Fully Homomorphic Encryption: A New Frontier in Blockchain Privacy Protection

Fully homomorphic encryption (FHE) technology originated from concepts in the 1970s but did not achieve breakthrough progress until 2009. FHE allows computation on encrypted data without needing to decrypt it first, bringing revolutionary changes to data privacy and security.

Core Features of FHE

1. Homomorphic Property: The addition and multiplication operations on encrypted data are equivalent to performing the same operations on the original data.

2. Noise Management: Noise is added during the FHE encryption process to enhance security, but it needs to be properly managed to ensure computational accuracy.

3. Infinite Operations: Supports unlimited additions and multiplications, surpassing the limitations of some homomorphic encryption and certain types of homomorphic encryption.

However, FHE also faces challenges. The overhead of ciphertext computation can be thousands to millions of times higher than that of plaintext computation, which is one of the main obstacles that need to be overcome.

The Application Prospects of FHE in Blockchain

FHE is expected to become a key technology for solving blockchain scalability and privacy protection. It can transform a transparent Blockchain into a partially encrypted form while retaining the control capabilities of smart contracts. This technology enables encrypted payments, privacy-protecting games, and financial applications, while preserving the transaction graph, making it more advantageous in regulatory aspects.

FHE can also improve the user experience of existing privacy projects, such as addressing issues like the long retrieval time for balance information and synchronization delays. Through privacy message retrieval (OMR), FHE allows wallet clients to synchronize without exposing the content being accessed.

Collaboration between FHE and Zero-Knowledge Proofs

FHE and Zero-Knowledge Proofs (ZKP) are complementary technologies, each with its strengths. ZKP focuses on verifiable computation and zero-knowledge properties, while FHE provides privacy protection for shared states. Combining these two technologies can offer a more comprehensive privacy and security solution for the Blockchain environment.

Current Status of FHE Development

The development speed of FHE is accelerating and is expected to soon catch up with ZKP. Several FHE projects have started testing network deployments and are expected to launch their mainnet later this year. Although the computational overhead is still high, with technological advancements, FHE is expected to become as popular as ZK Rollups.

Market Structure

Many companies are actively developing FHE-related technologies and applications:

• Zama: Provides open-source FHE solutions, including the TFHE-re library and fhEVM.
• Sunscreen: Develop an FHE compiler to convert standard Rust functions into private FHE functions.
• Fhenix: Build an Ethereum Layer 2 network based on FHE.
• Mind Network: Develop FHE re-staking layer for DePIN and AI applications.
• Inco Network: Creating a modular confidential computing Layer 1 Blockchain.

These projects attracted a large amount of investment, demonstrating the market's strong interest in FHE technology.

Future Prospects

FHE technology is shifting from theoretical research to practical application. It is expected that in the next 3-5 years, with continuous improvements in theory, software, hardware, and algorithms, FHE will become more practical and widely adopted. This technology is expected to enhance data privacy while providing users with data ownership and potential economic benefits.

With the maturity of FHE, it will bring new possibilities to the Blockchain ecosystem and promote the development of various innovative applications. Although facing different regulatory environments in different regions, FHE has the potential to maintain social benefits, such as targeted advertising applications, while protecting data privacy.

In summary, fully homomorphic encryption is at the forefront of revolutionizing the encryption field, providing new solutions for the scalability and privacy protection of Blockchain. With technological advancements and continued capital interest, FHE is expected to achieve widespread application in the near future, driving the encryption ecosystem towards a more secure and private direction.