How Will Private Shared State Transform Ethereum Privacy?

I’m thrilled to sit down with Nicholas Braiden, a true pioneer in the blockchain space and our resident FinTech expert. As an early adopter of blockchain technology, Nicholas has dedicated his career to exploring how financial technology can revolutionize digital payments and lending systems. With years of experience advising startups on harnessing tech for innovation, he’s the perfect person to dive into the exciting partnership between TACEO and Aztec Foundation. Today, we’ll explore their groundbreaking work on Private Shared State (PSS) for Ethereum, unpacking how it enhances privacy, enables collaborative computation, and tackles future challenges like quantum computing. Let’s get started!

Can you explain what Private Shared State, or PSS, is in simple terms, and why it matters for blockchain users?

Absolutely, Daisy. At its core, PSS is like a secure, shared vault on the blockchain where multiple parties can store and work on private data together without anyone peeking inside. It’s a way to maintain a single piece of encrypted information—think financial records or sensitive AI data—that can be updated and computed on, all while staying on-chain with proofs that everyone can verify. This matters because it brings a new level of privacy and trust to blockchain applications, especially on a platform like Ethereum, where transparency often comes at the cost of confidentiality.

How does PSS stand out from other multiparty computation solutions in the blockchain space?

What sets PSS apart is its focus on a persistent, shared private state that lives on-chain. Most multiparty computation, or MPC, solutions are designed for one-off calculations—think of them as quick, secure math problems done in isolation. PSS, on the other hand, allows for ongoing updates to that shared data over time, with public proofs that everything was done correctly. It’s not just about a single computation; it’s about creating a living, private system that multiple parties can rely on without a middleman.

Can you walk us through how PSS enables multiple parties to collaborate on encrypted data without risking exposure of sensitive details?

Sure, it’s all about encryption and trustless design. With PSS, each party contributes their data in an encrypted form, and the system performs computations on that data without ever decrypting it. Imagine a group of banks working on a joint credit model—they each input their customer data, but no one can see the others’ specifics. The computation happens in a secure environment, and the result, along with a proof of correctness, is committed to the blockchain. This way, everyone gets the output they need, like a risk score, without exposing the raw data behind it.

What’s the significance of the partnership between TACEO and Aztec Foundation in advancing privacy on Ethereum?

This partnership is a game-changer for Ethereum because it combines TACEO’s expertise in collaborative computation with Aztec’s privacy-focused Layer 2 solution. Ethereum, by nature, is very public—every transaction is visible. What this collaboration does is create a framework where private interactions can happen at scale, without sacrificing the security or decentralization of the network. It’s like adding a private room to a glass house; users can finally do sensitive work without the whole world watching.

How does Aztec’s Layer 2 technology contribute to making PSS effective on Ethereum?

Aztec’s Layer 2 is crucial because it handles the heavy lifting of privacy and scalability off the main Ethereum chain. It uses zero-knowledge proofs to ensure transactions and computations remain confidential while still being verifiable. For PSS, this means the complex, encrypted computations and state updates can happen efficiently without clogging up Ethereum’s base layer or costing a fortune in gas fees. It’s a perfect marriage of privacy tech and practical usability.

What are some real-world scenarios where PSS could make a big impact, like in industries such as finance or gaming?

Oh, there are so many exciting possibilities. In finance, PSS could enable trustless markets where institutions collaborate on things like derivatives or risk models without revealing proprietary data. Imagine banks pooling encrypted data for fraud detection without exposing customer info. In gaming, it could power cheat-proof systems for on-chain games—think poker where card values stay hidden but the game’s fairness is provable. Even beyond that, PSS could support collaborative AI training, where companies share data to build better models while keeping their datasets private. The potential is massive.

How does PSS address security concerns, especially when dealing with encrypted data across multiple parties?

Security is baked into the core of PSS through multiparty computation principles. By design, no single party ever sees the raw data—everything stays encrypted, and confidentiality holds as long as a certain threshold of participants doesn’t collude. On top of that, the protocols behind PSS have undergone years of peer-reviewed research to iron out vulnerabilities. Regular external audits are planned to keep the system robust as it grows, ensuring that even as new threats emerge, the framework stays secure.

With quantum computing posing a potential threat to blockchain encryption, how is PSS preparing for that future?

That’s a critical concern, and PSS is built with forward-thinking in mind. Some parts of the system, like the secret-sharing mechanisms in MPC, are already information-theoretically secure, meaning they’re immune to quantum attacks by nature. For areas where quantum risks do exist, like certain proof systems, the team is exploring post-quantum approaches, such as hash-based zero-knowledge proofs. The system is also designed to be crypto-agile, so components can be swapped out for quantum-resistant alternatives as they mature. It’s about staying ahead of the curve.

What’s your forecast for the future of privacy solutions like PSS in the blockchain ecosystem?

I’m incredibly optimistic, Daisy. Privacy is becoming non-negotiable as more industries adopt blockchain, whether for finance, healthcare, or AI. Solutions like PSS are paving the way for a world where sensitive data can be used collaboratively without compromising trust or security. I believe we’ll see privacy tech become a standard feature of blockchain platforms within the next five to ten years, with PSS-like systems leading the charge. The challenge will be balancing usability with robust security, but if this partnership is any indication, we’re on the right track.

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