The Development and Application Prospects of Fully Homomorphic Encryption Technology

Fully Homomorphic Encryption ( FHE ) is an advanced encryption technology that allows computation on encrypted data without decryption. This concept can be traced back to the 1970s, but it wasn't until 2009 that significant breakthroughs were made. The core feature of FHE is homomorphism, meaning that performing addition or multiplication operations on ciphertext is equivalent to performing the same operations on plaintext.

Unlike some Homomorphic Encryption ( PHE ) and a certain Homomorphic Encryption ( SHE ), FHE supports an unlimited number of addition and multiplication operations, allowing for arbitrary computations on encrypted data. However, FHE also faces challenges such as noise management and computational efficiency.

In the blockchain field, FHE is expected to become a key technology for solving scalability and privacy protection issues. It can transform a transparent blockchain into a partially encrypted form while maintaining control over smart contracts. Some projects are developing FHE virtual machines that allow programmers to write smart contract code that operates FHE primitives. This approach can address current privacy issues on the blockchain while preserving the transaction graph, enhancing regulatory friendliness.

FHE can also improve the usability of privacy projects, such as solving wallet client synchronization issues through privacy message retrieval (OMR). However, FHE itself cannot directly address the scalability issues of blockchain and may need to be used in conjunction with zero-knowledge proof (ZKP) technology.

FHE and ZKP are complementary technologies, serving different purposes. ZKP provides verifiable computation and zero-knowledge properties, while FHE allows computations on encrypted data without exposing the data itself. Combining the two may significantly increase computational complexity, so it is necessary to weigh the trade-offs based on specific use cases.

Currently, the development of FHE is about 3-4 years behind ZKP, but it is catching up quickly. The first generation of FHE projects has begun testing, and the mainnet is expected to be launched later this year. Although FHE still has a higher computational overhead compared to ZKP, its potential for large-scale applications is increasingly evident.

The application of FHE faces some challenges, such as computational efficiency and key management. The computational intensity of bootstrapping operations is being improved through algorithmic enhancements and engineering optimizations. In terms of key management, some projects adopt threshold key management methods, but further development is still needed to overcome single points of failure.

In the market aspect, multiple companies are actively developing FHE solutions. Zama provides FHE tools for Web3 projects, Sunscreen has developed an FHE compiler, Fhenix is building an Ethereum Layer 2 network that supports FHE, and Mind Network is dedicated to realizing an "end-to-end encrypted internet." These projects have all received support from venture capital, demonstrating the market's confidence in FHE technology.

In terms of regulatory environment, FHE has the potential to enhance data privacy, allowing users to retain data ownership and potentially profit from it while maintaining social benefits. With ongoing improvements in theory, software, hardware, and algorithms, FHE is expected to make significant progress in the next 3-5 years, gradually transitioning from theoretical research to practical application.

Overall, fully homomorphic encryption technology is at a critical moment of transforming the encryption field, with the potential to provide innovative solutions for issues such as blockchain scalability and privacy protection. As the technology matures and applications expand, FHE is expected to drive innovative development across various applications in the encryption ecosystem.