Confidential computing and fully homomorphic encryption (FHE) are poised to unlock unprecedented levels of capital, potentially bringing the next trillion dollars into the market. Remi Gai, the founder of Inco, a company at the forefront of this technological revolution, shared his insights during the FHE Summit 2024.
Expanding Web3 Capabilities with Confidential Computing and FHE
Confidential computing and FHE are set to transform the Web3 landscape by enabling creators to develop more complex and secure applications. Gai explained, “There’s the next trillion dollars of opportunities because if you think about what we’re building, it’s enabling creators to build more applications. So first, we’re growing the pie of what’s possible in Web3. A lot of these use cases in Web2 just cannot work in Web3 because we’re missing this confidentiality aspect.”
The integration of these technologies means that applications previously confined to the Web2 environment due to privacy concerns can now be securely transitioned to Web3. This development is expected to drive innovation and expand the range of possibilities within the decentralized space.
Boosting Institutional Participation
One of the most significant barriers to mainstream institutional participation in the decentralized finance (DeFi) sector has been the lack of privacy in Web3. Confidential computing and FHE offer a solution to this problem, providing the level of confidentiality that institutions require. Gai noted,
“Institutions are still having a hard time entering the space because everything is transparent. Now, if you enable an experience similar to what they’re comfortable with in Web2, suddenly this could bring a lot more liquidity, use cases, bigger participants and money to enter the space.”
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This shift could lead to a substantial influx of liquidity as financial institutions begin to see the crypto market as a viable and secure option. The increased participation of these entities would enhance market liquidity and drive the development of new financial products and services.
The Role of Encryption
A common misconception is that encryption equals anonymity. However, as Gai pointed out, encryption is about securing valuable information, not necessarily making it anonymous. He likened the current need in the blockchain space to the secure sockets layer (SSL) used on the internet.
“If blockchain is the value layer of the internet, then you need the SSL equivalent. A lot of people still think encryption means anonymity. No, it just means that you need to take certain pieces of information that are valuable through encryption. And that is what we’re missing today.”
Confidential computing and FHE provide this much-needed layer of security, ensuring that sensitive data can be handled securely without exposing it to potential threats. This capability is crucial for the continued growth and adoption of blockchain technologies.
Attracting New Capital with Confidential Computing and FHE
The anticipated influx of new capital into the crypto market will come from both institutional and retail investors. According to Gai, the new use cases enabled by confidential computing and FHE will attract a wide range of users. He stated, “If you think about the new use cases it will create, it will also attract net new users. That will also bring in liquidity. So it could also trickle down to retail. It doesn’t have to be just institutions.”
The disruption potential of these new use cases is vast, promising to bring significant benefits to the entire ecosystem. Financial institutions, in particular, stand to gain from the ability to perform computations on encrypted data without decrypting it, thanks to fully homomorphic encryption.
In conclusion, confidential computing and FHE are set to revolutionise the cryptocurrency market by enabling new levels of privacy and security. This technological advancement is expected to unlock trillions in capital, drive innovation in Web3, and attract both institutional and retail investors. As these technologies continue to develop, the future of the crypto market looks increasingly promising.
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