Privacy Is Normal: Everyday Applications of Commit-and-Reveal Threshold Encryption - Loring Harkness

Transcript

[Music] My name is Lauren Harkness. I'm one of the core contributors to Shutter Network. And Shutter does um encryption as a service. But we specialize in a type of encryption known as commit and reveal threshold encryption. But I'm not going to get into nitty-gritty cryptography with you today. Instead, we're gonna go on an excellent adventure.

No way. Yes [Music] way. The year is 1268. And the world is a crazy place. Imagine this. There's war in the Holy Land. Rome is overrun by thieves. The Pope has just passed away. And in the picturesque hillside village of Vitterbo, Italy, north of Rome, they actually had to leave Rome because there were too many thieves. There were 20 cardinals who gathered to elect a new pope. Little did they know that it would take 2 years and 9 months, the longest conclave in history.

And it took that long because there were bitter political and religious rivalries, but also some of the cardinals were engaged in some very uncchristian-like behavior. There were people forging ballots. There were bribes. There were backroom deals. And it took such a long time that the people of Vitterbo Italy grew desperate. They resorted to extreme measures. They locked the cardinals inside the papal palace. That's where we get the name conclave. Conclave with key. They also restricted the rations to mere bread and water. And at one point they removed the

roof overhead, exposing the cardinals to the elements until they had reached a decision. Fortunately, they elected this guy, Pope Gregory I 10th. He wasn't uh actually a priest at the time he was elected. Uh he was off fighting their crusades in the Holy Land, but he came to Rome and became the pope and he implemented a series of reforms designed to make the conclave more fair and credibly neutral. The first of which is private voting.

So, the cardinals would take a piece of paper, write down their name, and write down the name of the person they would like to elect Pope. They would fold it in half, and they would deposit it into one of these silver and gold earns. All of the ballots would be collected and then the earns would be unsealed. And then to do the official count, they had three scrutiners. You might say that these gentlemen were the first governance enjoyers for those of you who are on crypto Twitter. Um but they each did an independent count of the ballots and published their results separately thus

giving more um integrity to the count. Now let's go back to the future. The year is 2025 and the world is a crazy place. There's war in the Holy Land. Rome is overrun by thieves. And we're still using the same voting process to elect new popes. That's right. This manual process of commit and reveal threshold encryption has lasted for 750 years because it makes the papal conclaves

more fair and credibly neutral. And this is exactly what we do at Shudder. We elect popes. Uh no um we do commit and reveal threshold encryption. And it's actually really simple. All players encrypt information and commit to it. And then they all wait until a specified point in time or a specified event. And then a distributed network of nodes generates a decryption key and then all of the information is decrypted and the results are revealed.

And this is super cool because it promotes credible neutrality by eliminating information asymmetries when playing simultaneous move games. And this has all sorts of wonderful benefits. First of all, it prevents front running realtime censorship and manipulation. But it also eliminates uh privileged actors and it eliminates trusted third parties. But I don't want to talk about the theory here. I know that you have problems, lots of problems, and I'm here to solve them. So I'm going to talk about

everyday use cases of commit and reveal threshold encryption. Knowing my audience here today, I bet you have three problems in particular. You're trying to manage a treasury, win friends, and influence people, and most importantly, survive. So, let's go on another excellent adventure. No way. Yes way. Okay, so we're going to manage a treasury. I I know this is an outlandish scenario, but imagine that you just raised tens of millions of dollars in an

ICO and now you have to manage a Dow treasury. You are seeing green. You are flush with cash. You are feeling good. And then what happens? Everyone descends on you. You start receiving DMs from centralized exchanges who are willing to list your token for a mere arm and a leg. Market makers who are happy to structure liquidity for you. And most importantly, don't forget those third party outsource development firms.

Yes, everyone is looking at you like you're a giant piggy bank. And pretty soon, you're not seeing green, you're seeing red. So, what do you do? How do you make sure that you are not wasting the Dow's money? How do you make sure that the money is well spent? Well, every time you need to hire someone, you can issue a sealed bid RFP or request for proposals. And this is not something that we created. This is not a crypto innovation. This has been used by corporations and governments for decades.

In fact, the OECD working paper on public procurement shows that when you use a sealed bid RFP process to select a vendor, the company or government that runs the RFP saves 17% on average. And actually uh shutterd0x36 uh just recently ran an RFP uh for a small scope of work and we received four bids and all of them were excellent in term all of them were wonderful in terms of the

uh in terms of the proposals but the pricing ranged wildly. We had a low bid of about $3,000. The next one was $4,000 and then the next two were $22,000 and $25,000 each. So, the sealed bid RFPs uh actually worked amazingly well. And here's how you do it. The DAO creates a RFP or request for proposals and you publish it on the internet on Twitter for everyone to see and for everyone to respond

to anyone can submit a bid by typing it in. What happens next is the cool part. All of the bids are encrypted and they remain encrypted until the end of the submission period at which point all of the bids are decrypted at the same time and the uh DAO that is doing the RFP has the opportunity to look at them uh evaluate them and move forward with the selection process. So what you have is a situation where each vendor cannot see what the other vendor's bids are, right?

