Findora’s mission is to build a decentralized financial network for issuing confidential assets and smart contracts. Findora has created a system that achieves privacy-preserving transparency. Its flexible technology can also be used by institutions to replace their current infrastructure or deploy in the cloud – all interoperable with the public Findora network.
Transparent Blockchains Don’t Work for Finance
A blockchain is an append-only ledger of transactions that allows anyone to verify that its history is correct. Typically this means that all transactions and their contents need to be public knowledge. To an individual user, this means sending a transaction over a blockchain is similar to publishing their financial activity on Twitter. So, when a user participates in open finance on a transparent public blockchain, any observer can view the user’s financial history.
For financial services this creates a dilemma: although blockchain has the potential to greatly increase efficiency and reduce fraud, it creates new problems due to the lack of privacy. For example, exchanges need privacy to prevent front-running and keep user data confidential.
The Need for Privacy-Preserving Transparency
While some blockchain solutions offer private transactions, they do so in absolute terms. The entire transaction is either hidden from observers or revealed to the public through a view key. In Findora, users can prove fine-grained statements about their accounts without revealing any sensitive information.
Findora also supports confidential asset policies and smart contracts, enabling automatic enforcement of rules and programs. For example, an asset tracing policy can be attached to an asset. This would require transactions of that asset to make selective information visible to an auditor, even though the transaction contents are confidential to everyone else. If a user doesn’t feel comfortable with the attached policy, they can simply use a different service.
By using Findora, financial services can enjoy the transparency of blockchain while remaining compliant and confidential to the public, and users remain in control of their privacy.
Imagine there’s a door with a keypad lock next to it, and Bob is trying to persuade Alice that he has the correct password for the keypad lock. By unlocking the door with the keypad lock, Bob has given Alice a compelling argument of him knowing the password, without directly revealing what it is. In other words, Bob has convinced Alice that his statement about knowing the password is true, without revealing any additional knowledge about the statement.
To achieve privacy-preserving transparency, Findora uses these types of zero-knowledge arguments, or zero-knowledge proofs (ZKPs), to prove many complex statements without revealing anything about their contents.
Findora users can verify that the state of the ledger is valid without knowing the contents of transactions. Instead, the ledger is filled with ZKPs, and sensitive user data remains confidential to the public. This opens the door for all types of services to run on Findora. Decentralized exchanges, marketplace lending, investment funds, liquidity pools, payments, banks, and far more are all possible to be built as confidential, yet publicly auditable applications on Findora.