Fully Homomorphic Encryption: The Future Star of Privacy Computing

Fully homomorphic encryption ( FHE ) technology has been a research hotspot in the field of cryptography since it was first proposed in the 1970s. Its core idea is to perform computations on encrypted data without decrypting it. In 2009, Craig Gentry's groundbreaking work achieved fully homomorphic encryption that allows arbitrary computations on encrypted data, bringing revolutionary progress to this field.

FHE allows direct computation operations on ciphertext without needing to decrypt it first. This means that encrypted data can be processed, and the resulting encrypted output will be consistent with the result of performing the same operation on the original data after decryption. Key features of FHE include homomorphic properties, ( addition and multiplication ), noise management, and support for unlimited operations.

Compared to some Homomorphic Encryption ( PHE ) and a certain type of Homomorphic Encryption ( SHE ), FHE supports unlimited addition and multiplication operations, allowing for any type of computation on encrypted data. This makes FHE an extremely powerful encryption technology, but it also comes with higher computational overhead.

FHE has a broad application prospect in the blockchain field. It can transform a transparent blockchain into a partially encrypted form while retaining control of smart contracts. Some projects are developing FHE virtual machines that allow developers to write smart contract code that operates FHE primitives. This approach can solve current privacy issues on the blockchain, enabling encrypted payments, gambling, and other applications while maintaining transaction graphs to meet regulatory requirements.

FHE can also improve the usability of privacy projects through private message retrieval (OMR), addressing issues such as balance information synchronization. Although FHE itself cannot directly solve the blockchain scalability problem, combining it with zero-knowledge proofs (ZKP) may provide new solutions for this.

FHE and ZKP are complementary technologies, each with its strengths. ZKP provides verifiable computation and zero-knowledge properties, while FHE allows computation on encrypted shared states. Combining the two may increase computational complexity, but it may be necessary in certain specific scenarios.

Currently, the development of FHE is about three to four years behind ZKP, but it is rapidly catching up. The first generation of FHE projects has begun testing, and the mainnet is expected to be launched later this year. Although the computational overhead of FHE is still higher than that of ZKP, its potential for large-scale applications has already become apparent.

The main challenges of FHE include computational efficiency and key management. The computationally intensive nature of bootstrapping operations is being alleviated through algorithm improvements and engineering optimizations. In terms of key management, some projects adopt threshold key management schemes, but further development is needed to overcome single point of failure issues.

In the market, several companies and projects are competing in the field of FHE. Companies like Zama, Sunscreen, and Fhenix focus on the development of FHE tools and infrastructure. Inco Network and Mind Network are dedicated to applying FHE in the blockchain and Web3 fields. These projects have received substantial funding from venture capital, indicating a positive outlook for FHE technology in the market.

The regulatory environment for FHE varies by region. While data privacy is widely supported, financial privacy remains a gray area. FHE has the potential to enhance data privacy while retaining social benefits such as targeted advertising.

With the continuous advancement of theory, software, hardware, and algorithms, FHE is expected to achieve significant progress in the next 3-5 years, transitioning from the research stage to practical applications. As the future star of privacy computing, FHE is expected to drive innovation in the encryption ecosystem, bringing revolutionary changes to the scalability and privacy protection of blockchain.