There has been an increasing amount of talk regarding Zether (PDF), which is a privacy protocol that was developed for smart contract cryptocurrencies based on the account including ERC20 tokens, Stellar lumens, and Ether.
The salient features include concealment of transaction values through encryption. This means that payments mechanism can let cryptocurrencies which are not particularly known for privacy to transform into de facto privacy coins.
Zether Privacy Protocol
This is a smart contract system that was put forward in 2018 and has a few eminent supporters. Shashank Agrawal and Mahdi Zamani, the minds behind the idea are a part of the Visa Research. Besides, the authors of the research paper, Benedikt Bünz, and Dr. Dan Boneh have had previous work experience with Bulletproofs privacy protocol.
“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,” the authors mentioned in the paper.
The ZSC contract would be funded by the users through a compatible token. They would also receive a sum of money in ZTH. This could be then transacted in accordance with its usual value. The users have the option to burn the ZTH later, in order to get their cryptocurrency collateral back.
The “Big Four” giants, Ernst & Young (EY) announced their own zero-knowledge proof mechanism for Ethereum.
“This technology […] will allow companies to privately and securely create and sell product and service tokens on a public blockchain with private access to their transaction records,” EY mentioned in its announcement.
Other Privacy Developments
Ethereum co-designer Vitalik Buterin said last year that there was a considerable amount of progress in blockchain privacy and that there is much more to be done.
“Currently, there are no good ways to use blockchain while preserving privacy.”
“There have been good efforts to solve this using Zcash for example, along with research on top of Ethereum. However, there is still a way to go in terms of preserving privacy on the blockchain.”
The fact that Zether enables interoperability among arbitrary smart contracts is beneficial for maintaining the privacy of various applications based on Ethereum. This includes voting, auctions, and payment channels. There are other features incorporated such as “Σ-Bullets” which is a new version of the zero-knowledge proof system. According to the paper, Developer says :
“Blockchain-based smart contract platforms have great promise to remove trust and add transparency to distributed applications. Ethereum is a prominent example of such a platform. It provides high-level, powerful programming languages like Solidity to build decentralized applications (DApps) with ease. Unfortunately, there is no easy way to add some meaningful level of privacy to these applications.”