multiplication, and division could be performed on encrypted data, known as partial homomorphic encryption. In 2009, a researcher demonstrated a method for performing arbitrary computations on encrypted data, marking a significant breakthrough in Fully Homomorphic Encryption.

FHE is an advanced encryption technology that allows computation directly on encrypted data without the need to decrypt first. This means that operations can be performed on ciphertext to generate encrypted results, and the results after decryption are consistent with the results of performing the same operations on the original plaintext.

Key Features of FHE

1. Homomorphic Property: The addition and multiplication operations on ciphertext are equivalent to the same operations performed on plaintext.

2. Noise Management: FHE encryption adds noise to the ciphertext to ensure security, but the noise increases after each operation. Effectively managing and minimizing noise is crucial to ensure the accuracy of the computation.

3. Unlimited Operations: Unlike other homomorphic encryption schemes that only support a single operation or a limited number of operations, FHE supports unlimited addition and multiplication operations, allowing for any type of computation on encrypted data.

However, FHE also faces two major challenges:

1. Noise Control: The equivalence between plaintext and ciphertext involves adding noise, and excessive noise may lead to computation failure.

2. Computational Overhead: Encrypted computation is thousands to millions of times more expensive than plaintext computation.

The Application of FHE in Blockchain

FHE is expected to become a key technology for solving blockchain scalability and privacy protection. Currently, blockchain is inherently transparent, but FHE can transform it into a partially encrypted form while maintaining control over smart contracts.

Some projects are developing FHE virtual machines that allow programmers to write smart contract code to operate FHE primitives. This approach can address the current privacy issues of Blockchain, enabling applications like encrypted payments and online gambling while retaining transaction graphs to meet regulatory requirements.

FHE can also improve the usability issues of certain privacy projects through Oblivious Message Retrieval (OMR), allowing wallet clients to synchronize data without exposing the content accessed.

The Relationship Between FHE and Zero-Knowledge Proofs

FHE and Zero-Knowledge Proofs (ZKP) are complementary technologies, but serve different purposes. ZKP allows for verifiable computation and zero-knowledge properties, providing privacy protection for private states. On the other hand, FHE enables computations on encrypted data without exposing the data itself, which is crucial for permissionless smart contract platforms.

The Current Status and Future Prospects of Fully Homomorphic Encryption (FHE)

The development of FHE is about three to four years behind ZKP, but it is rapidly catching up. The first FHE projects have begun testing, and the mainnet is expected to launch later this year. Although the computational overhead of FHE is still higher than that of ZKP, its potential for large-scale application is enormous. Once FHE enters the production phase and achieves scalability, its adoption rate is expected to be comparable to that of ZK Rollups.

Challenges and Bottlenecks

The widespread application of FHE faces challenges such as computational efficiency and key management. The bootstrapping operation in FHE is computation-intensive, but algorithm optimization is continually improving. For specific applications like machine learning, alternatives that do not use bootstrapping may be more efficient.

Key management is also a major challenge. Some FHE projects require threshold key management, involving a group of verifiers with decryption capability. This approach still needs further improvement to overcome the single point of failure issue.

FHE Market Overview

Multiple crypto venture capital firms are actively investing in the FHE field. Some projects are developing FHE-based applications, such as online gambling, commercial payments, and gaming.

Threshold FHE (TFHE) combines FHE with multiparty computation and Blockchain technology, opening up new application scenarios. The developer-friendliness of FHE allows it to be developed using common programming languages, enhancing its practicality.

Regulatory Environment

The regulatory environment for privacy technologies such as FHE varies by region. While data privacy is generally supported, financial privacy remains in a gray area. FHE has the potential to enhance data privacy protection, allowing users to retain data ownership and potentially benefit from it, while still maintaining social benefits such as targeted advertising.

Conclusion

Fully homomorphic encryption is at a pivotal moment in the transformation of the encryption field, bringing new solutions for privacy and security. With advances in technology and increased capital attention, FHE is expected to achieve large-scale applications, addressing core issues such as blockchain scalability and privacy protection. As the technology matures, FHE will open up new possibilities for various innovative applications within the encryption ecosystem.