The JP Morgan’s blockchain team developed a privacy feature for blockchains based on Ethereum, to the Zether, obscuring not just how much money was sent but who sends that money.

The extension of JPM to the Zether protocol

JP Morgan has built the extension to the Zether protocol, which is a fully decentralized, as well as cryptographic protocol for confidential payments, compatible with Ethereum, together with some other smart contract platforms, and designed to add an additional layer of anonymity to the transactions.

The financial institution based in New York is going to open-source the extension on Tuesday and is possible to utilize it with Quorum, which is the homegrown private version of Ethereum of the bank.

Zether protocol, which has been built by one group of financial technology researchers and academics, including Dan Boneh from the University of Stanford, uses zero-knowledge proofs or ZKPs, a branch of mathematics which permits one party to prove knowledge of some secret value or information without conveying any detail about that secret.

Explaining what the recently developed extension does, the head of Quorum and crypto assets strategy of JP Morgan, named Oli Harris, said that in the basic Zether, the account actually balances, and the transfer accounts are concealed, but the identities of the participants aren’t. So, they have solved that. In their implementation, they provide a proof protocol for the anonymous extension in which the sender may hide himself and the recipient of the transaction in a much larger group of parties.

JPM has had quite a busy year in the space of blockchain, and not only with its headline-grabbing plan for an internal, as well as price-stable crypto called JPM Coin.

Who will benefit from the new extension?

As important as this, the firm also attracted about 220 bank institutions to its Quorum-based Interbank Information Network and recently achieved a load of integration work with Microsoft Azure as JP Morgan keeps up with preparations for Quorum to be spun out and to exist in the wild as the open-source protocol.

Harris pointed out that the confidential payments architecture of Zether incorporates an approach based on account, which is employed by Ethereum or ETH, opposite to the unspent transaction output, or method based on UTXO, which BTC clients use. The UTXO is another feature of the crypto Zcash which is oriented to privacy, which the original ZKP component of Quorum has been based on.

In this particular way, the extension could also benefit not just users of Quorum, but the enterprises that build on top of other ETH variants – or, conceivably, businesses that leverage the public ETH chain.

Keeping all of the facets of transactions between the banks and some other confidential could actually be a boon for projects such as Komgo, based on ETH, for example, which includes trading in the energy space.

Harris said that when they think about the community that builds on the top of Quorum if anyone looks to get an efficient trustless mechanism for trustless and anonymous payments in a consortium, then that is when it is relevant.

That is why they wanted to open-source it back to the community so that anyone will have the ability to build on it further and keep enhancing it and put it into their use cases as needed.

Making transactions more confidential on Zether

Harris, whose job is also to strengthen the efforts of Quorum inside the bank, as well as beyond, added that when they look at their own JPM applications, the Zether’s extended version is going to be one choice of the many which they are going to look at.

The work for making the transactions quite more confidential on Zether could be utilized to fine-tune Quorum for deployment inside of the enterprise consortia, making the extension another step towards hardening the protocol for a long-contemplated spin-out from the bank.

One of the drawbacks of complete zero-knowledge proving schemes is actually the amount of computation that they eat, probably slowing down blockchains. However, Harris also said that the extra dose of cryptography to obfuscate participant identities did not seem to have the same effect with Zether.

He concluded that the performance is good and that they have done several iterations to improve it and they are going to do the verification in smart contracts. They are also going to be including in their report the performance measurements for proving, as well as verification.


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