Produced | Odaily (ID: o-daily)

Produced | Odaily (ID: o-daily)

This year, good projects are hard to find everywhere, and investment institutions are cautious. The joint investment at the end of the year has attracted the attention of the industry.

In October, NuCypher, a distributed private key management project from Silicon Valley, received $10.7 million in financing from Bitmain, YC, Bitfury, Arrington XRP Capital, Notation Capital, Fenbushi Capital, DHVC, Continue Capital and other institutions.

In addition to the well-known institutions in the circle, the investor Y Combinator (YC) is the top investment institution in Silicon Valley. YC was established in 2005. As of April 2018, it has invested in more than 1,450 companies, including Dropbox, which has just been listed in the United States, and Airbnb, Stripe, Reddit and many other star companies. YC has not made many shots in the blockchain field, no more than 15 so far, but has already invested in projects such as Coinbase, SFOX, Blockstack, and Dharma.

The main product of NuCypher, which is favored by YC this time, is a distributed key management system (KMS) at the protocol layer, built on top of the Ethereum network.

With the rise of big data, people enjoy the convenience of technology while worrying about the violation of personal privacy. In 2018, the "Facebook Data Leakage Incident" brought the topic of privacy protection to the forefront. In the field of blockchain, addressing privacy issues also affects its widespread application.

The security scheme based on cryptography is a reliable way to solve information confidentiality at this stage. Cryptography can encrypt information, restrict viewing and access rights, etc. All of these rely on permission management based on private keys, so key management has become an important problem that needs to be overcome.

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Private key management is just needed

The key can be divided into a public key and a private key. The two are a key pair obtained by an algorithm, and this key pair is unique. Among them, the public key is public, and the private key is non-public. The public key can be used to encrypt data, such as various documents and electronic contracts. After the public key is encrypted, the corresponding private key is required to decrypt it. Therefore, private key management has become a crucial step in key management.

The reason why the blockchain has anonymity is that there is no user identity on it, only a pair of key pairs, and only the owner of the private key can operate on the assets on the public key, that is, the address. The private key is unique and necessary, so for digital asset owners, the private key is the most important thing. Once lost or stolen, it means that the assets cannot be found or are no longer safe.

Although the emergence of blockchain wallets has temporarily solved some private key custody problems, how to properly store them and how to operate them conveniently and safely is still a pain point in the industry.

In cold wallet solutions used by most crypto escrows, private keys are kept in a device that is not connected to the network and is considered the most secure. But Chun, chief investment officer of New York-based investment firm Shuttle Holdings, pointed out that obtaining assets from cold wallets is a headache, and companies want to be able to connect to their customers and keep data and assets in a ready-to-use but secure environment.

Cold wallets are difficult to use. Naturally, the wallets used by most users are hot wallets. Hot wallets need to be connected to the Internet to back up, save and manage the private key, but they will face the risk of hacker attacks during the connection process. Moreover, at this stage, many wallet platforms are becoming more and more centralized. Transactions between users rely on the central platform to match, and the transaction process will be restricted by the platform's contract.

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Private Key Management: Centralized VS Decentralized

Traditional Internet companies were the first to propose these solutions and used hardware to secure keys.

At the IBM Think 2019 conference, IBM announced the progress of the IBM Cloud Hyper Protect series of cloud native services. Later, the digital asset custody solution launched by the New York investment company Shuttle Holdings is based on the encryption service of IBM Protect.

Specifically, the IBM Cloud solution encrypts keys at rest as blocks of data in lower storage tiers in multiple tiers with a purpose-built cloud hardware security module (HSM) built on FIPS 140-2 Level 4 technology , providing encryption key management services for enterprises, which can realize the "keep your own key" (Keep Your Own Key, KYOK) function required for cloud data encryption.

This means not only enabling enterprises to fully manage their encryption keys and the hardware security modules that protect them on the cloud, but also enabling other companies to build a simple cold storage wallet solution.

At the software level, in the centralized KMS, the user first creates a master key, and then calls the KMS service to generate a data key. At this time, the user can obtain a public data key and a private data key, and then the user uses the public key Encrypt the file, and finally store the encrypted file and the private data key in the device or service.

When the user wants to call the file decryption, the user first calls the encrypted file and the data key to read the ciphertext from the device or service, then calls the KMS service to decrypt the data key to obtain the public data key, and finally uses the public data key Decrypt files.

During the entire encryption and decryption process, there is no need to call the original user's master key, and the files and keys are stored in the server after secondary encryption, and neither the data nor the master key will be leaked. Now there are Many centralized KMS, such as Amazon, Google, Microsoft, etc., are providing this service.

