The Bar For Privacy Is Going Up
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As A longtime advocate for (and investor in) blockchain privacy, I’m really happy to see the growing focus on privacy in the Ethereum ecosystem. Today Plume announced that they are adding the Nightfall privacy technology developed by EY to their ecosystem. I’m really happy to see that and to be helping them along with that process. Despite the increased focus on privacy, too many people still think that mixers and some other limited privacy pools will be enough. They aren’t. The new benchmark you need to start moving towards is that assets and transactions must go into privacy environments – AND STAY THERE. Every time you move an asset into or out of a privacy environment, you’re essentially using it as a mixer, but those types of movements are increasingly easy to track using sophisticated analytical tools. They are far from perfect, but perfect isn’t required to figure with whom you are transacting. This picture, which I took at the TUM Blockchain in Munich shows how Chainalysis can track funds as they move through mixers and bridges. It’s a leaky process, but it works. And that’s just with criminals and fungible assets. Chainalysis’ Reactor Tool Tracks Payments & Transfers If you’re a business and you deal in non-fungible assets or you do a lot of routine transactions with the same customers and suppliers, don’t think for one second that pattern won’t be discernible even faster. As a result, systems that operate a bit like mixers or that use ZK to conceal selected transfer data are not going to be effective for people who do anything more than routine transactions. To maintain privacy, you need execute transactions inside the privacy environment. Networks like Aztec allow you to build complex business transactions with programmable logic inside the privacy environment. Nightfall allows you to do payments, transfers, and swaps and, over the next year or so, we’ll be adding the ability to build complex, composable contracts that run entirely under privacy In the early stages, if you value your privacy, you should reasonably expect to pay a bit more for private transactions. At least for Nightfall, the most expensive part of the transaction is actually the computing power required for the roll-up, not the gas fees. However, I’m optimistic that these costs will come down quickly. We’ve seen performance improvements on ZK computations of over 1,000x in the last few years. I expect that to continue. The Nightfall test network on Plume is already up and running. Expect to see announcements from EY and Plume on education programs and access to the test net shortly. Between Nightfall, Aztec, COTI, and others, the privacy space is really heating up on Ethereum. I can’t deny that, as one of the proud parents of Nightfall, I want to see us win that race, but I’ll be happy no matter which option succeeds because first and foremost, I think sustainable, scalable privacy is critical to driving blockchain adoption at scale. Plume’s Nightfall Announcement: Nightfall’s GitHub Repo: https://github.com/eyblockchain/ EY’s Blockchain Technology Page: submitted by /u/pbrody |
