Scholars From Stanford To Develop Privacy Mechanism For Ethereum Smart Contracts

By&nbspRishma Banerjee

Researchers of the prestigious Stanford University and Visa Research have developed a privacy mechanism for Ethereum smart contracts. On 20th of February, a paper describing the mechanism was published on Stanford University’s Applied Cryptography Group website.

According to the paper, the researchers have created “a fully-decentralized, confidential payment mechanism”, a protocol called “Zether” that is compatible with both Ethereum and other smart contract platforms. It has been designed to execute either individually or by other smart contracts while maintaining the account balances encrypted and enabling the deposit, transfer, and withdrawal of funds through cryptographic proofs.

The authors have claimed in the report that transactions on Zether are strictly confidential. Here, one transaction costs approximately 0.014 ETH or around $1.51 at press time. For an even higher level of confidentiality, users have the option to lock funds in an account to a smart contract. The type of anonymity guaranteed by Zether is more similar to Monero (XMR). The report explains,

“We describe an extension to Zether that can also hide the sender and receiver involved in a transaction among a group of users chosen by the sender. Though the overhead associated with anonymity scales linearly with the size of the group, no trusted set-up is needed and no changes to the underlying smart contract platform are required.”

The security system of the Zether is independent and no other maliciously written or insecure smart contract can cause Zether to misbehave, claims the researchers.

Other features incorporated into the Zether protocol include “Σ-Bullets” – which are intended to be “an improvement of the existing zero-knowledge proof system” (called Bulletproofs). As mentioned in the research paper:

“Σ-Bullets make Bulletproofs more inter-operable with Sigma protocols, which is of general interest. We implement Zether as an Ethereum smart contract and show the practicality of our design by measuring the amount of gas used by the Zether contract.”

Privacy coins, which provide users with more anonymity, are regarded with mixed feelings both from the crypto community and governments. Last month, Litecoin (LTC) creator Charlie Lee declared that he would focus on making the major cryptocurrency more fungible and private. Lee explained that confidential transactions could be added to Litecoin through a soft fork and would be implemented “sometime in 2019.”

In April 2018, Japanese regulators from the Financial Services Authority (FSA) suggested preventing cryptocurrency exchanges from trading anonymity-oriented altcoins Dash (DASH) and Monero. “It should be seriously discussed as to whether any registered cryptocurrency exchange should be allowed to use such currencies,” an unnamed member of the FSA group said.

Rishma Banerjee

Rishma is currently pursuing a bachelor’s degree in International Relations and has a special place in her life for sifting through all sorts of random trivia, thank you very much.

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