Last couple of years has seen the development of different technologies, with blockchain considered to be one of them. In the current context, the technology is believed to be important because of cryptocurrencies and other financial investments. While blockchain’s decentralisation can provide benefits such as transparency, efficiency and security, privacy is seemingly not one of them. In order to address that, techniques such as homomorphic encryption, which refers to performing functions on encrypted information without decrypting it, can be beneficial for the technology’s long-term prospects.
“With the help of homomorphic encryption techniques, one can outsource activities to other people while still protecting the security and privacy of their data. Applications using blockchain may require many parties to communicate and verify data,” Sujit Patel, MD and CEO, SCS Tech, a software development and consulting company, told FE TransformX.
What’s the interpretation behind these concepts?
From what it’s understood, homomorphic encryption can help blockchain process transactions, without the chances of data hacking. Going by market reports, the most important advantage that homomorphic encryption can grant blockchain is ensuring users’ safety. Homomorphic encryption helps develop an extra surface of protection, which enables users to conduct blockchain-based transactions in confidentiality. Other benefits which can be achieved are adherence to regulatory requirements and smart contract-induced privacy. Reportedly, companies such as Chainalysis and Arkham are developing homomorphic encryption-based blockchain mechanisms.
“I think homomorphic encryption stands as a cryptographic tool with implications for data privacy and security. Its strength seems to lie in enabling organisations to delegate data processing tasks to external entities, such as cloud providers, all without divulging the actual data. This approach is considered invaluable in maintaining the confidentiality of sensitive information while capitalising on the computational prowess and scalability of third-party services,” Garima Mitra, co-founder, Treelife, a legal and finance firm, stated.
The presence of Fully Homomorphic Encryption (FHE) can offer different ways to combat blockchain-oriented privacy challenges. It’s believed that the integration between FHE and multiparty computation (MPC) technology can help share decryption keys amongst blockchain validators. For example, when ConstitutionDAO grouped donations to bid for the purchase of US Constitution’s first version handout, it didn’t work out as its opponents were able to see the amount that was raised by the company. In that context, FHE can help provide confidential decentralised autonomous organisation (DAO) votes through private token voting, which can help prevent problems such as bribing and blackmailing with regard to governance plans.
What is the structure of the market’s numbers?
According to Next Move Strategy Consulting, a market research and management firm, the homomorphic encryption market magnitude had a 189.5 million valuation in 2022 and is expected to reach 358.9 million by 2030, at a 8.3% compound annual growth rate (CAGR) between 2023-30. In terms of revenue, Global Market Insights, a market research and strategy consulting firm, mentioned that the homomorphic encryption market is expected to grow at a eight percent CAGR between 2023-32. The firm also stated that the homomorphic encryption market, in terms of healthcare, will consume $120 million by 2032.
Market figures have shown that the North American homomorphic encryption market will be fuelled by increase in hardware and software, followed by rise in private sector investments. “Globally, I believe homomorphic encryption is gaining momentum as organisations recognise the significance of preserving data privacy and security. In the Indian market, the awareness and adoption of this technology is growing, but it may still be in the early stages. This should be crucial for preserving data confidentiality in decentralised applications, smart contracts, and transactions,” Shrikant Bhalerao, CEO, Seracle, a blockchain technology company, emphasised.
In India, homomorphic encryption-based blockchain applications have reportedly found use cases across sectors such as cloud computing, finance, healthcare, among others. Data released by Tata Consultancy Services (TCS) has shown that, currently, 10% of data falls under privacy guidelines which is expected to be 65% in 2023. While FHE is expected to be a benefactor in this Indian scenario, it incurs significant expenses for computational complexity and memory needs. However, market experts believe that the Indian homomorphic encryption market is in alignment with the Digital Personal Data Protection Bill (DPDPB), 2023, for implementing data privacy guidelines. Based on market studies, the point which is understood to support the need for homomorphic encryption in India is the correlation between international interest and local programmes.
Furthermore, it is expected that homomorphic encryption can open new blockchain-oriented use cases.. “I foresee that in 2023 and beyond, homomorphic encryption will continue to play a role in reshaping data security and privacy landscapes, globally. In this era of digital transformation and cyber threats, businesses are expected to turn to this technology to safeguard sensitive data in blockchain applications and beyond. Additionally, regulatory authorities should place an emphasis on data privacy, further driving the adoption of this technology,” Ranjan Chopra, MD and CEO, Team Computers, an information technology (IT) consulting firm, concluded.
