Blockchain technology provides a beneficial layer of publicity and transparency that current centralized networks cannot do, but there are private data that users do not intend to share widely.
For example, how many people want to use a network that shares their financial and identifying information with everyone?
That is the problem that Secret Network wants to solve. By allowing programmable smart contracts to run on the blockchain and compute in a trusted execution environment, protecting data from the nodes themselves, the Secret Network promises the benefits of blockchain transparency with security and privacy that users demand from web services.
Here’s how Secret Network works and what the community hopes to achieve with the project.
What is Secret Network?
Secret Network is a blockchain built specifically for data security. By supporting encrypted inputs, outputs, and smart contract states, Secret Network enables programmable smart contracts to work to keep users’ data safe. If coins like Monero (XMR) and Zcash (ZEC) are the privacy-focused development of Bitcoin, then the Secret Network smart contracts are like the smart contract development version of Ethereum itself, on that premise while also allowing for the secure transfer of personal data.
Secret Network was born from Enigma, a startup that developed the concept of a decentralized protocol for secret smart contracts. Enigma raised $45 million in an ICO in 2017, but faced resistance from the U.S. Securities and Exchange Commission (SEC) in 2020 and was forced to settle a regulatory fine.
In the end, the community around Enigma decided to continue that vision as a standalone, decentralized project. That’s how the current version of Secret Network came into being. Holders of Enigma’s Ethereum-based ENG token can use the swap to trade 1:1 with SCRT (Secret Network’s native coin is used for administration and fee payments). Enigma remains involved as one of the key players in the community supporting the development of Secret Network.
How does the Secret Network work?
Secret Network is a layer 1 blockchain with its own consensus algorithm and on-chain governance, built on Cosmos’ Tendermint. It works on a distributed network of nodes that perform smart contract computation built on top of the Secret Network, but the nodes use a trusted execution environment (TEE) – like a black box – to make it work. that process avoids prying eyes.
It is similar to how smartphone processors use TEE to process sensitive data like fingerprints, but instead it is a blockchain node. The network refers to its smart contracts as “secret contracts” because they are designed to protect the privacy of the data held within. SCRT tokens (“Secret”) must be staked by nodes to participate in the network, and used to pay fees and transfer value.
What’s special about Secret Network?
There’s a lot to like about blockchains like immutability and transparency, but that degree of openness limits the kind of data that can be safely handled by many blockchains — especially top-secret data that people or companies can’t handle. don’t want anyone to see.
The Secret Network aims to fill that gap by providing a layer of privacy and security while keeping what people like about blockchain technology – in theory the best of both worlds. While it’s not the only company trying to fill that void, it could be key to driving the future of some decentralized applications (dapps), particularly in the decentralized finance sector. centralized (DeFi).
What can you do with Secret Network?
Secret Network is designed to empower decentralized applications that require a level of privacy not found on many other blockchain networks. By using a trusted execution environment and keeping data private to both node operators and the public, it can handle sensitive information that users and organizations are not willing to share. .
Network operators have suggested many potential use cases, including lending dapps and credit scoring, machine learning capabilities while preserving privacy in the process, and improved sharing, Securely monetize data. More broadly, the Secret Network can be useful for any dapp that handles sensitive data.
Do you know?
Secret Network builds on Cosmos. Cosmos is considered the “internet of blockchains” and aims to create an interconnected blockchain ecosystem while many existing blockchains are more like individual networks.
The future for SCRT
With the ENG to SCRT token swap ending in January 2021, ending the old Enigma project, Secret Network is trying to build towards a future that includes interoperability with other blockchains. The lack of cross-chain compatibility could limit Secret Network’s appeal and ultimately make it not as popular or useful as the community developers intended it to be.
Secret Network is also passionately promoting decentralized finance with its Secret DeFi initiative and launching its SecretSwap decentralized exchange in February 2021. According to the Secret Network’s FAQ page, “part of our vision has always been to bring privacy to every blockchain.” The platform leverages Cosmos’ cross-blockchain communication and interoperability as another potential initiative on the roadmap.
Additionally, Secret Network seems to be focused on attracting more developers to build dapps on the blockchain, thus presenting more use cases in the process. However, it is not the only blockchain with privacy-focused smart contracts (Oasis Network is another example), and there are other potential solutions to the processing dilemma. sensitive data on the blockchain — such as secure multi-party computation. Whether Secret Network’s solution ultimately outperforms others currently on the market remains to be seen.
* As part of the 2020 settlement, the SEC forced Enigma to refund investors, register their tokens as securities, and pay a $500,000 fine.
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