From Hyperledger to Ethereum, How the quest for privacy is shaping the future of enterprise blockchain technology

The case for non-public blockchains in an open world 

Though many imagine that the future of blockchain is all the things occurring on public networks, there is nonetheless room for permissioned enterprise-focused blockchains to thrive. With the rise of the internet throughout the noughties, we noticed many firms embrace the public web, nevertheless it did not eliminate non-public pc networks. A lot of the wholesale monetary providers trade makes use of non-public networks, and this is a development we’ll proceed to see even with web3. 


Pc networks which are of systematic significance to a particular jurisdiction equivalent to central bank-issued currencies is not going to find yourself on public blockchains. With this context in thoughts, a quantity of totally different extremely regulated monetary infrastructure suppliers and central banks are working with and evaluating enterprise blockchain networks. 


In the couple of years since its launch, the dominance of the Ethereum Digital Machine (EVM) in public blockchain networks has influenced enterprises too, with Hyperledger Besu rising as the most compelling possibility for companies trying to deploy new networks. For extra on why, you possibly can refer to my recent post. Given how widespread the EVM is, coupled with Hyperledger Besu being designed for each enterprise and public community deployments, it’s by far the most battle-tested and future-proof technology to use. 


Nonetheless, while Besu is changing into extra entrenched with enterprise, it would not resolve some of the privacy challenges which firms have. 


These privacy challenges aren’t distinctive to enterprises. Exercise on public blockchain networks takes place utilizing pseudo-anonymous identities, the place on-chain exercise is totally clear to all community contributors.

There is an expectation, like with most of the technical challenges in web3 that they are going to be solved in the close to future, nevertheless it appears unlikely in the subsequent 12 months. 


The innovative of privacy in Web3

The options have a tendency to contain utilizing totally encrypted blockchain networks equivalent to Obscuro and Aztec. Each of these are layer 2 networks being constructed on Ethereum — Obscuro depends on SGX enclaves, whereas Aztec makes use of its personal zero-knowledge technology (ZK-ZK rollups as they refer to them). 


Different approaches utilise zero-knowledge technology for good contracts that subject shielded tokens, as EY’s Nightfall project has achieved. None of these approaches are seamless, and they’re all at various phases of improvement. 

Enterprise -specific wants: Id and information safety

Customers of public blockchain networks are primarily pushed by asset hypothesis, and do not thoughts if their exercise is probably seen to others ought to their pseudo-anonymous identities be revealed. 


For enterprises, there are two essential concerns that restrict what they will do with public blockchain networks. Firstly, they want to be certain of whom they’re coping with. When you’re a financial institution, you higher make certain of who your prospects are. Secondly, you want to be certain that information, be that buyer or commercially delicate exercise is not available for anybody to devour ought to they so select.

This is the place an enterprise has challenges with all on-chain exercise being shared with all contributors of the community. 


Though it is restricted to transactional information on-chain, having everybody in a position to see which events are getting into into each transaction is removed from perfect and privacy is required to handle these shortcomings. 


Quorum’s privacy mannequin: a case research

J.P. Morgan’s Quorum blockchain technology emerged again in 2016 to handle this lack of privacy for Ethereum networks. They modified the Go-Ethereum shopper code base (help was subsequently baked into Hyperledger Besu too) and added a non-public state database and a safe enclave for storing non-public transaction payloads. 


Quorum added a non-public transaction functionality to blockchain networks. If you submit a transaction to a node on the community, you possibly can mark it non-public for that node. The node then encrypted the transaction payload and propagated it solely to the contributors it was supposed for. 


Those that may decrypt it, then utilized the applicable updates to a non-public state database, making certain that the transaction had taken place so far as they have been involved. The transaction was saved in the safe enclave making certain there was a method by which the transaction may very well be recovered. 


The Quorum privacy model

This strategy did work, nevertheless it was brittle, and lots of firms discovered it advanced to deploy as not solely did you want to have the blockchain nodes, however you additionally had to configure the enclave cases and guarantee they might all speak to each other. This added important overhead to the deployment. 


There have been additionally challenges with bringing new contributors into transactions after the truth, and challenges with excessive availability. These elements have resulted in the Quorum-specific performance being phased out of Hyperledger Besu, and few firms working with what was referred to as Quorum. 


Nonetheless, though the Quorum strategy to privacy suffered from its personal challenges, there is consciousness that blockchain networks want a approach whereby a subset of contributors can transact with each other in a safe method the place no details about this exercise is leaked to any further contributors.

Potential pathways

In each private and non-private blockchain networks, this is a problem for which a chic resolution doesn’t but exist. The Enterprise Ethereum Alliance has specifications for privacy approaches for networks. However, they’re not actively maintained. 


Zero-knowledge proofs come up as candidates for a possible resolution. Nonetheless, the present focus with them is on zero-knowledge rollups that are for scaling blockchain networks, not offering privacy. 


Different enterprise blockchain applied sciences equivalent to R3’s Corda and Hyperledger Material have their very own approaches to privacy. Material has parallels with the strategy utilized by Quorum. However more and more, firms need to find a way to utilise Ethereum technology of their blockchain networks to piggyback on all of the improvement being undertaken on it. The EVM is the closest factor we now have to TCP/IP in web3. 

Privacy as a catalyst for development

Alongside id and interoperability, privacy is one of the key options blockchain networks want to present. Throughout the previous 12 months, nice inroads have been made with scaling blockchain networks, it is my hope that groups now begin to focus extra on the remaining challenges, particularly privacy. 


Having these challenges addressed on public networks will not essentially carry enterprises onto them, however it should give them a mechanism they will incorporate into extremely regulated environments. 


It will drive additional adoption of blockchain technology in these firms. With the proper privacy measures in place, the floor space of potential alternatives will develop more and more bigger which might be helpful for all.



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