Fully Homomorphic Encryption: The New Frontier of Privacy and Security in Blockchain

Fully homomorphic encryption (FHE) has been an important research direction in the field of encryption since it was first proposed in the 1970s. The core idea is to perform computations on encrypted data without decrypting it. In 2009, Craig Gentry's groundbreaking work paved the way for the practical application of FHE.

FHE allows for arbitrary computations to be performed on encrypted data without needing to decrypt it first. This means that operations can be performed on ciphertext, and the resulting encrypted output will match the result of operations performed on the plaintext after decryption. Key features of FHE include the homomorphic nature of addition and multiplication, as well as the ability to support unlimited operations.

In the blockchain field, FHE is expected to become a key technology for solving scalability and privacy protection issues. It can transform a transparent Blockchain into a partially encrypted form while maintaining control over smart contracts. This provides new possibilities for applications such as encrypted payments and gaming, while preserving the traceability of transaction graphs.

FHE can also improve the user experience of privacy projects, such as solving wallet synchronization issues through Oblivious Message Retrieval (OMR). Although FHE does not directly address scalability issues, its combination with Zero-Knowledge Proofs (ZKP) may provide a trusted computing mechanism for Blockchain.

FHE and ZKP are complementary technologies, serving different purposes. ZKP provides verifiable computation and zero-knowledge properties, while FHE allows computation without exposing data. Combining the two may significantly increase computational complexity, so careful consideration of specific use cases is required.

Currently, the development of fully homomorphic encryption (FHE) is about three to four years behind zero-knowledge proofs (ZKP), but it is catching up rapidly. First-generation FHE projects have begun testing and are expected to launch their mainnet later this year. Although the computational overhead of FHE is still higher than that of ZKP, its potential for large-scale adoption is becoming evident.

The main challenges facing FHE include computational efficiency and key management. The computational intensity of bootstrapping operations is being alleviated through algorithmic improvements and engineering optimizations. In terms of key management, some projects are exploring threshold key management schemes to overcome single points of failure.

In the market, multiple companies are actively developing FHE solutions. Companies like Zama, Sunscreen, and Fhenix focus on the development of FHE tools and infrastructure. Projects such as Inco Network and Mind Network are committed to applying FHE in the fields of Blockchain and Web3. These companies have attracted significant venture capital, reflecting the market's recognition of FHE's potential.

Looking ahead, FHE is expected to make significant progress in the next three to five years. With the continuous improvements in theory, software, hardware, and algorithms, FHE will become increasingly practical. It has the potential to fundamentally change the landscape of data privacy and security, bringing revolutionary changes to Blockchain, artificial intelligence, and other digital fields.