Input Output Global (IOG), the firm behind the Cardano blockchain, is releasing a new privacy-focused blockchain called Midnight and a token called dust to accompany the new network.
Midnight, which is underpinned by zero-knowledge proof technology, is one of many side chains now being deployed around Cardano, and will go beyond previous privacy-coin projects by delivering zero-knowledge proof smart contracts, IOG CEO Charles Hoskinson said during an event at Edinburgh University in Scotland on Friday.
The system will walk the line between preserving privacy and allowing regulators and auditors a backdoor into the system when permission is granted, he said.
“Midnight has evolved privacy-coin technology where everything was anonymous by default, which is what zcash and monero did with Snarks and ring signatures,” Hoskinson said in an interview with CoinDesk, referring to two other privacy coins and their encryption methods.
“This is a completely new way of writing and running private smart contracts and private computation. So you can have a private DEX (decentralized exchange) or go mine an anonymous data set or these types of things.”
Privacy coins have always been lionized by crypto libertarians, but have been viewed warily by regulators fearful of how the technology might help facilitate financial crime. Yet, privacy is something that every business has a legal requirement to explore these days, Hoskinson said, although he noted that the difficulty of figuring out how to add privacy to blockchains has prevented its adoption.
A paper published two years back by IOG, titled "Kachina," which dives into privacy-enhanced smart contracts, is now coming to fruition in the real world, Hoskinson said. This has generated interest within the once-hyped world of enterprise blockchains, he added, explaining that Midnight will be working with Hyperledger, for example, which is a consortium of large firms exploring private and permissioned ledgers for things like supply-chain management.
“This is what the enterprise absolutely wants, and we have seen Walmart and some of the largest companies in the world working on privacy with Hyperledger,” Hoskinson said. “At the same time, we can service traditional cryptocurrency needs, especially when you look at DEXs that want to prevent front-running and these types of things.”
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