One of the core tenets of blockchain protocols has been the provision of privacy for users, even if the chains are publicly verifiable and relatively transparent.
This is becoming increasingly important as personal privacy rights seem to be eroding, evidenced by the European Union’s recent push for a chat control law that would allow mass scanning of private communications and encrypted messages.
The latest episode of The Clear Crypto Podcast delves into the importance of privacy-preserving protocols in conversation with Yannik Schrade, co-founder and CEO of Arcium.
Schrade unpacks the privacy revolution: encrypted computing, zero-knowledge proofs and multiparty magic that lets blockchains handle sensitive data like medical records and finance without leaks or trusted middlemen.
Privacy 2.0
Schrade says the industry is gradually moving toward an era he calls “Privacy 2.0,” where blockchains are powered by an encrypted shared state.
“That means everybody can encrypt their data, be it transaction data, be it medical records, anything. We can compute over all of this encrypted data collectively. We can build encrypted order books for people to trade privately. We can build private lending markets to have privacy when using all of those DeFi applications,” Schrade said.
The Arcium CEO said the possibility of encrypted shared states would not be just a major unlock for the cryptocurrency ecosystem, but for society as a whole.
“Data can now flow through encrypted fibers, globally. That’s is the future that we are moving towards, and that really is the frontier of both privacy and computing.
Schrade added that the Web2 internet that we know and use has been held back by single trusted entities. Cryptography and multiparty computation now allow people and AI to process and gain outputs from data without compromising or accessing the data itself.
Practical unlocks in healthcare
Schrade gave a working example of how encrypted computing could unlock sensitive healthcare and medical data without compromising patient privacy.
He pointed to medical records at hospitals, or data collected by a Whoop band, which tracks vital signs and other sensitive biometric information.
“Around the world, that data currently sits in data silos. It cannot be shared and shouldn’t be shared, right? That data is highly sensitive. There’s highly sensitive government data. There is highly sensitive financial data,” Schrade said.
Encrypted computing can connect to this data and gain shared insights without compromising the data.
“In traditional centralized computing systems, you always end up exposing the data at some point. That naturally is how those systems work but we are a future where that's not the case anymore.”