In an exciting release, Aztec Protocol’s development team announces the successful implementation of “smart contracts that employ zero knowledge proofs” allowing privacy coins like Monero and Zcash to run as Ethereum Smart Contracts.
Proclaimed the “holy grail of currencies” in a tweet by Alex Van de Sande, the protocol disguises the value of transactions by employing a stable, decentralized token.
Aztec dev team describes their achievement as:
“The AZTEC protocol can enable confidential transactions for any generic digital asset on Ethereum, including existing assets. For our proof of concept implementation of the AZTEC protocol, we attached an AZTEC token to MakerDAO’s DAI token. This smart contract can be used to convert DAI from its public ERC-20 form into a confidential AZTEC note form.”
The project is open source, with official notes posted on github.
Zero Knowledge proofs allow one party to prove they know a given value without revealing the value or the process by which it was discovered or encrypted. These proof types are often used to protect information of monetary value while trying to prove the a given party actually holds a solution.
Aztec Protocol uses homomorphic encryption and range proofs to secure transactions in the form of notes. The notes encrypt a number that represent the transaction value before sending it to an ethereum address.
The project is currently live, having successfully transfered 40 DAI to the smart contract address.
The next step is seeing how the technology scales while maintaining small transaction costs as promised by the dev team. The value of the completed transaction is surely small based on the $40 stablecoin value.
Traditional financial services can now be performed on the blockchain in complete privacy using any crypto asset. Providing the security of bank transactions in the form of decentralized smart contracts may hold the key to innovation in the financial industry.