FHE Is the New Black to Crypto Security

CoinEx
6 min readMay 28, 2024

In today’s data-driven world, the ability to utilize information for valuable purposes like medical research or artificial intelligence advancements constantly clashes with the critical need for data privacy. Traditional encryption methods, while crucial for safeguarding sensitive information, are often time consuming in decryption.

This is where Fully Homomorphic Encryption (FHE) enters the scene, offering a revolutionary approach to data security. FHE promises the ability to perform complex computations directly on encrypted data, eliminating the need for decryption and safeguarding privacy throughout the entire process. This article will explain FHE, exploring its different forms, its potential applications in various fields, and the exciting possibilities it holds for the future of secure data processing.

Highlights:

  • There are four levels of homomorphic encryption; FHE is the ideal one.
  • FHE can analyze data while protecting privacy, which is vital in some criteria like medical studies.
  • Zama and Fhenix are prominent players in FHE, but there are also many others.
  • Computational demands, scalability, efficiency, and standardization are the hurdles to FHE’s development.

What Is FHE? A Leap to Crypto Security

Imagine a world where you can perform complex calculations on sensitive information without ever needing to decrypt it. This is the concept behind homomorphic encryption. It is like performing calculations through a special lock, and the data remains secured inside, but the lock allows you to manipulate it in specific ways to get the desired outcome.

FHE allows secure computations on encrypted data, protecting user privacy and eliminating the need for trusted third parties, solidifying the core principle of trustless transactions in cryptocurrency.

But first of all, we need to know what homomorphic encryption is. There are different levels of functionality, each offering varying capabilities:

  • Partially Homomorphic Encryption (PHE): This is the simplest form, allowing basic operations like addition or subtraction on encrypted data. While it’s limited, it’s useful for specific scenarios.
  • Somewhat Homomorphic Encryption (SHE): SHE takes things a step further. It supports more complex operations like multiplication, but there’s a catch. The number of operations you can perform on the data is limited (depth limitation). Imagine a complex mathematical equation. SHE might handle the initial steps but struggle with the later ones.
  • Leveled Fully Homomorphic Encryption (L-FHE): L-FHE offers a more versatile solution. It allows for any number of computations on encrypted data but with a trade-off. The process can be computationally expensive and slower compared to other methods. Think of it as a powerful tool, but it might take a bit longer to use.
  • Fully Homomorphic Encryption (FHE): The holy grail of homomorphic encryption, FHE allows for unlimited operations on encrypted data without any limitations. It’s the ideal scenario, offering complete privacy while enabling any level of data manipulation. However, achieving true FHE is computationally demanding and still under development.

By understanding these different types of homomorphic encryption, we can appreciate the spectrum of possibilities this technology offers. As we delve deeper, we’ll explore how FHE can unlock groundbreaking applications in various fields.

Practical Use of FHE

FHE’s ability to process encrypted data unlocks a treasure trove of possibilities across various sectors. Let’s explore some real-world examples that showcase its potential:

  • Medical Data: Many hospitals store private records of patients in their databases, and for ethical and legal reasons, these records must be kept confidential. However, this information is highly valuable to external medical researchers who can analyze the data to derive important insights about diseases and potential treatment methods. By using Fully Homomorphic Encryption (FHE), hospitals can encrypt patient data homomorphically, making it easier to protect patient privacy in the cloud.
  • AI on Autopilot, Personalized Experiences with Enhanced Security: Platforms like YouTube rely on user data to personalize recommendations. With FHE, their AI models can be trained directly on encrypted user data, allowing them to identify patterns and personalize experiences without compromising user information. This ensures users get the content they crave while keeping their data secure.
  • DAO Democracy with Secure Strategies: Decentralized Autonomous Organizations (DAOs) are internet-native communities governed by collective decision-making. FHE can secure voting privacy within DAOs. Members could cast encrypted votes on proposals, ensuring the integrity of the voting process while keeping individual voting strategies confidential. This fosters secure and transparent governance within DAOs.