So there's no advantage to applying early or applying late because you're never going to benefit from information asymmetry, but also there's no privileged actor. The DAO cannot uh play favorites, cannot leak information about one proposal to their preferred vendor. Next up, we're going to talk about winning friends and influencing people. If you're on Crypto Twitter or Farcaster, you probably want to be this guy, a know-it-all or at least someone who has alpha before everyone else. And some people do this using a really cool

technique, dropping hashes. Uh for example, if you are a security researcher and you discover a vulnerability on a major platform, say Google, what you can do is you can write up a paper and use it to generate a hash and publish that hash on Twitter where it cannot be modified and then you can send your paper to Google and give them the opportunity to resolve the bug without anyone else knowing about it. and then publish the fact that they fixed it. At which point you can go back and publish your paper and using the same algorithm people can do the calculation backwards

and if they have the same hash that you published earlier then they know that you knew about the bug before Google or at least at a certain period of time. Another thing which people on crypto Twitter like to do is they like to see into the future or at least pretend like they're clairvoyant. Uh recently Arthur Hayes just dropped a bomb. Oh my goodness, Bitcoin $1 million is coming way sooner than we ever could have imagined. No, talk is cheap. Really, if you know something, if you're willing to make a prediction, don't tweet the prediction.

encrypt the prediction, drop the hash, and then let it be decrypted in the future. And encrypted predictions are a wonderful use case for commit and reveal threshold encryption. We have shutddter predict. And in this example, uh I am predicting that ETH will be at $20,000 by the end of 2025 and it should be revealed on January 1st, 2026. And so what I do is I take my prediction and I encrypt it and then I commit to it by tweeting about it and people can see uh the cipher text and a link to the prediction but they

cannot see the prediction itself. And then um on January 1st, 2026, uh the prediction will be automatically decrypted and I can point back to the tweet and the cipher text and say, "See guys, I told you it wasn't financial advice, but I knew all along." Okay, last but not least, survive. What if I told you that you and you and you were being targeted by an international criminal organization, one with hundreds uh sorry, millions of operatives in 66

countries worldwide. And this criminal network has already stolen $1.5 billion from average crypto users, people like you and me. You're probably thinking, "He's talking about Lazarus. He's talking about North Korean hackers." But I'm not. I'm talking about Ethereum. Yes. Wait a second. Some of you are getting angry, getting ready to throw tomatoes up on stage, and you're thinking, "Wait, he cannot possibly be saying that Ethereum is an international criminal organization hellbent on stealing my crypto." You're probably thinking, "He's

talking about our convoluted transaction supply chain or malicious me bots like Jared at subway.eth. But in fact, Ethereum, our beloved infinite garden, our horrible dark forest, is something that we cocreate together, right? It's mine. It's yours. It belongs to all of us. And so everyone who has ETH, everyone who runs a node, everyone who develops on Ethereum is responsible or at the very least

complicit in the plague of malicious MEV, which steals funds from unsuspecting crypto users when every time they do a DEX swap. and iigenfi. Man, shout out to those guys. Follow them on Twitter because they break down sandwich attacks and other types of malicious me in wonderfully painful detail. So you can geek out about me in all of its complexity.

But the fact of the matter is, as I mentioned earlier, $1.5 billion have been stolen from crypto users in the past four years. So we talk about protecting users from losing their seat phrase. That's great. We talk about protecting users from exploits and hacks. That's also great. But we as a community need to come together and demand that we solve the problem of malicious MEV once and for all without introducing additional centralization. And one way we can do it is with encrypted transactions in the

public meool. And it's actually very simple. The user submits a transaction like a DEX swap and they use an encrypting RPC and the shutter keeper network to encrypt the transaction and then it goes into the public mempool and at that point the malicious MEV bots are blind. They can see that there's a transaction in the public mempool but they can't see the contents of the transaction. And so as a result, they don't know how to place transactions uh before or before and after your transaction in order to manipulate the price and extract

value at which point the builder confirms the place of the transaction within the block and then the validator and the keepers collaborate to decrypt the transaction and it's added to the chain as normal. So this has been a brief overview of commit and reveal threshold encryption and many of its everyday use cases. If you are interested in adding commit andreveal threshold encryption to any onchain DAP or any off-chain application, head on over to shutddter.network. We have a wonderful

API and SDK so you can start utilizing Shutter in just a couple of hours. Thank you so much. [Music]