What is Enigma?
Enigma is a privacy protocol that is a second-layer network for private computations that protects sensitive data. It addresses two problems with blockchain technology: privacy and scalability. Nodes in the Enigma network do not see the data they compute, yet they can publicly prove that they run a computation correctly. Enigma calls this application a “secret contract”, which is like a private smart contract. The Enigma protocol oversees that a smart contract is executed properly without seeing the contents of the contract. Eng is an Ethereum ERC-20 token that has focused on Ethereum’s smart contracts, but is blockchain agnostic, which means that it is compatible with any blockchain.
The intense verification and public nature of the blockchain limits potential use cases. Many parts of modern applications require heavy processing on private data. In their current design, most blockchains cannot handle privacy at all. Furthermore, they are not well-suited for heavy computations. Their public nature means private data would flow through every full node on the blockchain, fully exposed. In their current form, blockchains are not private nor scalable.
The status quo for data collection calls for sensitive, private data to be stored and processed in centralized, less transparent databases. This paradigm has lead to catastrophic data leaks and systematic privacy invasions. Additionally, sharing data is an irreversible process; once it is sent, there is no way to take it back or limit how it is used. An entity that buys data can reproduce it and spread that data anywhere it wants.
Enigma is a decentralized computation platform that guarantees privacy through secure multi-party computation. Data is split between nodes, and they compute functions together without leaking information to other nodes. Specifically, no single party ever has access to data in its entirety; instead, every party has a small random piece of it.
Enigma addresses scalability because computations are not replicated by every node in the network. Only a small subset of nodes performs each computation over different parts of the data so that there is decreased redundancy in computing.
The key new utility Enigma brings to the table is the ability to run computations on data, without having access to the raw data itself. Since only the original data owner(s) ever see the raw data, data for secure computations is reversible and controllable. This presents a fundamental change in current approaches to data analysis.
The Enigma whitepaper explicitly states ten applications for it. Four of those applications include:
- Data marketplace – Direct consumer to business marketplace for data. With guaranteed privacy, consumers can sell access to their data. For example, a pharmaceutical company looking for patients for clinical trials can scan genomic databases for candidates. The marketplace would eliminate tremendous amounts of friction, lower costs for customer acquisition and offer a new income stream for consumers. Information like medical and genomic records can be transferred through the Enigma protocol without users having to worry about a identity nor data breach.
- Secure Backend – Many companies today store large amounts of customer data. With Enigma, companies can use the data for the same purposes they do today, without actually storing or processing the data on their servers, removing security risks and assuring the privacy of their customers.
- Internal Compartmentalization – Large organizations can use Enigma to protect their data and trade secrets from corporate espionage and rogue employees. Employees can still use and analyze data for the benefit of the organization, but won‘t be able to steal any data. Productivity inside organizations would be improved since more people can have access to more data, and costs on security would be lower.
- Blind E-Voting – Votes on anything, from political elections to company board meetings, without exposing anything besides the final outcome. Not only is the privacy of each voter is maintained, even the actual vote count can remain private. For example, if the elections require any kind of majority vote, but no details about the distribution, a unanimous decision would be indistinguishable from one decided by a single vote.
The other six applications listed are N-Factor Authentication, Identify, data collected by the internet of things, distributed personal data stores, crypto bank, and bitcoin wallets
- The first example is a decentralized application created by the Enigma team called Catalyst. Catalyst lets cryptocurrency traders analyze trading data without having access to the data itself. Catalyst offers traders secure and trustworthy data without compromising the source of that data. However, Catalyst is a centralized application, but Enigma is working on making it fully decentralized in the future.
- An example straight from the whitepaper explains how a group of people can provide access to their salary, and together compute the average wage of the group. Each participant learns their relative position in the group, but learns nothing about other members’ salaries. In practice, any program can be securely evaluated while maintaining the inputs a secret.
- Computations on healthcare research – currently pharmaceutical companies acquire data from participants who agree to yield the rights of their health records and medical companies buy the data to perform analysis on that data. With Enigma, participants can sell their health records directly to pharmaceutical companies, get paid for that data, and ensure that their personal information is never leaked.
- Credit checks – with Enigma, credit companies could perform computations on factors that affect a credit score, without having access to the actual data itself. Users would not have to worry about a credit company losing or misusing their personal information.
-The Enigma protocol is one of a kind with no competitors. Although it could have many uses there are no competitors to compare it to
-The Enigma team increased the total supply of their token sale right before their ICO launch, which made it seem like the team greedily added more money for themselves in their fundraising campaign.
-A hacker gained access to an Enigma admin’s slack account and was able to phish $500,000 asking for ICO pre-sale contributions. They refunded those who lost money in that accident but it made the team looks careless.
-25% of the total supply of tokens are owned by the team. It will be in the team’s best interest to keep the value of their token high, but a large stake of the tokens are owned by a handful of people.
The Enigma Team consists of mostly MIT graduates and experienced software developers
What is the point of the ENG token?
The Enigma token (ENG) is used to pay for computations on the Enigma protocol and is also used as a payment for fees to store data on the platform. Additionally, ENG is used as a security deposit to ensure that anyone participating in the network is honest. Dishonest users lose their security deposit.
The development of a private smart contract or “secret contract” makes a lot of sense and Enigma offers the first solution to that development. It’s possible that Ethereum, Cardano, Neo, etcetera, could create their own version but Enigma has the first mover advantage for this problem. Some of the downsides associated with Enigma (their ICO token presale and their initial Slack admin page hack) do not fundamentally impact the long-term success of their project. Enigma offers scalability in its secret contracts because it does not require much on chain computation. Right now there is no good scalability solution to intensive blockchain computation, which makes Enigma alluring, but a scaling solution may come to the market in 1-3 years, which would decrease the need for something like Enigma.