Current Development Status and Application Prospects of Fully Homomorphic Encryption Technology

Fully Homomorphic Encryption ( FHE ) is an advanced encryption technology that allows computations to be performed directly on encrypted data without the need for decryption first. This concept can be traced back to the 1970s, but it was not until 2009 that significant progress was made. The core feature of FHE is homomorphism, meaning that performing addition or multiplication operations on ciphertext is equivalent to performing the same operations on plaintext.

FHE has broad application prospects in the blockchain field. It can transform a fully transparent blockchain into a partially encrypted form while retaining the control capabilities of smart contracts. This offers possibilities for privacy-sensitive applications such as encrypted payments and gaming. Additionally, FHE can improve the user experience of existing privacy projects, such as addressing synchronization delay issues through privacy message retrieval (OMR).

Although FHE itself cannot directly solve the scalability problem of blockchain, its combination with zero-knowledge proof (ZKP) may bring breakthroughs. FHE and ZKP are complementary technologies, with the former providing privacy for shared states and the latter enabling verifiable computation.

Currently, the development of Fully Homomorphic Encryption (FHE) is about 3-4 years behind Zero-Knowledge Proofs (ZKP), but it is rapidly catching up. The first generation of FHE projects has begun testing, with the mainnet expected to launch later this year. Although the computational overhead is still higher than that of ZKP, the potential for large-scale adoption of FHE is immense.

The main challenges faced by FHE include computational efficiency and key management. The computationally intensive nature of bootstrapping operations is being alleviated through algorithmic improvements and engineering optimizations. Key management needs further development to overcome single points of failure.

The FHE market has attracted numerous startups and investments. Companies like Zama, Sunscreen, and Fhenix are developing FHE tools and infrastructure. Venture capital is also actively positioning itself, with 1kx investing in the Inco project built on Zama.

From a regulatory perspective, FHE has the potential to enhance data privacy protection while maintaining certain social benefits. With ongoing improvements in theory, software, hardware, and algorithms, FHE is expected to make significant progress in the next 3-5 years, moving from theoretical research to practical applications.

Overall, FHE is at a critical juncture in the field of encryption. It is expected to address the core issues of blockchain scalability and privacy protection, bringing new innovative opportunities to the encryption ecosystem. As the technology matures, FHE will open up vast prospects for various privacy-sensitive applications.