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NuCypher's solution

NuCypher's KMS uses a distributed network to remove the dependence on centralized service providers, and replaces the centralized KMS provider with a public blockchain network: Ethereum; then set up nodes in the consensus network, and use proxy re-encryption to provide password access Control, use the token incentive mechanism to ensure reliability and correctness, and the encrypted keys and files are stored in the service. Even if hackers attack, you can only get the encrypted keys, but not the files.

Such technology can protect the privacy of DApp users. For example, if a developer builds a medical DApp on Ethereum and wants to store a patient's medical records in a decentralized storage system, such as Protocol Labs' Interplanetary File System (IPFS), NuCypher can use encryption technology through its The network helps keep these records private and confidential.

In addition to NuCypher, Keep Network and Enigma are well-known decentralized projects targeting privacy solutions. Keep Network provides users (mainly smart contracts) with secure private exchange, transmission, calculation and storage channels by using off-chain private data containers, creating an off-chain storage market for the Ethereum chain.

Enigma advocates a homomorphic encryption scheme, which divides data into many fragments for encryption, and randomly distributes these undecipherable fragments to many computers called "nodes" in the Enigma network.

Both Keep Network and Enigma use secure multi-party computation to achieve similar information security goals. At present, there is no similar blockchain project that uses proxy re-encryption technology to solve encrypted communication problems. NuCypher is currently the first and only KMS that uses proxy re-encryption technology.

Proxy re-encryption technology is the core technology of NuCypher, which is a technology for sharing private information through "asymmetric encryption" by a third party. It has two advantages:

1. As long as the encryption is difficult enough and the third-party agent is safe, the process of sharing private data is safe enough;

2. Users can decide whether their data can be shared through authorization, which increases the flexibility of data access.

At present, NuCypher's application scenarios mainly include decentralized databases, medical fields, Internet of Things, digital assets, etc. There are many cases such as Bluzelle (decentralized database), Origin Protocol (sharing economic agreement), Spherity (Internet of Things) and other popular projects.

Since its launch in 2014, NuCypher has conducted two rounds of financing. The seed round (2017) was $4.3 million, led by Polychain Capital. NuCypher is valued at about US$130 million, which is lower than star projects such as Cosmos, Polkadot and Difinity.

Its co-founder and CEO, MacLane Wilkison, worked as a software engineer and investment banker at Morgan Stanley for three years. He learned about Bitcoin by chance in 2014 and founded NuCypher.

Lianchuang and CTO Michael is a physicist and scientist at the Moscow Institute of Physics and Technology. He has a Ph.D. in philosophy and physics. He was a senior engineer at LinkedIn (USA), a consultant for Bluzelle and Datum, and has 5 years of experience as a software engineer.

Recently, Odaily came into contact with MacLane to discuss and exchange the project background and his personal "blockchain view". The following is the essence of the interview:

Odaily: How did you come into contact with the blockchain and virtual currency industry?

MacLane: I worked at Morgan Stanley before founding NuCypher. In 2013, I moved to San Francisco to live. In 2014, I participated in a bitcoin developer user group event in San Francisco. There were only five people attending the event: The organizer of the event, Michael, Michael Founder, Tom Ding (former co-founder of Dfinity) and me. I didn't quite understand what blockchain and cryptocurrencies were at first, but the "decentralization" they said attracted me deeply. Later, Ethereum began to go online. At that time, I studied Ethereum and found that blockchain not only needs the promotion of advanced technology, but also has the attributes of a financial market, which is also very attractive to me.

Odaily: What was the original intention of founding NuCypher? What industry pain points does NuCypher solve?

MacLane: Speaking of my inspiration for starting NuCypher, I must mention my co-founder Michael Egorov.

In 2014, I met Michael at an event in San Francisco. Both Michael and I were very interested in the idea of ​​"decentralization" and believed that decentralization could be realized in the future. But before realizing this vision, the blockchain world still needs to build a lot of infrastructure, such as public chains, smart contracts, DApps, etc.

With people's discussion on decentralized applications, DApps have appeared. Everyone believes that DApps are an important entry point for blockchains to realize real landing scenarios, but users have to submit their own information and data to the system when using these DApps , Unlike centralized organizations, when people use these decentralized DApps, they don't know who is behind the scenes to control and run their own data privacy, so in this process, users need some way to protect their own data Privacy, so that users' access to private data stored on the public chain is controllable and only visible to the recipients they want to communicate. This is our motivation for designing NuCypher.

Odaily: Can you give some examples of the application scenarios of NuCypher?

MacLane: Suppose a developer wants to build a medical DApp on Ethereum, and wants to make the patient data stored on IPFS private and controllable. At this time, it is necessary to make these medical records invisible to everyone. Hospitals or other recipients, NuCypher is one such data privacy layer for blockchain decentralized applications.

