Zether (PDF), the privacy protocol that was proposed for concealing transactions on smart contract platforms, has been getting a lot of attention this month. The protocol, according to its developers, conceals transaction values using encryption. This way, top cryptocurrencies like Ethereum, that aren’t currently considered as privacy-centric can become de facto privacy cryptocurrencies.
Zether Can Conceal Ethereum Transactions
The research paper on Zether was initially released in 2018 only to be revised this year. It was authored by four well-known researchers; Mahdi Zamani, Shashank Agrawal (both are from Visa Research), Benedikt Bünz, Dr. Dan Boneh, cryptographers from Stanford University. Benedikt Bünz and Dr. Dan Boneh were also the authors behind the Bulletproofs privacy protocol. In the new paper, they wrote:
“We describe Zether as a smart contract that can be executed either individually or by other smart contracts to exchange confidential amounts of a token, denoted by ZTH,”
People who want to use the protocol will fund the ZSC contract with one of the compatible tokens. In return, they will receive the ZTH equivalent of the token. This can be used for transactions while the value remains concealed. When the user is ready to reclaim the original cryptocurrency, they can do that by burning the ZTH.
To prove that the encrypted transactions are correct, the researchers added Σ-Bullets, an optimization of Bulletproofs. This makes Zether the perfect tool for guaranteeing auctions, payment, voting, and other confidential transactions on various smart contract platforms including Ethereum.
Zether Is A Competition To AZTEC, EY Ops Chain, And Möbius
Zether is a direct competition to the AZTEC protocol which was developed last year. Developers of this protocol were able to raise $2.1 million USD in a funding round with the goal of boosting the zero-knowledge transactions on the system. AZTEC is active on the Ethereum mainnet and it uses range proofs and encryption to conceal transactions on the blockchain like Zether. The key difference between both protocols is that AZTEC uses a trusted setup experience while Zether uses smart contracts which can be interacted in a trustless way.
Shortly after AZTEC was debuted, Ernst & Young (EY) debuted the Ernst & Young (EY) which is another zero-knowledge proof system for the Ethereum blockchain. There was also the development of Möbius. This is a decentralized mixing service that uses a combination of Ethereum smart contracts stealth addresses, and ring signatures to facilitate private transactions.
Ethereum (ETH) Price Today – BTC / USD
Despite there protocols though, the co-founder of Ethereum, Vitalik Buterin, said that there is still a lot of work to be done in the privacy front. However, privacy-centric cryptocurrencies like Zcash and Monero made significant progress last year. Monero activated the Bulletproofs protocol which significantly reduced XMR transactions and made them more private. Zcash activated Sapling which shields addresses and reduces the time and memory required for each ZEC transaction.
Privacy enhancement is key for institutional adoption. Most big-time financial institutions like banks will be more comfortable using smart contract platforms if they can conceal transactions. This will promote institutional interest in the Ethereum blockchain and help secure its place in the cryptocurrency economy.
Do you think Zether will be a more preferred option than AZTEC and other privacy protocols? Share your thoughts in the comment section.