Fully Homomorphic Encryption (FHE): The New Frontier of Blockchain Privacy and Security

Fully Homomorphic Encryption (FHE) is an advanced encryption technology that allows computation on encrypted data without the need for decryption. This concept was first proposed in the 1970s, but it wasn't until 2009 that significant breakthroughs were made. The core features of FHE include homomorphism, noise management, and support for unlimited additions and multiplications.

FHE has various potential applications in the blockchain field. It can transform a fully transparent blockchain into a partially encrypted form while maintaining control over smart contracts. This technology can address current privacy issues on the blockchain, enabling encrypted payments and other privacy-sensitive applications. Furthermore, FHE can improve the usability of privacy projects through Oblivious Message Retrieval (OMR).

However, FHE does not directly solve the scalability issues of Blockchain. Combining FHE with Zero-Knowledge Proofs (ZKP) may provide solutions to some scalability challenges. FHE and ZKP are complementary technologies that serve different purposes. ZKP provides verifiable computation and zero-knowledge properties, while FHE allows computation on encrypted data without exposing the data itself.

Currently, the development of FHE is about three to four years behind ZKP, but it is rapidly catching up. The first generation of FHE projects has begun testing, and the mainnet is expected to launch later this year. Although FHE still has higher computational overhead than ZKP, its potential for large-scale adoption is beginning to emerge.

The adoption of FHE faces some challenges, including computational efficiency and key management. The computational intensity of bootstrap operations is being improved through algorithmic advancements and engineering optimizations. Key management is also an important challenge that needs to be overcome, especially in projects involving threshold key management.

Several projects and companies focusing on FHE have emerged in the market. These include Arcium, Cysic, Zama, Sunscreen, Octra, Fhenix, Mind Network, and Inco Network. These projects are developing various FHE solutions, from hardware acceleration to specialized Blockchain networks.

With the development of technology, FHE is expected to make significant progress in the next three to five years. It may become an important technology for solving key issues of blockchain scalability and privacy protection, driving the development of various innovative applications in the encryption ecosystem.