A few days ago, the famous co-founder of Ethereum, Vitalik Buterin, published a post on his personal blog dedicated to Halo.
— vitalik.eth (@VitalikButerin) November 5, 2021
Halo, Vitalik Buterin brings privacy to Ethereum
It is a long article describing the technical features of Halo, in the perspective of a “march toward faster and more efficient and safer ZK-SNARKs”.
ZK-SNARKs are Zcash’s “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge”, i.e. the high-privacy cryptocurrency that prevents the tracking of transactions recorded on its public blockchain.
The fact is that the Halo protocol is about to enter Zcash, and this opens up new avenues.
This protocol uses a special technique of combining evidence to create a system of recursive evidence.
Buterin has described the Halo protocol in this article not so much to promote Zcash, but to suggest rather prominently, though not implicitly, a possible future integration on Ethereum.
The implementation on Zcash could serve as a valid testing ground to verify its real potential in the field, in order to better understand also the possible risks due to large-scale use.
Cryptocurrencies and privacy
Ethereum does not currently have on-chain systems that would greatly enhance privacy, such as Zcash or Monero. Bitcoin does not have them either, but thanks to the Lightning Network, very high levels of privacy can be achieved by using a second layer.
Ethereum’s ultimate goal, especially after the move to Proof-of-Stake, will not be to rely on second layer solutions but to focus primarily on on-chain transactions. So if it wants to raise its level of on-chain privacy, it must also test solutions such as those adopted by Zcash, which are able to make public transactions untraceable.
Second layers like LN do not record all transactions on a public blockchain, but only record the opening and closing transactions of a channel on the blockchain. Since channels can be kept open virtually indefinitely, it may be impossible to track transactions publicly.
As far as on-chain transactions are concerned, it is necessary to find other solutions that partially conceal the publicly disclosed data, and it seems that the Halo protocol could help with this.
Bitcoin vs Ethereum when it comes to privacy
One of the main differences that will probably continue to oppose Ethereum and Bitcoin in the future is that Ethereum aims to record as many transactions as possible on the public blockchain, while Bitcoin tends to move most of them to second layers that do not make transactions public. From this point of view, it seems necessary for Ethereum to integrate solutions that allow for a significant increase in the level of privacy of on-chain transactions.