True Privacy is When Users Decide Who Sees and Uses Their Data: Unhased #24

For the 24th version of Unhashed, I reached out to Kurt Nielsen, the Co-Founder & President of Partisia Blockchain, a Web 3.0 public blockchain built for trust, transparency, privacy, and lightning speed finalization. So, let’s dive straight into the interview.

Q1. Welcome to Unhashed. What’s your crypto story, and how did you get started with Partisia Blockchain?

Answer: I was working on a Ph.D. in market design and game theory when I first heard about distributed cryptography and secure multiparty computation (MPC). MPC is a perfect match to the theory I was buried in at the time. My friend introduced me to one of the most prominent researchers in the field, Ivan Damgaard, and we hit it off. This was the beginning of a long collaboration about bringing MPC into commercial use.

I have been working with MPC and distributed cryptography since 2004, first as a researcher and then as co-founder of Partisia since 2008. The first product was a DEX - a decentralized exchange with no single point of trust - built on MPC. I later co-founded Sepior, a pioneer in MPC-based key management, which is booming these days with larger players like SBI Holding, Paypal, and Coinbase buying into the technology.

In 2017, we started to build blockchain applications and, more importantly, to merge blockchain and MPC technologies, which are two technologies that are destined to melt together. Partisia Blockchain is the result of this effort.

Q2. "True sense of privacy and ownership," how do you define this? What are the most overlooked parts of how our money works?

Answer: Let me break this question into two relatively short answers to what I would consider two very different but important questions.

First, “true sense of privacy” is when the user controls who gets to see and use the user’s data. It is this level of control that defines ownership, although I don’t usually use the term “ownership” as it has different legal ramifications. This level of control needs to include the service providers as well; otherwise, the service provider can unilaterally profit by accumulating data across users - as we all know, this is the current dominating business model on the internet but not a fair one. Establishing a “true sense of privacy” is a difficult problem that is not at all solved by traditional blockchain technologies.

Second, while blockchain provides real decentralized control of money, private money is a different matter. As mentioned, traditional blockchain is, in fact, orthogonal to a true sense of privacy as discussed above. For this discussion, it is important to distinguish between confidential data and anonymous users. For the most part, the current blockchain technology provides full transparency about transactions and some sort of anonymity about the users. While the lack of “private transactions” may prevent more mainstream and corporate adoption, introducing “private transactions” is a delicate matter.

A much larger privacy problem is privacy around the data used prior to a transaction as opposed to the transaction itself. As an example, it may require the use of private data across hundreds of potential buyers and sellers to get to a single transaction. It is this massive use of private data that is our primary focus.

Q3. ZKP is one of the highly idealized cryptographic tools. How do you explain its utility with regards to privacy and security for the layman? Also, please shed light on the need for standardizing ZKP computations.

Answer: ZKP is a short form of zero-knowledge proof and the first step towards ZK computation.

Consider the children’s game “Where's Wally,” and now try to prove that you found Wally without revealing Wally’s position in the picture. If you can do that, you actually practiced zero-knowledge proof. A straightforward and very tangible ZKP is for the “prover” to use a large cover paper and cut a hole that exactly captures Wally and nothing else, then put the cover paper on top of the “Where’s Wally” picture. Now the “verifier” can see Wally and the “prover” didn’t reveal anything but the image of Wally. This Medium article provides the full story.

The above analogy also hints that ZKP is limited to two players and to binary results (true or false). ZK computation is, on the other hand, a generic distributed privacy-preserving computer that can compute any computations with arbitrary private input and output.

Q4. Please brief us all about the proof of finalization and justification. How does it fare in comparison to resource-friendly consensus mechanisms like proof of stake?**

Answer: The consensus protocol on Partisia Blockchain is environmental-friendly and similar to Proof-of-Stake, except that the individual node’s vote will be weighed with a node-specific “trust score” as opposed to the node’s relative token holding. In the initial version of Partisia Blockchain, however, all nodes have equal voting power. The Proof-of-verification, -Justification, and -Finalization are components of the improved consensus model.

Proof-of-Verification is a node-specific proof of the actual construction of the block in question. As such, this prevents nodes from blindly signing blocks without proper verification. Hereby it compensates for the concept of the “longest chain,” which is a very important property of Proof-of-Work i.e., that if you do not work on the longest chain, rewards are lost.

The Proof-of-Justification is a single node’s proof of having received signatures from 2/3 or more nodes on the block in question.

The Proof-of-Finalization is the first Proof-of-Justification of the next block, which indirectly proves that 2/3 or more of all nodes hold 2/3 or more signatures on the previous block. The yellow paper provides a more thorough presentation of the consensus model.

Q5. 'Privacy-preserving' transactions are also safe havens for fraudulent activities and scams. How does Partisia Blockchain sustain the balance between transparency and privacy?

Answer: This is an important balance, as discussed in Q2. Partisia Blockchain consists of a fully transparent blockchain, and dedicated ZK nodes run a privacy-preserving computation in a separate second layer. The transactions on Partisia Blockchain belong to the transparent blockchain, and the privacy-preserving use of data is kept confidential forever.

This provides a balance between transparency and privacy. However, since Partisia Blockchain is a generic network for the coordination of public and private information, it is possible to implement the auditability needed to justify any level of privacy.

Concerning anonymity and identification, Partisia Blockchain provides an alternative as a platform for privacy-preserving self-sovereign identity. This is already tested in collaboration with three Swiss cantons.

Concerning transactions and privacy, Partisia Blockchain makes it possible to create a fully compliant “private coin” by using Partisia Blockchain to audit the private transactions and run all the required fraud detection. This has already been developed for potential use as private cash for humanitarian aid.

Q6. We now know that multiparty computation facilitates privacy-preserving computations. How does this layer of decentralization impact operational efficiency?

Answer: Distributed computation requires more coordination as the nodes/servers involved need to agree on the state of a given operation. This is a common challenge for traditional blockchain and for MPC.

The design of Partisia Blockchain, however, ensures that MPC does not slow down the blockchain part and vice versa. Also, Partisia Blockchain comes with so-called sharding or scalable parallelization of the entire blockchain. This means that congestion is solved by spinning up a new shard as opposed to a market that uses price to prioritize transactions.

Disclaimer: The sole purpose of Unhashed is to unhash (decode) information about projects innovating using blockchain and cryptocurrencies and share it with the community. The writer does not have any vested interest in any of the projects covered herein. Not that this article shares any, but still, taking investment advice from strangers on the internet is not a wise thing to do.