To start off, this post is not investment advice. To disclose, I am a stakeholder in the Enigma Project and an Enigmarine (official promoter). That said my post represents my honest opinions based on my digestion of the whitepaper, MIT dissertation, and my own deeper understanding of where Enigma fits in the crypto landscape.
The God Protocols by Nick Szabo
Legendary crypto-innovator Nick Szabo who invented the smart contract concept has also invented another concept which is even more serious in it's implications. He called this concept the God's Protocol and at the time the technology did not exist to make it into a reality. In his writing titled "The God Protocols" you find that there are a few very important key concepts:
- Trustworthy Computing
- The Trusted Third Party
- The Mathematically Trustworthy Protocol
The best way to understand the God Protocols is to simply look at the images Szabo titles Trusted Third Party in which you have a theoretical computer which all Participants feed their secrets to and receive outputs from. This Trusted Third Party is like the current popular model where you have a centralized authority which everyone trusts with their secrets.
The other image is the Mathematically Trustworthy Protocol where all Participants feed encrypted input to a Virtual Computer.
The Network as God or God as the Social Network?
In my opinion what both of these images represent is the concept of "the network as God". The first image because it's a more typical topology leaves one computer (one participant) in charge of all private information in the God position which of course is a security risk. This risk is mitigated by decentralization by forming a "virtual computer" as the trusted third party which all participants feed encrypted information to. This virtual computer can compute on the encrypted information and output relevant results to the participants on a 1 to 1 basis as minimum.
Homomorphic encryption is typically of low performance
We know already that homomorphic encryption allows for computers to compute on encrypted data. This is not new because in 1997 the ideas behind this existed but it was also known that it was notoriously slow. As far as I know today it is still notoriously slow to do things the fully homomorphic encryption way. Could there be a breakthrough which achieves efficiency to improve performance of this kind of computation?
The Enigma MPC Protocol
Enigma may have solved the problem and I stress may. According to their whitepaper and the dissertation they have found an efficient way to compute on encrypted data. I admit I am skeptical of this because this would be a potential huge breakthrough for practical implementation of secure multi-party computation with homomorphic encryption of some form. From what I read in the papers they will be using "somewhat homomorphic encryption" but again a lot of the theory presented in the paper has not been tested in practice so I have no benchmarks to rely on to be certain that it can achieve a level of efficiency good enough. We do have theoretical knowledge on what is possible by certain algorithms but without benchmarks we don't know how it will function in practice.
The theory behind Enigma is encouraging, and it would at least seem on paper that they have a viable solution. If it is true that the Enigma team can perform efficient secure multi-party computation on encrypted data then we have the first viable and practical implementation of the God Protocols as described by Nick Szabo in 1997. In fact this is a bigger breakthrough than Bitcoin or Ethereum if they achieve this.
What about the implications?
The implications of having a trusted third party as a virtual computer which can compute everyone's encrypted secrets is immense. Suddenly we would be able to share or sell our data to a network which cannot ever violate our privacy or reveal our data. We would have reduced all sorts of risks and will have improved cybersecurity for all kinds of different sensitive information. Just as there are smart contracts and blockchains today the private smart contract will be able to exist where the data being computed or even the data types are marked as private. It would bring trust into the network and allow us to do things which typically we rely on the government for and this in my opinion could even allow for self regulation of ICOs for example.
If the Enigma Project achieves it's technical performance goals then the ENG token is dramatically undervalued. In fact, I see Enigma being as valuable as Ethereum or Bitcoin if it can do what the whitepaper says it can do.