Odaily: Can you introduce some recent progress of NuCypher?

MacLane: As mentioned above, NuCypher is the data privacy protocol layer for public chains and DApps. At the beginning, we used proxy re-encryption and blockchain technology to provide distributed key management and encrypted access control services. In the world of cryptography, proxy re-encryption technology is a very conventional public key encryption technology. The ciphertext decrypted by the key to realize the technology of password sharing. So proxy re-encryption is the philosophy behind NuCypher.

Speaking of recent progress, about two months ago, we officially announced that we have launched the public test network. Currently, about 250 nodes are running on the test network. We have also launched the Staking network stress test (Odaily Note: Participate in this test Staking operators include Figment Networks, Staked, Bison Trails, Polychain Labs, Hashquark, etc.).

Odaily: Why design the WorkLock token custody agreement?

MacLane: WorkLock is our newly designed token distribution mechanism. You can think of it as a replacement for ICO, IEO and other token issuance models. The reason why we designed this token mechanism is to encourage more users to participate in NuCypher In the network, participants are encouraged to run staking nodes and prevent them from doing evil. Participants who escrow and lock ETH in a smart contract will receive token rewards. Participants are free to use the token. If it is used in a specific scenario such as running a staking (Staking) node, some ETH generated by custody can be obtained as a reward. However, if it is used in a specific scenario, the ETH hosted by the user will be destroyed.

Odaily: So how does NuCypher prevent nodes from doing evil?

MacLane: There are two main ways to prevent nodes from doing evil. The first is the reward mechanism (rewards). If users participate in the NuCypher network or participate in operating nodes, they will be rewarded (usually paid in ETH), and participating Staking miner nodes will also be rewarded with NU tokens generated by inflation. The second method is punitive measures. If you do not operate the pledge node according to the system regulations, you will be punished, and the ETH hosted by the participants will be destroyed by the system.

Odaily: As far as I know, you worked in the investment banking department of Morgan Stanley before. From the perspective of an investor, how do you evaluate whether a blockchain project is of high quality? When looking at the projects, which track projects do you take a fancy to?

MacLane: I did work in Morgan Stanley's investment bank, but I'm not a professional investor, but personally, I prefer to build infrastructure projects, such as NuCypher's data privacy protocol. Judging from the current development status of blockchain technology, there is still a big gap in the infrastructure of the blockchain field. It is believed that the current blockchain field still lacks compelling technology and underlying infrastructure.

Odaily: How do you view the current development status of the public chain? Many people say that there is no need for so many public chains in the market, many public chains have not found a suitable landing scenario, and many public chains are slowly dying. How do you view the current situation and future of public chains?

MacLane: There are indeed too many public chains on the market at present, some of which are very successful, and some have almost "returned to zero", but I don't think it is a good phenomenon that so many public chains emerge on the market. The belief that truth is arrived at through trial and error. Only by constantly trying can we know who is the final king and which solution is the most suitable for the market. And I think the public chain is the lowest infrastructure in the blockchain world, and it will not die.

Here I want to add another phenomenon, some public chains have raised too much funds by relying on pre-product or pre-network in the early stage of the project. Generally speaking, this may bring prosperity to the entire blockchain ecology, but The technical development and progress of some teams is very slow, and the actual landing scene has not been found.

Odaily: Which public chain projects are you optimistic about?

MacLane: First of all, I would like to talk about Ethereum, which is a very early project. Many developers develop DApps on it. We also created it on Ethereum. Today, it seems that there are some good public chain projects on the market. , such as Tezos and Cosmos, but they still have a long way to go in terms of developer activity.

Odaily: How do you view DeFi (decentralized finance) and DAO (decentralized autonomous organization), two market hotspots? Do you think they will become a trend in the future?

MacLane: DeFi and DAO are two fields that I am very interested in. Let me talk about Defi first. I am very optimistic about the model and innovation of DeFi. The ETH locked in DeFi has been increasing, and there are some popular ones in the market Defi projects, like MakerDAO and ComPound, but I think it will take a long time for Defi to achieve large-scale application. At present, many people use Defi to speculate and gamble, which is not conducive to the future development of Defi.

References:

References:

Ten Billion Research Institute: "Secret Key Management Project Research"

Node Project (NPC): "NuCypher In-Depth Review: Why Do Top Blockchain Investment Institutions Love It?" "

ONE.TOP Rating: "NuCypher: Distributed Key Management System"

The peak of the blockchain wave: "NuCypher-a distributed key management system for proxy re-encryption"

36 Krypton: "36 Krypton Interview | YC, the world's best startup incubator, is coming to China. What new opportunities do Chinese entrepreneurs have? "