FHE is the new black to crypto security, and these are just a few examples of FHE’s vast potential. As the technology matures, we can expect even more innovative applications to emerge, transforming how we interact with and utilize data in a privacy-conscious world.

Other FHE Applications

  • On-chain Blind Auctions
  • Two phases: a bidding and a claim phase
  • One Bidding phase consists of users bidding an encrypted amount of tokens using the encrypted ERC20 contract
  • When the auction ends, the contract homomorphically determines the highest bidder
  • Only discloses the winning bidder while keeping the winning bid value and non-winning bid values private
  • Marketplace where buy and sell orders are not visible to the public before they are filled
  • Confidential ERC-20 Tokens
  • Encrypted Key-value Database
  • Trustless bridges: an encrypted key is used to sign bridge transactions homomorphically
  • Confidential voting: encrypted choices and token amounts

The FHE Landscape

FHE is not just a theoretical concept; several projects are actively pushing the boundaries of this technology. Here are a couple of prominent players:

  • Zama: Developed by Microsoft Research, Zama is a high-performance L-FHE scheme. It offers a good balance between functionality and efficiency, making it suitable for various real-world applications.
  • Fhenix: This open-source project by IBM Research focuses on creating user-friendly and accessible FHE libraries. Fhenix aims to democratize FHE development, making it easier for researchers and developers to build applications on this innovative platform.

Beyond these two, there are other noteworthy projects, each contributing to the ongoing advancement of FHE technology. As competition and collaboration within this field grow, we can expect even more powerful and efficient FHE solutions to emerge.

Other FHE projects in blockchain:

Challenges and Roadblocks Against FHE Adoption

While FHE holds immense promise, it’s not without its challenges. The biggest hurdle currently lies in its computational demands. Performing complex calculations on encrypted data requires significant processing power and resources.

This can translate to slower processing times and higher energy consumption compared to traditional encryption methods. It is like a powerful engine that can get the job done easily but requires a lot of fuel.

However, computational demands aren’t the only roadblock. Here are some other potential challenges to consider:

  • Scalability: As the amount of data being processed increases, FHE schemes can struggle to maintain efficiency. Scaling FHE solutions to handle massive datasets remains a work in progress.
  • Efficiency: While advancements are being made, FHE is still not as efficient as traditional encryption methods in all scenarios. Optimizing FHE algorithms for better performance is an ongoing area of research.
  • Standardization: As with any new technology, the lack of standardized FHE schemes can create compatibility issues. Fostering collaboration and establishing industry-wide standards will be crucial for widespread adoption.

Despite these challenges, researchers and developers are actively working on overcoming them. Advancements in hardware, like specialized processors, and the ongoing development of more efficient FHE algorithms are paving the way for a more practical future for this technology.

Conclusion

FHE presents a transformative vision for data security. By enabling computations directly on encrypted data, it unlocks a future where privacy and data analysis can coexist. Imagine medical research leveraging anonymized datasets for breakthroughs or AI personalization thriving without compromising user information. These are just glimpses of the possibilities FHE offers.

We explained why FHE is the new black to crypto security. However, challenges like computational demands and scalability require ongoing development. Standardization will also be crucial for widespread adoption. Despite these hurdles, the potential is undeniable. As research and development continue, FHE is poised to become a game-changer across various fields. The future of data processing is likely to be one where security and utilization go hand-in-hand, and FHE stands as a key player in shaping this future.

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About CoinEx

Established in 2017, CoinEx is a global cryptocurrency exchange committed to making trading easier. The platform provides a range of services, including spot and margin trading, futures, swaps, automated market maker (AMM), and financial management services for over 5 million users across 200+ countries and regions. Founded with the initial intention of creating an equal and respectful cryptocurrency environment, CoinEx is dedicated to dismantling traditional finance barriers by offering easy-to-use products and services to make crypto trading accessible for everyone.

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