Lack of Confidentiality in Blockchains
A Blockchain is a kind of distributed ledger which indelibly records transactions in an ever-growing list of blocks. The basis of our trust in the blockchain is the fact that the execution of every transaction can be verified by any user of the blockchain. Existing blockchains, such as BTC and ETH, live up to this promise in an intuitive way: they make everything public, including the transactions and the internal states of smart contracts. This brings us to the problem: confidential data cannot be processed by these blockchains.
Phala Network tackles this challenging problem. It seeks to provide strong guarantees of confidentiality without sacrificing cross-contract interoperability, which means the confidential contracts in Phala Network can interact with other confidential contracts freely. Further, as a Polkadot parachain, Phala Network enables cross-chain interoperability of smart contracts to confidentially operate assets on another blockchain.