The Development and Application of Fully Homomorphic Encryption ( FHE )

Fully Homomorphic Encryption ( FHE ) is an advanced encryption technology that allows computation on encrypted data without decrypting it. This concept can be traced back to the 1970s, but it was not until Craig Gentry's groundbreaking work in 2009 that it became truly feasible.

The core features of FHE include homomorphic property where the addition and multiplication operations on encrypted data are equivalent to plaintext operations (, noise management, and unlimited operational capability. Compared to partially homomorphic encryption ) PHE ( and some forms of homomorphic encryption ) SHE (, FHE supports unlimited additions and multiplications, making it an extremely powerful but computationally intensive technology.

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In the blockchain field, FHE is expected to become a key technology for solving scalability and privacy protection issues. It can transform a transparent blockchain into a partially encrypted form while maintaining control over smart contracts. This approach enables applications such as encrypted payments and privacy games, while retaining the transaction graph, making it more advantageous in terms of regulation.

FHE can also improve the user experience of privacy projects through private message retrieval )OMR(, allowing wallet clients to synchronize data without exposing the content being accessed. Although FHE itself does not directly address the scalability issues of blockchain, combining it with zero-knowledge proofs )ZKP( may provide new ideas for tackling this challenge.

FHE and ZKP are complementary technologies, each serving different purposes. ZKP provides verifiable computation and zero-knowledge properties, while FHE allows computation on encrypted data without exposing the data itself. Combining the two, although it significantly increases computational complexity, may bring unique advantages in specific scenarios.

Currently, the development of FHE is about three to four years behind ZKP, but it is rapidly catching up. The first generation of FHE projects has begun testing, and the mainnet is expected to be launched later this year. Although the computational overhead is still higher than that of ZKP, the potential for the large-scale adoption of FHE is becoming evident.

The main challenges faced by FHE include computational efficiency and key management. The computational intensity of bootstrapping operations is being alleviated through algorithm improvements and engineering optimizations. Key management, especially in projects that require threshold key management, still needs further development to overcome the single point of failure problem.

In the market, multiple companies are actively developing FHE solutions. For example, Zama provides FHE tools for Web3 projects, Sunscreen has developed an FHE compiler, and Fhenix is building an Ethereum Layer 2 network that supports FHE. These projects have all received significant venture capital support, reflecting the market's recognition of the potential of FHE.

In terms of regulatory environment, FHE has the potential to enhance data privacy protection while maintaining social benefits. With continuous advancements in theory, software, hardware, and algorithms, FHE is expected to achieve significant development in the next 3-5 years, gradually transitioning from theoretical research to practical applications.

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Overall, FHE is at the forefront of revolutionizing the encryption field, providing innovative solutions for privacy and security issues. With the maturation of technology and the expansion of applications, FHE is expected to unleash new innovative potential in the blockchain ecosystem, driving the development of various applications.