The Enigma is a famous cryptographic machine used by many states in the 20th century. A dark page of the Enigma story was unveiled through the film "The Imitation Game,” which tells of its use by Nazi Germany during the Second World War (the "antidote" was developed by a group of scientists led by Alan Turing in the form of a deciphering machine called the "Turing Bombe").

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Inspired by the encryption power of the Enigma, scientists from the Massachusetts Institute of Technology (MIT) Guy Zyskind and Alex Pentland together with entrepreneur Oz Nathan named their own invention in its honor. The Enigma is a privacy protocol for creating decentralized applications with secret account functionality that allows users to share sensitive information with third parties without compromising data and protecting them from government surveillance or exposure as a result of hacker attacks or leaks.

"Imagine it as a black box. You send any data, it falls into the black box, and only the result goes out. The real data is never disclosed neither to the outside world, nor to computers that perform computation internally," says Zyskind.

The creators of Enigma won the Summer Startup Competition held by the MIT Bitcoin Project in 2014. "Ethos [the team of Oz Nathan, Guy Zyskind, and Amir Lazarovich. DeCenter.] impressed the judges by providing a working prototype of a decentralized network for storing and transferring personal information based on that ambitious vision that they set out in the first two rounds," the MIT Bitcoin Project said in a statement.

"The Blockchains Are Broken"

To the question, "why does the world need Enigma?" the project team replies: "The blockchains are broken, and we are fixing them. Our technology enables truly decentralized, secure applications by solving for privacy." According to the members of the project, "the critical component for the success of the "smart economy" and the “blockchain" is the ability of decentralized applications to analyze data while keeping it completely private. To achieve this, the project offers a second-level solution, an offline network using "secret contracts" that hide data from the network nodes. Under the mechanism of secret contracts, the concept of "safe computing" is implemented in a set of technologies that allow the performance calculations using encrypted data.

Considering that today many platforms are obliged to disclose user data at the request of the government or law enforcement agencies, the Enigma makes this practice impossible, since the decryption keys are stored only by the user.

Moreover, data owners will be able to monetize them. For example, to sell partial, controlled access to their medical data to pharmaceutical companies, which will launch programs for data analysis based on information collected from different patients. "Nobody wants to give their data to any company without knowing what they will do with it. But data analysis can be much more productive with guaranteed privacy. People will want to disclose more information," explains Nathan.

Technical Side

The methods used in Enigma are somewhat similar to the mechanisms of Bitcoin. The Enigma protocol encrypts the data, splitting it into several components and randomly distributing them across hundreds of computers (nodes) in the Enigma network. Then, each node performs calculations based on its received data block, and in the end, only the data owner can "combine the results" of the calculations of each node by decrypting them using the decryption key. According to the white paper, "the Enigma computational model is based on a highly-optimized version of secure multiparty computations guaranteed by the confirmed secret sharing scheme," and the Enigma uses a "modified distributed hash table" to store the common secret. "I can take one part of the data and divide it into many parts and give them to 10 people. If you ask everyone, they will only have random pieces. Only by combining a sufficient number of these pieces will they be able to decipher the original data," explains Zyskind.

Information about the ownership of data is stored on the blockchain in the form of metadata, which protects it from forgery and change. The blockchain monitors the network, manages access, and serves as an immutable log of actions. Deposits and contributions stimulate the functioning, correctness, and integrity of the system. Like Bitcoin, the Enigma eliminates the need for a trusted party, providing autonomous control over personal data. "One of Enigma's goals is to minimize the tradeoff between security and privacy, allowing people and organizations to share data with one another while retaining control over how data is used without disclosing any raw data to anyone," Nathan said in a conversation with Bitcoin Magazine.

Secret Contracts

The technology of secret contracts is at the center of the Enigma architecture and is a type of smart contract for public blockchains that use cryptographic mechanisms to conceal transaction data. "At the moment, privacy is the most serious obstacle to the adoption of smart contracts. Blockchains are strong in accuracy but are weak in privacy because of their concept. Smart contracts and decentralized applications should be able to work with private and sensitive information to get global distribution," said an Enigma representative in a conversation with CoinDesk.

A demonstration of the vulnerabilities of today's smart contracts was a hacker attack on The DAO, which resulted in the loss of 3.6 million Ethereum Classic tokens in 2016, and a bug in the library responsible for the smart contract in the wallet Parity, which led to the freezing of 513,774 Ethers last November.

In April, in a post on Medium, Guy Zyskind emphasized the shortcomings of existing solutions to protect privacy, including the zero-knowledge proof protocol implemented in the anonymous ZCash cryptocurrency. "Zero knowledge proof is useful when a party who has access to data wants to confirm the statement before others without disclosing their data to them. In the case when we want to entrust the calculations, often with the participation of several parties, there is no participant to whom we can show all our data," writes Zyskind. That is, the protocol is not applicable when calculations are performed by several "unreliable and anonymous" parties. Therefore, Zyskind believes that secret contracts are the "missing link" allowing users to perform calculations using encrypted data that remains hidden from the network nodes.

As an example, Zyskind presents an application for loans, which issues funds to users autonomously. It uses smart contracts that evaluate each applicant, scanning their wallet, tracking the history of loans and previous transactions, and determining whether it is possible to give a loan and in what amount on the basis of this information. When using a conventional smart contract, the user is forced to disclose their financial information. In the conditions of public blockchains, it means that the information is available to any party. By providing protection for user information, the providers of such applications store such data centrally, thus restricting access to it. In this case, however, the application can no longer be considered fully decentralized and becomes dependent on the specific company. Due to the possibilities of a secret contract, however, the user can entrust their transaction history directly. The nodes perform the calculations, and the provider will receive an answer to the question about the "reliability" of the applicant at the output stage, while never receiving specific data about their transactions.

Partnerships and Future Plans

The last partnership signed by the startup was announced in June. Together with Intel, Enigma intends to further enhance privacy by implementing Intel Software Guard Extensions (SGX) technology. The teams are also conducting research in the in the TEE (trusted execution environment), which is an integral part of Intel SGX technology and helps secure data and code (TEE is the space on the processor of the device, separated from its operating system, and is responsible for storing and protecting data in a safe environment). In the case of Enigma, TEE will help hide data from the entire network.

According to the roadmap, the first release of the network, codenamed Discovery, will be introduced in the second quarter of 2018 and will use TEE. In 2019, support for secret contracts will be implemented in the second release known as the Voyager.

Previously, Enigma partnered with the Aion project, working on solutions for interoperability, so that the Enigma protocol can be implemented on different blockchain systems.

As a member of the STEX25 startup exchange from MIT, Enigma plans to attract new partners to implement various scenarios for using its protocol.

We would also like to remind our readers that the first implementation of Enigma was the application of the Catalyst "library of algorithmic trading for crypto assets" using statistical data analysis. Currently, the latest version of Catalyst provides built-in support for exchanges, including Bitfinex, Bittrex, and Poloniex.

According to Zyskind, "the most interesting application that potential developers will offer is the ability to analyze data and perform machine learning on encrypted data sets." Therefore, the project is developing solutions for new scenarios for the use of the protocol, including the personal data marketplace, calculations with genomic data, the use of artificial intelligence for analyzing health data, the Internet of Things with increased privacy, services for evaluating applicants for loans, and solutions for decentralized identities.