JPMorgan Adds New Privacy Features to Its Ethereum-Based Quorum Blockchain
JPMorgan Chase’s blockchain team has developed a privacy feature for ethereum-based blockchains, obscuring not only how much money is being sent but who is sending it.
Revealed exclusively to Finance Blog, JPMorgan has built an extension to the Zether protocol, a fully decentralized, cryptographic protocol for confidential payments, compatible with ethereum and other smart contract platforms and designed to add a further layer of anonymity to transactions. The New York-based financial institution will open-source the extension Tuesday, and is likely to use it with Quorum, the bank’s homegrown, private version of ethereum.
Zether, which was built by a group of academics and financial technology researchers including Dan Boneh from Stanford University, uses zero-knowledge proofs (ZKPs), a branch of mathematics which allows one party to prove knowledge of some secret value or information without conveying any detail about that secret.
Explaining what the new extension does, Oli Harris, JPM’s head of Quorum and crypto-assets strategy, said
“In the basic Zether, the account balances and the transfer accounts are concealed but the participants’ identities are not. So we have solved that. In our implementation, we provide a proof protocol for the anonymous extension in which the sender may hide herself and the transactions recipients in a larger group of parties.”
Just as importantly, the firm attracted some 220 banks to its Quorum-based Interbank Information Network and most recently completed a load of integration work with Microsoft Azure as JPM continues to prepare Quorum to be spun out and exist in the wild as an open-source protocol.
Harris pointed out that Zether’s confidential payments architecture incorporates an account-based approach employed by ethereum, as opposed to the unspent transaction output, or UTXO-based approach, which the bitcoin client uses. The UTXO is also a feature of the privacy-oriented cryptocurrency zcash, which the original ZKP component of Quorum was based on.
In this way, the extension could benefit not only users of Quorum, but also enterprises building on top of other ethereum variants – or, conceivably, businesses leveraging the public ethereum chain.
Keeping all facets of transactions between banks and other confidential could be a boon for projects like ethereum-based Komgo, for instance, which involves trading in the energy space.
“When we think about the community building on top of Quorum,” said Harris, “if anyone is looking to get an efficient trustless mechanism for trustless and anonymous payments in a consortium then that’s when it’s relevant. That’s why we wanted to open-source it back to the community so anyone can build on it further and continue enhancing it and potentially put it into their use cases as needed.”
Harris, whose job is to strengthen Quorum efforts inside the bank and beyond, added: “When we look at our own JPMorgan applications [the extended version of Zether] will be one choice of many that we will be looking at.”
The work to make transactions more confidential on Zether could also be used to fine-tune Quorum for deployment inside enterprise consortia, making the extension another step towards hardening the protocol for a long-contemplated spin-out from the bank.
One drawback of complex zero-knowledge proving schemes is the amount of computation they eat, potentially slowing down blockchains.
But Harris said the extra dose of cryptography to obfuscate participant identities didn’t appear to have that effect with Zether, concluding:
“The performance is quite good; we had done multiple iterations to improve it and we are doing the verification in solidity smart contracts. We’ll be including in our report the performance measurements for proving and verification.”
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