Accounting firm EY has announced a tool that it claims will bring private transactions to Ethereum that’s a public blockchain and not an enterprise version.
EY unveiled the prototype of their EY Ops Chain Public Edition (PE) that uses zero-knowledge proofs or ZKP. This will let custom tokens on the public Ethereum blockchain but maintain private transaction records.
EY is currently in the process of patenting its tech as well as the plans to release a production version in 2019.
A year ago, another ZKP in the form of zk-SNARKS was introduced public Ethereum. In most cases, it’s used to keep data private. For instance, a smart contract can determine whether someone is older than 18 years without actually accessing the user’s actual age.
In addition, the use of ZKP for scaling blockchains is considered an active area of research. This includes the ZKP to enable off-chain computation. The Enterprise Ethereum Alliance (EEA) has already issued some specifications on the matter.
ZKP can also be used for private transactions as it is for ZCash, which was founded by the zk-SNARKS inventors. EY’s solution is an expanded version of such a concept. However, ZCash was based on bitcoin, which has a more limited, payment-focused compared to Ethereum.
Meanwhile, 18 months ago, Consensys described the idea of private Ethereum transactions. More recently they open-sourced the Orion private transactions for Enterprise Ethereum blockchains.
At present, the most fungible tokens on the Ethereum platform use the ERC-20 standard, and the EY solution supports payment and service tokens which are very similar.
In the statement released by the company, EY said that the purpose was to help organizations in commercializing blockchain technology. It points to the scale of public Ethereum compared to private blockchains.
“Private blockchains give enterprises transaction privacy, but at the expense of reduced security and resiliency. With zero-knowledge proofs, organizations can transact on the same network as their competition in complete privacy and without giving up the security of the public Ethereum blockchain,” said Paul Brody, who is EY Global Innovation Leader.
At present, most companies prefer private blockchains since they have more control over the network. A common worry is that on the public blockchain, many hackers will attempt to break the privacy protection.
JP Morgan’s Quorum permits transaction privacy but on a private version of Ethereum. It also uses ZKP.
“The biggest challenge for enterprises’ blockchain adoption is the ability to on-board business partners into their private or consortium blockchain network. Using the standard, secure infrastructure of a public blockchain while keeping their transactions private, businesses greatly reduce the expensive and time-consuming process of setting up a private network and on-boarding business partners one at a time,” Brody explained.
Within some consortium blockchains, there’s a technology partner that manages the network and sets up the nodes. Precisely because of the hurdle that Brody refers to. However, in other cases, nodes are on-premises and they use firewalls.
Even though EY could aid in the adoption of public chains by corporates, there are many other challenges. These concerns include security fears and regulation. If corporates adopt the current proof of work energy-hungry blockchains, they will have to face environmental concerns as well.