Austin Hill, chief instigator of the highly regarded Blockstream project, believes confidentiality of data on blockchains will lead to hitherto unseen levels of confidence in the financial system itself. Hill, whose background is in zero knowledge proof applications and cypherpunk technologies for privacy in electronic cash, thinks blockchain users should be able to have their cake and eat it: the efficiency of a shared ledger system without sacrificing the privacy of transactions therein. Why advertise with us Confidential Transactions is one element within the sidechains project, which Hill says has garnered a lot of interest from Wall Street. He explained how retaining privacy through some cutting edge encryption can leverage the real time audit capabilities of the blockchain, strengthening integrity generally in many use cases. Hill told IBTimes: "In some use cases you might want to prove a leverage ratio for an asset class and the issuing of new assets against a base asset. You may want to say – we do not have insurance contracts that are above and beyond our core assets, or we don’t have fractional lending going on above a certain ratio. "You could prove that without having to show what the underlying assets are. So using these technologies I think there’s a lot of potential for removing systemic risk and improving confidence in our finance system." Blockstream’s Confidential Transactions does not disclose the value of a transaction but allows the network to check that inputs add up to outputs and things balance; the network understands that encrypted 3 + encrypted 5 = encrypted 8. The actual amounts are only disclosed to the sender and the recipient, and potentially their auditor. It uses one-way homomorphic encryption which has improved efficiency in terms of computational power requirements. "There is a small size trade-off in terms of […]
