Multicoin founder talks about leading investment in Zama: ZKP is the past, the future belongs to FHE

Original author: Kyle Samani, founder of Multicoin Capital

##Translator: Odaily Planet Daily Azuma

Editor’s note:

On March 7, Zama, an open source cryptography company that aims to help developers build privacy-protecting applications, announced the completion of a US$73 million A Round of financing, co-led by Multicoin Capital and Protocol Labs, with participation from Metaplanet, Blockchange Ventures, Vsquared Ventures and Stake Capital, as well as Filecoin founder Juan Benet, Solana co-founder Anatoly Yakovenko and Ethereum co-founder and Polkadot co-founder Gavin Wood .

In the early morning of March 8, Kyle Samani, the founder of Multicoin Capital, wrote an article called "The Holy Grail of Cryptozoology", which deeply explored the reasons why Multicoin Capital led the investment in Zama, and expressed his opinions on Zama and its The potential application of the flagship "Fully Homomorphic Encryption" (FHE) technology in the cryptocurrency field is prospected.

The following is the full text of Kyle, compiled by Odaily Planet Daily.

Over the past 30 years, every server-side security breach or attack has been traced to the same core problem: a lack of encryption protection of sensitive data or an attacker obtaining the keys needed to decrypt it.

When we interpret the problem this way, the solution becomes obvious - always encrypt the data and make sure that the decryption key is not stored on any server.

The problem with this solution is that it used to be impossible...but not anymore.

Today, I’m excited to announce that Multicoin Capital and Protocol Labs have co-led a $73 million investment in Zama, with participation from Metaplanet, Blockchange, VSquared, Stake Capital, and Portal Ventures. As well as the founders of several other projects including Juan Benet (Filecoin), Gavin Wood (Polkadot), Anatoly Yakovenko (Solana), Julien Bouteloup (StakeDAO), and Tarun Chitra (Gauntlet).

Zama is the leader in the "fully homomorphic encryption" (fully homomorphic encryption, FHE) track. The special feature of FHE is that it allows arbitrary computation on encrypted data. The concept has been around in academia for decades, but has been too computationally intensive to be of practical value in the past.

The Zama team (composed of more than 30 PhDs and cryptography experts) has made dozens of breakthroughs around FHE in the past four years, targeting certain types of computing work (the first is the blockchain field) , Zama’s TFHE-rs and Concrete open source libraries are ready for production. In the coming years, we expect 1000x performance improvements in mathematics, software, and hardware (e.g., ASICs) that will allow FHE-based cryptographic computations to directly compete with plaintext computations.

• Odaily Planet Daily Note: The following is an example of how FHE can be used in the field of privacy computing.
  Suppose we have an encryption function f, which can turn plaintext A into ciphertext A', and also turn plaintext B into ciphertext B', that is to say, f(A) = A', f( B) = B'; In addition, we also have a decryption function f', which can decrypt the ciphertext encrypted by f into the plaintext before encryption, that is to say, the ciphertext A' can be turned into plaintext A, or the ciphertext can be B' becomes plain text B.
  For general encryption functions, if we add A’ and B’ to get C’, and then use the f’ function to decrypt C’, we will only get a meaningless string of garbled codes.
  However, if f is an encryption function that can perform homomorphic encryption, then we can get the result C after using f' to decrypt C', and C will also be equal to the sum of A and B result.
  In this way, data processing rights and data ownership can be separated, thereby preventing data leakage without affecting computing.

I believe it won’t be long before every Web2 application from database applications to large language models will introduce FHE technology.

FHE will revolutionize the underlying structure of computing.

One of the characteristics of the blockchain field is that even if the transaction throughput is quite limited, it can create huge financial value. Therefore, considering the current limitations in FHE performance, Zama will first focus on the blockchain field.

For Multicoin Capital and Protocol Labs, this is the main reason why we led the investment in Zama and want to bring its technology to the market. We have been working closely with the Zama team and helping them implement FHE on the chain. .

Regarding on-chain privacy, there are actually many solutions on the market. For simple payments, the effect of Zero-Knowledge Proof (ZKP) has been fully proven. However, for transactions involving shared state - which covers almost all DeFi transactions - ZKP always has insufficient utility. Or extremely difficult to implement.

The beauty of FHE is that it allows developers to execute exactly the same logic in FHE's encrypted environment as in a transparent environment.

Currently, three teams have announced that they will use Zama’s technology to build FHE-based blockchains, including Fhenix (we have also invested in them), Inco and Shiba, all of which will be launched this year.

Zama provides fhEVM out of the box for developers who want to implement FHE on EVM, and I expect that soon Zama will support more blockchain virtual machines in addition to EVM.

The introduction of FHE will realize new possibilities in the following aspects:

• Privacy-based DeFi applications;

• Encrypted voting;

• Privacy-based Data Autonomous Organizations (DataDAOs);

• Blind auction on the chain;

• On-chain games;

• A new way of thinking across chains (store the FHE encryption private key of chain B on chain A, and vice versa);

We are still in the early stages of use case exploration, and I very much look forward to seeing developers use FHE to build new and different applications.

5 In 10 years, we may look back at some of the cloud data breaches that are happening now and be shocked - people will not understand why user data was not encrypted.

A few years ago, the Zama team proposed their idea for an iteration of HTTPS, which they called HTTPZ. HTTPZ is a natural outcome of the evolution of the encryption logic of the Internet, where users encrypt data locally with their own keys and then send the encrypted data to a server, which can then perform calculations on the encrypted data.

Under the configuration of HTTPZ, it can be assumed that the server is always at risk of intrusion, but if all user data has been encrypted and the keys are kept by the user themselves on the device, even if the attacker accesses the server To no avail.

HTTPZ represents the grandest vision of applying encryption technology to the Internet.

Based on the gradual popularization of cryptography technology in the past 30 years, we believe that this day will eventually come, it is just a matter of time.

We couldn’t be more excited to support Rand, Pascal (Zama co-founder), and the entire Zama team as they lead the revolution in cryptography technology.

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