In recent years, there have been several remarkably intriguing advancements in cryptography. Apart from Satoshi’s blockchain, perhaps the first significant leap forward following blinding and zero-knowledge proofs is fully homomorphic encryption, a technological advancement that enables you to upload your data to a server in an encrypted state, allowing the server to perform computations on it and return the results without any knowledge of the actual data. In 2013, we witnessed the inception of succinct computational integrity and privacy (SCIP), a toolkit developed by Eli ben Sasson in Israel, facilitating cryptographic verification of executed computations and their corresponding outputs. On a more conventional note, we now have sponge functions, an innovation that significantly streamlines the previous chaos of hash functions, stream ciphers, and pseudorandom number generators into a singular, elegant structure. However, most recently, there has emerged yet another significant advancement in the cryptographic realm, one with potential applications that could be incredibly extensive in both the cryptocurrency domain and software in general: obfuscation.
The concept of obfuscation is not new, and cryptographers have been working to solve this challenge for years. The central issue surrounding obfuscation is whether it’s feasible to encrypt a program such that the output is another program performing the same operations while remaining entirely opaque, yielding no insight into its internal functioning. The clearest application of this concept is proprietary software – if you possess a program that integrates sophisticated algorithms and wish to allow users access to it on certain inputs without permitting reverse-engineering of the algorithm, the sole method to achieve this is through code obfuscation. Proprietary software is, for evident reasons, not favored within the tech community, leading to limited enthusiasm for the idea, compounded by the fact that every time a company attempts to implement an obfuscation scheme, it is usually swiftly compromised. Five years ago, researchers may have introduced what appeared to be a final blow: a mathematical proof, employing reasoning somewhat akin to that which demonstrates the halting problem’s impossibility, asserting that a general-purpose obfuscator transforming any program into a “black box” is unattainable.
Simultaneously, however, the cryptographic community began to pursue an alternative approach. Realizing that the ideal of perfect obfuscation as a “black box” will always remain unattainable, researchers set their sights on a more modest objective: indistinguishability obfuscation. The definition of an indistinguishability obfuscator is as follows: given two programs A and B that execute the same function, if an effective indistinguishability obfuscator O produces two new programs X=O(A) and Y=O(B), then there is no (computationally feasible) means of discerning which of X or Y originated from A and which from B. Theoretically, this represents the highest achievement anyone can accomplish; if there exists a superior obfuscator, P, then applying A and P(A) to indistinguishability obfuscator O would yield no means to differentiate O(A) from O(P(A)), indicating that the additional step of incorporating P would not conceal any information about the program’s internal mechanisms that O does not already obfuscate. Developing such an obfuscator has been the focus of numerous cryptographers over the past five years. In 2013, Amit Sahai of UCLA, alongside homomorphic encryption trailblazer Craig Gentry and various other scholars discovered the methodology to accomplish this.
Does the indistinguishability obfuscator effectively conceal sensitive information within the program? To explore this question, consider the following scenario. Let’s say your confidential password is bobalot_13048, with the SHA256 hash of the password beginning with 00b9bbe6345de82f. Now, create two programs. Program A simply outputs 00b9bbe6345de82f, while Program B actually holds bobalot_13048 internally. When executed, it computes SHA256(bobalot_13048) and returns the initial 16 hexadecimal digits of the result. According to the indistinguishability attribute, O(A) and O(B) should be indistinguishable. If it were possible to extract bobalot_13048 from B, then it would also be feasible to extract bobalot_13048 from A, implying a breach of SHA256 (or any hash function, for that matter). Based on standard assumptions, this is impossible, hence the obfuscator must also preclude uncovering bobalot_13048 from B. Thus, we can reasonably conclude that Sahai’s obfuscator does indeed achieve obfuscation.
What’s The Significance?
In many respects, code obfuscation represents one of the holy grails of cryptography. To comprehend why, consider how effortlessly nearly every other primitive can be constructed using it. Seeking public key encryption? Take any symmetric-key encryption method and create a decryptor with your secret key embedded. Obfuscate it and distribute it online – voila! You now possess a public key. Interested in a signature scheme? Public key encryption conveniently provides that as a corollary. Want fully homomorphic encryption? Develop a program that accepts two numbers as inputs, decrypts them, sums the results, and re-encrypts it, then obfuscate the program. Repeat for multiplication, send both programs to the server, and it will integrate your adder and multiplier into its code, executing your computation.
Moreover, beyond that, obfuscation is potent in another crucial manner, one with significant implications, particularly within the realm of cryptocurrencies and decentralized autonomous organizations: contracts executed publicly can now incorporate private data. Building on second-generation blockchains like Ethereum, it will become feasible to manage so-called “autonomous agents” (or, when the agents primarily act as a voting mechanism among human participants, “decentralized autonomous organizations”) whose code is entirely executed on the blockchain, possessing the ability to maintain a currency balance and execute transactions within the Ethereum ecosystem. For example, one could establish a contract for a charitable organization that holds a currency balance and stipulates that funds can be withdrawn or spent if 67% of its members concur on the amount and destination for the transfer.
