What is Nightfall? The Ethereum Privacy Technology From Ernst & Young


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Addressing Privacy in Ethereum
Concerning cryptocurrencies, privacy typically materializes as a topic for preserving the anonymity of users when participating in financial transactions. That notion has shouldered the brunt of development work in cryptocurrency anonymity technology, with the safeguards from third-party surveillance on individuals the foremost concern.

However, when you evaluate the broader applications of a public blockchain like Ethereum, where Turing-complete smart contracts are enabled, the use of privacy technologies extends beyond the individual and into business processes. But first, a high-level overview of how zk-SNARKs can preserve privacy on Ethereum.

According to ZCash’s technology page on zk-SNARKs:

“The acronym zk-SNARK stands for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge,” and refers to a proof construction where one can prove possession of certain information, e.g. a secret key, without revealing that information, and without any interaction between the prover and verifier.”

A form of zero-knowledge proofs (ZKPs), the concept is better understood with more abstract examples, such as the cave of Alibaba or the idea of verifying that Waldo exists in a portrait without specifically revealing where he is in said portrait.

The clever logic of ZKPs is that they decouple data from information.

Esoteric concepts like zk-SNARKs, which are built on exceptionally complicated mathematics, are challenging to translate into code, particularly when referencing an implementation that is congruent with applications in a blockchain. As a result, formal code libraries, like ZoKrates, become the bridge between the mathematical interpretation and the human-comprehendible aspect that can be wielded into real uses cases via code.

Formalized libraries of zk-SNARKs are still under heavy development, so they are challenging to use, but that is precisely why firms like EY have been exploring their application and working on introducing a more usable set of protocols with the underlying technology abstracted away.

The discovery of privacy tools using Ethereum is not explicitly limited to EY either. JP Morgan is also reportedly working on the technology with its blockchain Quorum — a permissioned version of Ethereum.

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