This is the problem that motivated me to read about @MidnightNetwork . Every blockchain follows a dictum that we call “don’t be evil” and that is “everything must be open”. The open nature of blockchains was a core tenet of many of the first crypto projects, and there is a solid base for this idea. But with openness comes a set of new issues that become roadblocks for any businesses trying to operate. Midnight Network is a project that aims to reach a better balance in the openness of a blockchain.
Our latest project, Midnight, is a privacy blockchain that will be used as the companion chain to Cardano. Instead of being yet another competing blockchain, Midnight aims to create a completely new use case where participants are able to share encrypted and sensitive information in a private manner but with the data still being auditable and on-chain. To achieve this Midnight will be leveraging advanced cryptographic techniques such as zero-knowledge proofs, which enables one to prove that some statement is true without necessarily revealing any information about how such proof was constructed. Using zero-knowledge proofs as an example, users can demonstrate to a bank that they have all of the qualifications and characteristics required to receive a loan, for example, without having to show any personal ID or priiate documents.
The thing that I find very interesting about Midnight is the programmable privacy. All the other privacy coins obfuscate all transactions, and that’s the core promise that most users are used to. In the case of Midnight, as a developer, you can choose at different points in the transaction flow, what is private and what you choose to reveal at a given time, which is a concept that we are calling rational privacy. Where something is private by default but then at a later stage in time it could be disclosed to a specific auditor, or set of auditors or even to the regulators.
Zero knowledge cryptography in the form of zk-SNARKs is used for privacy-preserving smart contract interactions and transactions on the network. This means that complex computations can be made on sensitive local data without ever revealing the data itself. Instead of publishing sensitive information to the blockchain, only a cryptographically verifiable “proof” that the smart contract rules have been followed is published, allowing sensitive information to remain private while still being verifiable, decentralized and secure.
One alternative design path for Midnight is the economic design. The NIGHT token will be the token of the NIGHT ecosystem: the governance and capital token of the network. Locking it will reward the user with DUST, an independent resource used for personal transaction and execution purposes. This trade-off is not something you would see in a traditional blockchain design. It is a design choice that is heavily influenced by the fact that having governance value in the unlocking mechanism of a primitive as well as having costly transaction fees is a bad way to leak sensitive metadata.
Privacy in blockchains, which is something that I think Midnight is quite pivoting to. A lot of projects think of privacy as a layer on top of a base layer blockchain, but I think Midnight and the Tardigrade protocol that it is built on is positioning privacy more as a infrastructure layer that can be programmed in. So, if this works, there’s loads of applications in finance, for identity, for healthcare and for business where you want to keep information private but you also want it to be available in such a way that it can be seen and verified on the blockchain. I think the privacy/visibility trade-off is the key to getting blockchain out of the early days of “proof of concept” and into some more real-world use cases.