If you’re active in the crypto community, I’m sure there’s one thing that you’ve noticed more than anything else. One thing that is constantly being brought up by developers, investors, and users. Blockchain’s are transparent. In fact, they’re probably far too transparent. Wallet balances are public, transactions are traceable, and users interactions with smart contracts are also out in the open for all to see.
That is a good principle for transparency, but it is a principle that creates a huge amount of friction in the system for businesses, consumers and institutions. Businesses would prefer not to disclose their trading activity to their competitors. Consumers would not like their financial history to be disclosed to third parties. And institutions do not want to move large sums of money on a system that is permanent and public.
That’s the gap @MidnightNetwork is trying to fill.
Midnight is a privacy-focused blockchain that is built on a foundation of zero-knowledge (ZK) proof technology. At a high level the concept is quite simple: instead of having to broadcast an entire transaction or block to the network, we can prove that it is valid without actually broadcasting the data itself.
Just because you can prove something true doesn’t mean you have to prove you’re naked.
And honestly, this is something crypto has needed for a long time.
Midnight is a brand new project that is closely tied to the Cardano protocol and has been developed by Input Output Global (IOG) the company behind Cardano. The aim of Midnight is to deliver privacy on the blockchain in a compliant manner.
So that's the tough part. Pure privacy coins run into regulatory issues. Midnight is taking a different approach with "rational privacy".
In short, this means that, by default, all data will remain private. However, should it become necessary, this data can then be disclosed to whoever requests it (such as regulatory bodies, auditors, etc.).
Ideally we wouldn’t have to choose between privacy and compliance. Ideally we’d have a protocol that supported both.
At a technical level, Midnight uses zero-knowledge cryptography. Specifically, it makes use of a class of cryptographic primitives commonly referred to as Homomorphic Hash Functions or zk-SNARKs, which allow a transaction or computation to be verified without the verifier learning anything about the actual details of the transaction or computation.
Anonymous proof of a financial requirement (without access to full bank account details) or age verification (without sharing personal details).
That’s the type of logic Midnight is built around.
Another interesting piece is how the network handles transactions and fees.
Almost every blockchain in existence uses a single currency for all transactions on the blockchain. Midnight uses a 2-asset model.
The main token of this project will be named NIGHT. NIGHT token will be linked to governance, staking and many other use cases users will have in the project.
But transactions themselves run on something called DUST.
DUST is like the “fuel” for the blockchain. Night holders earn DUST for every computation or transaction made on the Night protocol. The DUST token model is a bit different than other cryptocurrencies. We want to keep fees as low and as predictable as possible, while at the same time making sure that the price of our token does not increase transaction fees to the point that they become prohibitive for users.
I’ve looked up the supply and apparently it’s roughly 24 billion NIGHT tokens. Their token distribution seems quite different to your run of the mill VC funded launch.
Most of the tokens were given away in community distribution events such as the Glacier Drop and the Scavenger Mine. Our primary goal was to ensure the tokens were spread across as many different blockchain communities as possible and that the early investors’ wallets were not overloaded with them.
Whether this will work in the longer term remains to be seen. At least there is a good intention.
Where Midnight really gets interesting is the potential use cases.
A lot of industries simply cannot operate on completely transparent systems.
Finance This is finance. So, when a company transfers funds internally, this transaction isn’t something they’d want to become part of the blockchain. Midnight allows them to verify that the transfer is valid, without having to make the sensitive details public.
Identity systems are another big one.
I shouldn’t have to share my whole passport to verify my age to vote, or my citizenship to buy a plane ticket, or my education level to get a job. I should be able to share just the right attributes for the use case at hand. I should be able to prove I’m old enough to vote, that I’m a citizen of my own country, that I’ve attended school, that I’ve been certified in something.
Healthcare is a topic of discussion for many. The idea is that a hospital or research institution would be able to share the results of legitimate, quality medical research and education regarding the specific disease in question without having to disclose any identifiable information regarding specific patients.
And then there’s DeFi.
DeFi has exploded over the last couple of years and hundreds of DeFi protocols have been launched in an attempt to bring users innovative new financial products. Almost all DeFi protocols are fully on chain and therefore fully visible. Every open position, every loan and every collateral value is publicly visible. There is a huge privacy opportunity that protocols such as Midnight could help fill, and that would be huge value add to DeFi as a whole.
The team behind Midnight isn’t starting from zero either.
IOG has been building blockchain technology for years through Cardano and the project was first announced around 2022 as part of Cardano’s plans for the future.
Things have been going a bit slow and very research heavy as it usually is for Cardano.
Some people like that method. Others think it moves too slowly.
I don’t know if you buy into that argument, but I do know that Midnight is here to last as a long-term play on infrastructure.
As for the roadmap, the network is rolling out in phases.
We’ve finished the token distribution and building the entire Mochii ecosystem. Now it’s time to launch the Federated Mainnet, and bring all the dApps to Mochii.
We are looking to further decentralize, get more validators online and to do work with smart contracts across other blockchains.
In theory Midnight could be a privacy layer for many blockchains other than Cardano.
That’s actually the bigger vision here.
If crypto is going to have a real role in the world if it’s going to have an impact on people’s lives then privacy can’t be an afterthought. If crypto is going to really change people’s lives if crypto is going to be part of the mainstream financial system, if it’s going to change how people manage their identity, if it’s going to change how people share and manage data then privacy can’t be a choice.
You can’t run serious applications on a system where every piece of information is permanently public.
Midnight is trying to cheat, but she has to do it in a way that doesn't break the accountability rule that is at the heart of the blockchain.
Will it work? We just don’t know. Privacy tech is inherently complex and no matter how good the work is, people still have to change their behavior to actually use a new product. So there’s no guarantee that this is a product that will actually take hold either. And in the meantime,
But the core idea behind Midnight makes sense.
A blockchain where you can prove something is true… without revealing everything.
if Web3 is really going to be more than just a speculative frenzy on OpenSea and other marketplaces, this is just a few of the many issues that need to be addressed. otherwise you will just be constantly fighting for the rights to use the platform that you chose to pay money to.
@MidnightNetwork #night $NIGHT
