Ernst & Young, a multinational auditing and consulting firm, has announced the launch of their new EY Ops Chain Public Edition prototypes recently. What are these? The first implementation of zero-knowledge proof technology on Ethereum.
If you do not understand the concept, try to imagine Ethereum as Monero. All the features that Ethereum always had like smart contracts and its virtual machine for the development of decentralized apps but with anonymity.
According to the company, the system was created mainly to overcome three important barriers that get in the way of Ethereum’s full potential. For instance, Ethereum lacks the ability to allow companies to conduct “secure” and secretive transactions while lowering the barriers for a more widespread adoption of the technology and enable a full traceability of private transactions.
At the moment, this version is mostly just still a prototype that will be further developed, but there are actual plans to release it in 2019 when testing and development are done.
In the article, we’ll try to explain to you why this technology is important and why you should care. Information has been taken from Ernst & Young and a Cointelegraph article on this subject.
Public x Private Blockchains
Do you know what are the main differences between a public and a private blockchain? The main differences are that one of them lets anyone in and the other does not. While public chains are open to anyone with the technology and are more decentralized because of this, the private ones work in a different way.
For instance, Bitcoin and Ethereum are the two most well-known public chains in history. All transactions are verified by thousands of independent computer that are set all around the world and the more decentralized that this chain is, the better it is in security.
Ernst & Young argued that there is a cost for this, though, and that this cost is that every transaction confirmed by the nodes need to reach consensus and solve proof of work calculations to be accepted in order for the system not to be easily frauded as it could be without all this. This makes the network slower. Therefore, scalability is affected and some barriers to a wider adoption of the network emerge.
Also, the transactions are all shown with all information but the name of the people who made it and they are very easy to track, which can compromise the security and the anonymity of the person using the public blockchain.
The private blockchains, on the other hand, are generally open only to specific individuals that are part of a consortium or some sort of organization. They are faster and protect the identity better but are far less decentralized.
This way, the transactions will be only limited to a small number of participants instead of any persona on the internet. Some enterprises like Hyperledger and R3 already are using a private infrastructure instead of a public one.
Zero Knowledge Proof And Its Blockchain Applications
The argument from Ernst & Young is that zero-knowledge proof can be used in the blockchain to get the best of both worlds. This is a verification process that only informs whether the transactions were correct or not. Transactions are trackable but they do not give information about them the way they generally do.
With this somewhat old cryptographic method (the original idea is from 1988), the verification is only made about whether a statement (transaction) is true or not. This kind of protocol can solve some privacy issues with public blockchains like Ethereum and this is why EY Ops Chain PE is significant for the company.
The technology can easily be used in the verification of information at the same time that it does not need to be a prey of all the bad aspects of private chains. This way, the transactions can still be as decentralized as ever without giving so much information and even helping in the speed of the network.
Paul Brody, the EY Global Innovation Leader of Blockchain, has described this technology as a major step forward that empowers blockchain adoption in his interview with Cointelegraph. This way, users will have more privacy but with no reduced security against external attacks and the transactions will still be trackable.
This would, in the vision of the team, make a considerable change in how the industry works and let the users actually enhance their capabilities while using the blockchain.
Is This New Effort Any Good?
It looks like it might be. Ethereum needs something like this, anyway. Vitalik Buterin, arguably the most important co-founder of the Ethereum network, has been thinking about ZCash’s protocol, ZK-SNARK (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge) for some time, but he deems it too energy expensive.
Because of this, if the final version of the software is actually good, this project can be important for the future of Ethereum.
The main issue, for now, is that while ZK-SNARK is something that exists, nobody is 100% sure that this new program developed by Ernst & Young is actually properly better in any way. Ideas are great but the reality often tones them down.
If the protocol does everything that it promises (and you might just remember the Lightning Network to decide whether they generally deliver or not), it can be a great solution, but we still have to wait until next year to know for sure whether this will be the future of Ethereum or just another bland empty promise.