Banks are concerned about privacy leaks from blockchain. Can Enigma solve this problem?

Banks and other data operators may be attracted by the efficiency of blockchain, but they are still worried that the openness and transparency of blockchain cannot protect their privacy, especially their sensitive data. These banks that run closed private systems very much want to maintain the privacy of data between each other. This is a point that people often overlook when advocating banks to use blockchain.

Oz Natha and Guy Zyskind , founders of MIT's Enigma project, have developed a system that ensures data privacy, so that people don't have to worry about being seen when storing, sharing, and analyzing data.

Nathan told IBTimes UK:

“Together we built this distributed supercomputer, and every calculation is performed by a different participant in this network, and the actual data is never revealed to anyone.”

The system is inspired by Bitcoin and uses a similar distributed network to accomplish this, Nathan said:

“Different computers communicate with each other, but they don’t mine, they just contribute resources to the network, like bandwidth, some hard drive space, and some CPU processing power.”

To break the system, one would have to take control of all the servers in the network. The system is compatible with any blockchain — Bitcoin, Ethereum, or any private blockchain that a bank wants to develop.

Nathan added:

“One bank I spoke to told me that even a private blockchain would not help because even if they implemented it across 10 branches, they would still be concerned that competitors would know certain information that was being passed on the blockchain or the customer base they had.”

Commercial adoption of blockchain technology is driving the need for privacy for financial institutions that are moving toward sharing ledgers. Blockstream recently released some privacy-enhanced sidechain elements that can operate in conjunction with the Bitcoin network in exchange for information.

Generally speaking, as data becomes more valuable, people’s concerns about security will increase. But when people feel their privacy and security are guaranteed, they may be more willing to share more data with companies, and then companies will share data with each other, which will create more business value.

Zyskind said:

“Companies in general, and banks in particular, are more interested in blockchain because it forms a distributed supercomputer network, so decisions are made in a decentralized way, and the results are transparent and trustworthy. But using blockchain now, especially for banks, will not be of much use because everything will be public.”

Zyskind is currently participating in a blockchain seminar on privacy and identity authentication, with representatives from banks and large pharmaceutical companies in the audience. He said: "At the meeting, the pharmaceutical company representatives said they can't put everyone's medical information on the blockchain, and the banks also said they can't put everyone's financial status on the blockchain."

The Enigma system breaks data into pieces and then uses some clever mathematical tricks to mask that data.

Zyskind said:

“The term ‘encryption’ is incorrect: it should be ‘privacy sharing’ and guaranteeing that every fragment is completely masked in a mathematical calculation that is completely random and completely secure.”

"It's impossible to get the data from each fragment individually, you can't get back the original data. So actually Enigma is better than 'encryption' because it achieves what we call 'perfect privacy', which is the best type of security you can imagine."

Computers will interact while ensuring data integrity, and the system allows them to execute any code and process any encrypted data.

Nathan said:

"In general, we use a huge network instead of a single computer to perform calculations, which can achieve better 'honesty' and 'resilience'. If you want to decrypt, you need to have the corresponding key; if you want to crack the Enigma project or the blockchain, you need to control all the servers. So, if you want to reconstruct the original data, you need to control all the servers, not just get the key."

Nathan pointed out that the Enigma system is different from homomorphic encryption. Enigma uses ciphertext to perform calculations to produce encrypted results.

He said:

"The best [homomorphic encryption] right now is extremely expensive, and the system we're developing is the same order of magnitude in encryption, but the computational intensity is ten times greater. With our system, you can actually compute on data stored on different machines. In homomorphic encryption, you need to use the same key to encrypt, but with Enigma you can use multiple keys because there is no concept of keys in Enigma. So in either case you can aggregate data from different users, from different companies."

As for use cases, Nathan mentioned some details, such as privacy under supervision: "You don't need to see other people's account balances, but if you know a transaction is over a certain amount, or the transaction comes from a certain address, and you mark it, you can know his balance."

Other use cases in the banking sector include proof of solvency, or proof of compliance. In this case, the bank does not need to reveal the actual structure of the bank, but only needs to show proof that they comply with regulations. Another financial use case may be dark pool trading, where no one can see what is going on inside.

Nathan said the system is also applicable to any type of机器学习, where machines can use the system to aggregate data or do some very private work so that the company can assure customers that the data is safe and that even the company cannot access their data.

Zyskind added that pharmaceutical companies often store a lot of sensitive data that must be kept secret, even from their own researchers or other companies or universities they work with.

“Because the data is so sensitive, they can’t easily give it out for research. But if they run machine learning models or predictive models on the data, there won’t be such concerns, which will be groundbreaking.”

Original article: http://www.ibtimes.co.uk/banks-looking-mits-enigma-bring-perfect-secrecy-blockchains-1525232
Translator: ivanjianjian
BTC address: 3HAqfF9nrCMQHrBTgRe76BwxYreDxBG6RC
Editor: printemps
Source (translation): Babbitt Information