Now you see it, now you don’t.
The development firm behind the privacy-focused public blockchain zcash has announced the first integration of its zero-knowledge security layer (ZSL) into an enterprise blockchain, with JPMorgan today revealing it has added the functionality to its Quorum blockchain.
Derived from zcash’s zk-snarks technology, the code now integrated into Quorum obscures all identifiable information about a transaction – including the user’s public key and the amount transacted – while promising to also give accountants the ability to audit those transactions.
Zcash co-founder Zooko Wilcox told CoinDesk:
“What we have now done through our partnership with JPMorgan is use zcash technology previously pioneered in the open zcash cryptocurrency to create protected and auditable transfer of token ownership on the JPMorgan blockchain.”
To complete the project, JPMorgan partnered with Zcash Company (the firm that manages the open-source development of zcash) in May of this year and tapped into support from Microsoft.
“Today’s announcement is a prime example of how big banks and fintechs can work side-by-side to build groundbreaking technology for the financial markets,” Umar Farooq, head of blockchain initiatives for JPMorgan, said in a statement.
Crucially, however, the integration doesn’t have a so-called “god key” that would give some trusted authority the ability to go in and make changes after the fact.
Rather, Quorum’s private smart contract language, called Constellation, would require that when building a financial product that doesn’t require a centralized authority, the creator include the public key to all relevant regulators, giving them the necessary access to ensure compliance.
While the proof of a transaction’s underlying value can take 40 seconds, according to a senior JPMorgan exec with knowledge of the project, that process only occurs at the very last step of a smart contract workflow.
If the merging of the two technologies ends up doing what the developers claim, the results could be an entirely new ecosystem of financial products developed without the need of a central authority. As an example, the Depository Trust & Clearing Corporation could be removed from secondary trading.
“There’s been extensive investment in research and proofs-of-concept for blockchain in enterprise over the last several years, and very little of it has reached enterprise value yet,” Wilcox said, adding:
“One of the major blockers that has been preventing larger adoption is the privacy problem, and we have a live solution to that privacy problem for the first time.”
But while this is the first implementation of ZSL in an enterprise blockchain, it may not be the last.
As part of the announcement, JPMorgan and the Zcash Company jointly expressed plans to continue working together with other enterprises building blockchain technology. Further, variations of the ZSL integration could someday include different parameters to define the proofs.
In the initial implementation, those parameters came directly from zcash (which has a market cap of $559 million as of press time), but the JPMorgan source said they could be modified to accommodate other concerns in the future.
Also revealed, as part of an expansion effort to attract new talent, ZSL is scheduled to be released as open-source software at a future date. In this way, individuals and other organizations will be able to experiment and test new applications of the code.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Zcash Company, the for-profit entity that develops the zcash protocol.
JPMorgan building image via Shutterstock
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