The Development and Application of Fully Homomorphic Encryption Technology

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

Compared to some partial homomorphic encryption and certain types of homomorphic encryption, FHE supports arbitrary computations on encrypted data, which makes it highly promising but also brings computationally intensive challenges. The main advantage of FHE lies in its ability to protect the privacy and security of data throughout the computation process.

In the field of blockchain, FHE is expected to become a key technology for addressing scalability and privacy protection issues. It can transform a transparent blockchain into a partially encrypted form while retaining the control capabilities of smart contracts. Some projects are developing FHE virtual machines that allow programmers to write smart contract code that operates FHE primitives. This approach can solve the current privacy issues of blockchain, making encrypted payments, gaming, and other applications possible while maintaining the traceability of transaction graphs.

FHE can also improve the usability of privacy projects through private message retrieval (OMR), allowing wallet clients to synchronize data without exposing the content being accessed. However, FHE alone cannot directly address the scalability issues of blockchain and may need to be combined with zero-knowledge proofs (ZKP) to tackle this challenge.

FHE and ZKP are complementary technologies, each serving different purposes. ZKP provides verifiable computation and zero-knowledge properties, while FHE allows computation on encrypted data without exposing the data itself. Combining the two may significantly increase computational complexity, so it is necessary to weigh the pros and cons based on specific use cases.

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

The main challenges facing FHE include computational efficiency and key management. The computationally intensive nature of bootstrapping operations is being improved through algorithmic enhancements and engineering optimizations. In terms of key management, some projects adopt threshold key management schemes, but further development is needed to overcome single point of failure issues.

Many companies and projects are actively investing in the development and application of FHE. These include Arcium, which focuses on parallel encryption computing; Cysic, which provides ZK computing as a service; Zama, which develops FHE solutions; Sunscreen, which builds private application tools; Octra, which proposed the HFHE concept; Fhenix, which develops Ethereum Layer 2 supported by FHE; Mind Network, which builds the FHE re-staking layer; and Inco Network, which creates a modular encryption computing blockchain.

The regulatory environment for FHE varies across different regions. While data privacy is generally supported, financial privacy remains in a gray area. FHE has the potential to enhance data privacy while maintaining social benefits.

With the continuous advancement of theory, software, hardware, and algorithms, FHE is expected to achieve significant progress in the next 3-5 years, gradually transitioning from theoretical research to practical applications. As a revolutionary technology, FHE is expected to have a profound impact in the field of encryption, providing innovative privacy and security solutions for the blockchain ecosystem.