Fresh from the bustle of Blockchain Week Australia, we find ourselves in the aftermath of intense debates surrounding blockchain’s core tenets of decentralisation and the mounting wave of private blockchains. Day 1 had some perceived contentious views from the banks, where customer surveys suggest convenience is more important than decentralisation. This sparked a lot of chatter and understandably so in a room full of web3 folks including crypto exchanges, asset providers, blockchain infrastructure companies and more. Yet, a closer inspection reveals a pattern that goes beyond mere convenience.
Banks, corporations, and governments gravitate towards centralisation and in some cases, private blockchains. This is due in part to customer convenience, and in part due to scam concerns, which the banks duly highlighted. However, we believe it is due to something else too, clarified during our participation in the Reserve Bank of Australia (RBA) Central Bank Digital Currency (CBDC) pilot project. Specifically, the transparency of public blockchain transaction records presents problems for businesses with a need for commercial confidentiality. In turn, this raises intriguing questions about privacy in a blockchain future.
Picture this, a cafe in a blockchain-powered world, where customers pay for their coffee using digital tokens. The transaction is recorded on the blockchain, and the customer can then trace the cafe’s entire transaction history using a block explorer and the knowledge of the cafe’s wallet address. While this provides unprecedented transparency, it also starkly contrasts the confidentiality that businesses (and individuals) enjoy in our current financial system.
The transaction is recorded on the blockchain, and the customer can then trace the cafe’s entire transaction history
It is therefore logical for corporations, banks, and governments that are keen to adopt blockchain technology to lean towards private or more centralised chains. These platforms, though not as decentralised, can provide a balance between the benefits of blockchain and the need for transactional confidentiality.
This led our team at NotCentralised to explore the potential of Zero Knowledge (ZK) proofs to reconcile the seeming contradiction between transparency and privacy. We delved deep into ZK technology, grasping the intricacies of ZK circuits and Circom technology, determining that ZK proofs need not be confined to layer 2 blockchains.
Layer 2 solutions, including Optimistic and ZK rollups, offer a path to scalability for Ethereum. However, they do centralise some components, which could compromise the full decentralisation ethos. Our alternative, encapsulated in our newly launched open-source solution, NotVault, allows ZK proofs to exist either off-chain or on any Ethereum Virtual Machine (EVM) compatible chain, including Coinbase’s BASE layer 2.
NotVault: Bringing Privacy to the Decentralised World
At its core, NotVault is an open-source Software Development Kit (SDK) designed for the secure and speedy creation of self-sovereign data workflows. Ranging from confidential commerce and payments to verifiable credentials, its applications are vast.
What makes NotVault unique is its underlying mechanism. It links a contact ID, such as an email, privately to a user’s wallet, generating a new public/private key pair for data encryption and signing within the ecosystem. This approach removes the need to access the Ethereum wallet’s keys, often inaccessible via API, offering a more user-friendly way to connect identities.
Moreover, NotVault builds on three fundamental principles: peer-to-peer operations to prevent single-point failures, encryption for continuous confidentiality, and ZK proofs to minimise data footprints during communication.
Our journey has been paved with innovations, from the TradeFlows protocol, which leveraged blockchain for digital escrows and programmable payments, to Layer-C which encoded rules and regulations in smart contracts, ensuring DeFi can match or exceed Tradfi in terms of regulatory compliance if needed.
We were thrilled to introduce NotVault at the recent Blockchain Week, marking the next step in our pursuit of reshaping blockchain technology for everyday use. We’ve incorporated it into our other tools like TradeFlows and Layer-C and we want others to utilise it too. It’s why we’ve made it open source (sign up for beta access here: https://www.notcentralised.com/layer-c) and we have documentation for developers to read too (https://docs.notcentralised.com/).
Looking ahead, we believe NotVault could play a crucial role in the evolution of commerce. As blockchain technology becomes more pervasive, a platform like NotVault, which harmoniously melds the programmability of blockchain technology with the need for confidentiality, might become indispensable. With NotVault, businesses, individuals, and even governments can participate in a blockchain-powered economy without forfeiting privacy. By enabling ZK proofs on any EVM-compatible chain or off-chain, we bring a much-needed balance to the transparency-privacy equation.
NotVault: A Tool for the Future of Commerce
Developers who integrate NotVault into their applications can take advantage of its diverse set of features, including wallet functionality for safeguarding encrypted keys and metadata, and credentials that facilitate the generation and verification of zkSNARK credential proofs. It further simplifies confidential token transfers and self-sovereign, encrypted file storage.
Additionally, the Commercial Deals feature manages the entire lifecycle of transactional or contractual agreements, including their financial settlement. It provides self-custody escrows of token payment amounts via a peer-to-peer platform, adding another level of security and trust to business transactions.
Finally, the Service Bus, a confidential messaging service, ensures the integrity of timestamp, source, and underlying message using a zkSNARK, creating a secure and reliable communications network.
All this functionality comes wrapped in an open-source package, available to everyone under an MIT License. We believe open source is a key pillar of innovation, fostering a collaborative and inclusive development environment where anyone can contribute and benefit.
A New Era: Blockchain, Confidentiality, and the Path Forward
Our journey through Blockchain Week Australia and the unveiling of NotVault brings into focus the intricate balance between privacy and transparency in the blockchain sphere. While the initial clamour for decentralisation underpins blockchain’s disruptive potential, the realities of business operations and regulatory compliance have nudged us towards a more centralised approach.
Yet, with tools like NotVault, we’re seeing the evolution of a middle path — a convergence of the best elements of both worlds. The future of commerce may well hinge on this blend of decentralised technology with layers of privacy and confidentiality.
At NotCentralised, we’re proud to contribute to this journey and excited to see how NotVault, and indeed blockchain technology at large, evolves in the years to come. Let’s continue this dialogue, explore these opportunities, and together forge a path to a more inclusive and efficient future.