The Value and Challenges of Enigma

After public ledger store of value and decentralized public blockchains comes a need for private computations and applications that maintain privacy and control over the usage and access of data. Data is a commodity that the giant oligopolies of the modern economy gain their value from -- firms such as Facebook, Amazon, and Apple -- through advertising information and consumer analytics. With such large influence and control comes a lack of competition and innovation, and abuse of users’ data due to the weakness of centralized data storage -- even more relevant in light of the Facebook and Cambridge Analytica scandal. Platforms like Enigma allow a user to control their value and data in this new information economy, allowing them to create markets while maintaining security, identity, and agency.

The crux of Enigma's use case comes from its private smart contracts. These contracts allow for the use and access of encrypted data to perform calculations that do not require the contract to know the contents of or hold onto the data through the use of distributed hash tables. These data structures allow the private contract to remember references to data for computation without revealing to it the underlying data. This allows for computations to be done that can prevent the sharing of information. Take, for example, two people want to know which one of them is wealthier, without revealing how much money they have to each other. A private smart contract could perform a program to check each users’ wallet and determine who is wealthier, without accessing the underlying data. With people in control of their data and free to pick and choose opportunities to share and sell their data while being assured that their private association and their information will not be leaked in calculations or operations involving their information. This now creates markets for information, which in this world is increasingly not only a great commodity for many industries, but also for an individual’s economic situation.

The value created through quantifying data and allowing these markets to exist will drive demand for the token, thus raising the value of the platform and create new profitable markets for investors and innovators to interact with. Enigma has even launched a data marketplace where access to data can be bought and sold using the Enigma token. Take for example medical and pharmaceutical companies able to buy large amounts of private data for developing new medicines or innovations. The Healthcare Information and Management Systems Society (HIMSS) even notes that “Many scenarios exist where health data, an asset in its own right, becomes the main currency of exchange, or a ‘cryptocurrency.’” This can also allow businesses to more easily acquire large amounts of insightful data for their initiatives, like marketing agencies looking for consumer preferences. With people knowing their data is secure, they may be more inclined to provide quality information that many large and important industries can leverage for better products and outcomes. The Enigma team is helping nurture these markets particularly through its algorithmic trading platform, Catalyst. With built in access to multiple cryptocurrency exchanges and integration with dataset usage, the team is delivering a product with a base of users, demonstrating practical application and understanding of positive marketing of their target product.

Another benefit is Enigma’s position as a layer on top of public blockchains, as it is a token issued on top of Ethereum, one of the leading public blockchain protocols. As a major consensus layer for decentralized applications (Dapps), the presence of a feature such as Enigma could be the impetus to help drive further Dapp growth and mainstream adoption of cryptocurrencies and blockchain technology. Along with plans to introduce a native blockchain and consensus layer in the future through their “Defiant” update, detaching from Ethereum, and issuing a new token, Enigma is looking to further secure its independence and security.

The current attachment to public blockchains is also one of Enigma’s main challenges. Can these underlying blockchains scale and even allow additional layers to operate, and the markets and opportunities they create to exist? Will it be able to meet the demand and have the infrastructure that Enigma needs for their data marketplace and protocol to thrive?Without the infrastructure of the public blockchain Enigma will remain irrelevant with their potential unrealized. . In addition, , these public blockchain and protocol projects could implement features natively that would render Enigma obsolete and redundant. Ethereum is a large open source project that is already looking to implement upgrades such as a shift to Proof of Stake -- challenges such as implementing a protocol similar to Enigma may not be out of reach in such an explosive space. The developers need to maintain development and leadership in a turbulent market and field. Enigma has a lot of potential but remains to be seen if mainstream adoption will help to realize the value the data marketplaces could create which would propol the protocol usage and token value higher.