Differing from Bitcoin’s somewhat analogous multisig functionality, the regulations can be exceedingly flexible, for instance permitting a maximum withdrawal of 1% per day with merely 33% consent, or transforming the organization into a for-profit entity with tradable shares and shareholders.automatically obtain dividends. Up to this point, it has been presumed that such agreements are inherently restricted – they can only exert influence within the Ethereum ecosystem, and possibly within other frameworks designed to specifically interact with the Ethereum network. With obfuscation, though, fresh opportunities arise.
Take into account the most basic scenario: an obfuscated Ethereum contract could store a private key for an address on the Bitcoin network and utilize that private key to authenticate Bitcoin transactions as long as the contract’s stipulations are fulfilled. Consequently, as long as the Ethereum blockchain persists, one can effectively leverage Ethereum as a type of regulator for funds present within Bitcoin. From that point, things become even more intriguing. Imagine wanting a decentralized organization to manage a bank account. With an obfuscated contract, you could have the contract preserve the login credentials for a banking website and enable it to perform an entire HTTPS interaction with the bank, logging in and subsequently approving specific transfers. One would need a user to serve as a mediator, relaying packets between the bank and the contract, but this would involve a completely trustless function, akin to an internet service provider, which anyone could easily undertake and even earn compensation for the duty. Autonomous agents can also possess social media accounts, virtual private server accounts for conducting more intensive computations than what a blockchain can manage, and almost anything else that a typical individual or proprietary server could.
Looking Ahead
Thus, we can observe that over the forthcoming years, decentralized autonomous organizations are likely to become considerably more influential than they are at present. But what ramifications might this incur? In the developed world, the expectation is a substantial decrease in the costs associated with establishing a new business, organization, or partnership, alongside a means of crafting organizations that are notably more resistant to corruption. Often, organizations are constrained by regulations that are essentially mere gentlemen’s agreements in practice, and when some members of the organization gain a certain level of power, they are able to distort any interpretation to their advantage.
Until now, the only partial remedy has been to encode specific regulations into contracts and laws – a solution that carries its own merits, yet also has disadvantages, as laws are extensive and exceedingly complex to navigate without assistance from a (often quite costly) professional. With DAOs, another option has emerged: creating an organization whose operational guidelines are completely unambiguous, embedded in mathematical code. Of course, several terms have definitions that are simply too ambiguous to be mathematically articulated; in such situations, we will still require some arbitrators, but their role will be minimized to a limited commodity-like function outlined in the contract, rather than possessing potentially comprehensive control over everything.
In the developing world, however, the impact will be much more profound. The developed world benefits from a legal system that, at times, is semi-corrupt, but primarily suffers from biases toward lawyers and is often antiquated, bureaucratic, and inefficient. In contrast, the developing world faces legal systems that are, at best, fully corrupt, and at worst, actively scheming to exploit their citizens. There, almost all enterprises operate on gentlemen’s agreements, and opportunities for betrayal are prevalent at every turn. The mathematically defined operational guidelines that DAOs can implement are not merely an alternative; they might represent the first legal system that genuinely aims to assist the populace. Arbitrators can enhance their reputations online, similar to how organizations can. Ultimately, perhaps blockchain-based voting, such as that being innovated by BitCongress, may even lay the groundwork for novel experimental governments. If Africa can transition directly from oral communication to mobile technology, why not leap from tribal legal frameworks interfered with by local authorities straight to DAOs?
Many will understandably express concern that allowing unregulated entities to manage funds is perilous, as the potential for illegal activity with such powers is significant. In response, two straightforward counterarguments can be presented. First, while these decentralized autonomous organizations will be impossible to dismantle, they will certainly be quite easy to oversee and monitor at every juncture. It will be feasible to identify when one of these entities conducts a transaction, it will be straightforward to ascertain its balance and connections, and it will be possible to gather significant insights about its organizational framework if voting occurs on the blockchain. Much like Bitcoin, DAOs are expected to be too transparent to be functional for much of the underground; as FINCEN director Jennifer Shasky Calvery recently stated, “cash is probably still the preferred medium for laundering money”. Second, DAOs ultimately cannot perform any actions that ordinary organizations cannot; they are merely a set of voting principles for a collective of humans or other human-operated entities to manage the ownership of digital resources. Even if a DAO cannot be disbanded, its members can certainly be dealt with as if they were operating a regular organization offline.
Whatever the prevalent applications of this emerging technology may be, one fact is becoming increasingly certain: cryptography and distributed consensus are poised to make the world considerably more fascinating.
