Looking for confidentiality in blockchains? Put QED-it on your radar!
“At QED-it, we help the blockchain industry go beyond experimentation and reach to its full potential. We solve the confidentiality tradeoff using scalable Zero-Knowledge Proof technology.”
Jonathan S. Rouach, CEO
Blockchain emerged as a new industry in the past 3 years, with bold promises: replace intermediaries with technology solutions, lower the complexity of systems to collaborate among competitors (e.g. banks), enable programmable assets and smart contracts. As veterans and entrepreneurs of the Bitcoin field we were, like many others, very excited by these promises.
Blockchain technology immediately attracted experts in cryptography, who saw a concrete application for their science. One group in particular caught our attention in 2013, during the “San Jose Bitcoin Conference”: academics showed how Zero Knowledge Proofs could truly anonymize Bitcoins. Three years later, we observed an overwhelming presence of banks and financial institutions, gathering at the “Consensus 2016 Conference” and joining the party to learn about Blockchain technology. Connecting the dots, it was clear for us that this new Blockchain trend will have to face a dilemma: you can’t achieve at the same time “Consensus” (having all network parties agree on a single shared reality, e.g., that each asset is only held by one party), “Confidentiality” (transaction details and history aren’t shared) and “Decentralization” (no central player validates all data). People were still confused by Bitcoin’s pseudonymity, where transaction details don’t tell the full story of who transacted with whom. We realized that in a banking context, pseudonymity wouldn’t be enough, and players would be sharing confidential data in order to reach consensus in a decentralized system.
This was a fascinating problem to solve. It combines a deep understanding in cryptography, computational complexity, parallelization and scaling, and an endless list of business use-cases solved by decentralization but in need of confidentiality. On top of that, Tel Aviv appeared to be the right place for solving it. We put together a team of passionate people around this challenge: QED-it was born. (Pronounce: [ˈkedɪt]). It struck us, instead of building a Blockchain of information and trying to protect it, we should build a Blockchain of proofs, generated by cryptographically verified self-auditing, leaving the confidential information where it belongs. Quod Erat Demonstrandum.
A group of seasoned angels joined our vision, followed by the financial support of the Office of Chief Scientist in Israel, and so started our venture. Our team built a platform for confidentiality on blockchain, using the principle of self-auditing, enabled by zero-knowledge proofs. We produced a compelling demo of the technology, which we have presented to more than 100 business leaders from major financial and industrial institutions. Feedback has been very enthusiastic and we are encouraged by the strong business and technological traction.
One interesting example is real-time asset valuation. When a bank finances an asset (e.g. an aircraft, an energy facility), this asset serves as a collateral for the loan, like in a mortgage. However the value of that collateral varies with its operation (e.g. accidents, repairs), but the bank has no real-time visibility to this private data. Today, the bank occasionally uses third party appraisals (e.g. consultants, auditors), which are too expensive to perform continuously. For this use-case, we provide the platform for the asset operator to run a self-audit, using its own confidential data, and send only the result to the bank, along with a proof that this audit happened correctly. Confidential data stays where it belongs. This new capability of real-time valuation lets the bank replace conservative risk margins with tighter risk management. It would allow the bank to propose better financing terms for the asset owner. It may also reduce the need of locking down regulatory funds.
In general, self-auditing can serve to prove to stakeholders statements when they are kept remote from the underlying fundamentals: regulators could check compliance in real-time without the need to collect industry’s confidential data; stakeholders could track carbon emission or other indicators without getting access to corporate data; individuals could prove dynamic statements about their digital identity, such as credit score and loan worthiness, without revealing their full financial history; investors could be reassured, in real-time, of the correct use of the money they invested, without interfering with day to day finances. We’ve been working with partners on all these use-cases, and more.
Zero-knowledge Proof systems are an advanced technology, only now becoming practical, their application is still resource intensive. In order to make the technology scalable and fit for the most advanced uses, we took it upon ourselves to accelerate their core cryptographic primitives so that larger proofs can be produced in a shorter time. We want this technology to be accessible for a larger developer audience, so we’re building the tools to create custom proofs. We are part of larger community of hands-on builders, working to deploy Blockchain applications. We believe our efforts will help the blockchain industry go beyond experimentation, and realize its full potential.
We have more posts to come, presented by our core team members (Maya Zehavi, Kobi Gurkan, Daniel Benarroch Guenun). In the meantime, we call for curious people to contact us, learn more about our approach and follow its development.
Jonathan S. Rouach, CEO
Dr. Aviv Zohar, Chief Scientist
Ruben Arnold, CFO