One of blockchain’s persistent thorns on the side is that of privacy and scalability (or lack of them). With transparent platforms and labor-intensive verifications and consensus mechanisms (Bitcoin and Ethereum), traditional blockchains are not equipped to deal with the fast, privacy-oriented world of today.
Using Bitcoin’s public addresses, for example, a dedicated person with resources can soon track who is the real-life owner of a particular transaction. For privacy-conscious users, this lack of privacy is not an option. And when it comes to scalability, the blockchain community remembers the CryptoKitties fiasco on the Ethereum blockchain, in which the uber-popular game almost brought down the network, proving it’s far from scalable for high-volume transactions.
Enigma is a blockchain platform that aims to solve these issues for blockchains via the use of second layer technology. The platform was initially built on Ethereum but has since launched its own mainnet in Feb 2020.
Below, we explore the Enigma concept, how it works, and some applications for its privacy blockchain.
What is Enigma?
Enigma is an off-chain network that aims to complement blockchain networks via a second layer of storage and computation. It aims to make blockchains more private and scalable by providing a platform where they (blockchains) can offload data. This data will be treated with high-tech security, and the process will also help to decongest the main chain.
Enigma sees and hopes to solve the following problems with the current blockchain setup.
i) Data Privacy
Blockchains have transparent transactions by nature. As you can imagine, they don’t go hand-in-hand with privacy. This limits the scope of decentralized applications (DApps) that can be built. For instance, healthcare, finance, and manufacturing all need “a privacy” that cannot be afforded by current blockchains.
Decentralized applications are already not exactly easy to use. Added to the issue of privacy, interactions with such apps become more complicated.
The limited block size, e.g., 1MB for Bitcoin’s transactions, plus difficult computations that need to be carried out before transactions are verified, leads to uncompetitive scalability levels.
iv) Data Silos
Current data sharing solutions are centralized and characterized by silos, restricting the sharing of crucial information and creating single points of attack.
Enigma seeks to solve these problems, as we’ll see below.
How Does Enigma Work?
#1. Off-chain Ecosystem: MPCs and DHT
Enigma will utilize multi-party computations (MPCs) and distributed hash tables (DHT) to achieve data privacy. The MPCs will be responsible for distributing data between network nodes, splitting info into small separate chunks to make it more secure. The DHT then stores this data in an off-chain database. Essentially, MPCs and DHTs are two parts of a whole, with both playing a crucial role in achieving top-notch privacy for network data.
Network nodes receive fees for securing and maintaining the network, as well as being incentivized through the network’s token, ENG. After the February move to their own mainnet, the network will adopt a new native coin, ‘Secret’ (SCRT) through which users can claim a stake in the network, as well as pay transaction fees.
The Enigma network ensures that node operators act with honesty and integrity via the use of the security deposit that they lose in the event of misconduct.
The Enigma white paper explains: “To participate in the network, store data, perform computations, and receive fees, every full-node must first submit a security deposit to a private contract. After each computation is completed, a private contract verifies if correctness and fairness were maintained. If a node is found to lie about their outcome or aborts the computation prematurely, it loses the deposit, which is split between the other honest nodes. The computation is continued without the malicious node (e.g., by setting its share of the data to 0).”
#2. Catalyst and Data Marketplace
Enigma utilizes secret contracts through which developers can create privacy-focused DApps. Some use cases for the secret contracts include election/voting, financial audits, healthcare, identity management, and so on.
Another use case is the trading data marketplace. One such use case is Catalyst, the first-ever DApp on the Enigma platform. Catalyst provides an environment where users create, share, and exchange data to create the best crypto investment strategies.
The Catalyst whitepaper puts it this way: “The main goal of Catalyst is to serve as a one-stop-shop for developers (or quantitative traders) who are interested in developing trading strategies that operate in the expanding domain of crypto markets. Developers can utilize the myriad of data sources that will be made available through our platform and will be served through Enigma’s peer-to-peer data marketplace protocol, to build their models, backtest them according to historical data, as well as put their strategies to the test in a simulated or real trading environment.”
What are Some of Enigma’s applications?
The Enigma product can be utilized in a raft of many disparate industries. Let’s take a look at some of those:
1. Data protection
Companies can use Enigma to ensure high-level protection for their data and thwart off corporate espionage. This would also extend to employees, who can still access and use data but cannot steal it. This would help organizations save up on security costs.
2. N-Factor Authentication
Biological identifiers such as voice, face, and fingerprints recognition can be stored on the Enigma blockchain. Only the right owner of such identifications can be allowed to access the data.
3. Identity Authentication and Secure Storage
This would involve authenticating identities in a provably correct, anonymous, and trustless manner. All that is needed is for the user to share their personal information secretly. When they log in, an authenticating private contract is implemented, thus giving the user a pass-through to the account.
Manage and utilize highly sensitive data handled by IoT devices in a decentralized and trustless cloud computing system
5. Distributed Personal Data Store
On the Enigma platform, individuals can store and share personal data with third parties while still maintaining total control and ownership of the data. The decision to share the data is reversible, and third parties can only perform computations on the data – they do not have access to it.
Who is on the Enigma Team?
The Enigma core team is a duo that’s also MIT graduates with a ton of experience in software engineering between them.
Guy Zyskind is the CEO and co-founder. He has an M.S. from MIT and 10 + years of experience in software development. Zyskind is also a former MIT Media Lab research assistant and the tutor of the first-ever class on blockchain at MIT.
Can Kisagun is the project CPO and co-founder. He’s a graduate of MIT’s Sloan School of Management and has experience with tech startups. He formerly worked at McKinsey and company as a business analyst.
Several notable investors have also given a thumbs up to the project, including Floodgate, Flybridge Capital Partners, the Digital Currency Group, and MIT.
Enigma (ENG) Tokenomics
As of June 8, 2020, Enigma is trading at $0. 321533, world ranking at #166. The token’s market cap is $24, 062, 307, and its 24-hour volume is $1, 380, 629. The current circulating supply is $74, 836, 171 out of a total supply of 150, 000, 000. ENG’s all-time high was $8.30 (Jan 10, 2018), while its all-time low was $0.070056 (March 13, 2020).
Where to Buy and Store Enigma
Enigma is available on markets such as Binance, Huobi, Coinswitch, Cointree, and Bittrex. In some of the exchanges, you will need to first purchase another crypto such as BTC and ETH before converting it to ENG.
ENG is an Ethereum-based token (for now – see the statement by the team on the issue), meaning you can store your ENG tokens in any Ethereum-compatible wallet. Some of the best options include MyEtherWallet, Parity, MetaMask, Guarda, Trust, Bread, as well as user favorites Ledger Nano S and Trezor.
Enigma promises two robust solutions for the current blockchain setup: security and scalability. Secret contracts provided by the platform will afford users a high-level verification of data, while still taking advantage of the network’s watertight privacy. Developers can offload blockchain data onto the off-chain Enigma, which will facilitate scalable and safe storage.
Enigma’s first-ever DApp, Catalyst, is a must-see for new and experienced traders. Here, they get unfettered access to a raft of tools to optimize their trading and investment decisions, all in an autonomous, trustless environment. Enigma’s unique offerings separate it from the crypto herd, and the community is keenly watching to see how it evolves.