Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Can NuCypher (NU) make money from Encryption?

The builders of NuCypher (NU) bet their blockchain can make money by protecting and preserving privacy and secrecy.

NuCypher provides cryptographic infrastructure for secrets management, dynamics access control, and secure computation. For example, NuCypher claims you can use its technology to store encrypted secrets in any storage backend.

In addition, NuCypher claims its infrastructure can grant and revoke access to secrets based on time or behavior. For instance, NuCypher could restrict access to a company’s data to its employees.

How NuCypher Protects Privacy and Security

Moreover, NuCypher claims its dynamic access control specifies when and how users can share data. For example, they could offer access to data at specific times, or block access to data to specific visitors. Foreigners, or people without security clearance, for instance.

They claim NuCypher can revoke access to some individuals. A company could revoke access to former employees, or people who behave suspiciously. In addition, NuCypher claims it can scale data sharing to large numbers of recipients, even those with lower-powered devices.

To secure data, NuCypher (NU) uses several technologies, including Umbral Proxy Re-encryption (PRE). Proxy re-encryption is a public-key encryption (PKE) that re-encrypts data from one public key to another. To explain, Umbral PRE re-encrypts data every time somebody accesses it.

Umbral is NuChypher’s threshold PRE scheme. NuCypher claims Umbral allows data owners to give decryption rights to others. For example, a bank could give decyrption rights to account information to account holders.

NuCypher Signatures

Another NuCypher solution, NuBLS functions as a signature library that uses threshold protocols that resemble threshold signatures (TSS) and a Proxy Re-Signature (PRS) algorithm to restrict access to data. NuBLS uses a Boneh–Lynn–Shacham cryptographic signature scheme to create unique cryptographic signatures only one person can use.

In essence, if a person does not provide the correct cryptographic signature. NuCypher will block access. Hence, a hacker will need to forge an exact copy of the cryptographic signature to gain access to data.

One advantage to NuBLS is that a Threshold signature (TSS) can provide unique cryptographic signatures to a group of people. It could give each user a unique signature that a DApp can reject if the user leaves the project.

Another advantage is that threshold proxy resignature (PRS) allows users to delegate signing rights to others. For example, a client could delegate PRS signing rights to encrypted legal documents to her attorney, or her children.

Homomorphic Encryption

I think the most valuable of NuCypher’s technologies could be GPU (graphics processor unit) accelerated fully homomorphic encryption or NuFHE.

Homomorphic Encryption allows secure computation of encrypted data. For example, a bank could process account information while maintaining encryption. Similarly, a retailer could process payment transactions while maintaining encryption.

I suspect the financial industry will be the largest market for Homomorphic Encryption. Banks, brokers, accountants, payment processors, lenders, investment bankers, and others need to process enormous amounts of financial data and keep it secure.

NuCypher claims NuFHE is the fastest fully available Homomorphic Encryption library. Thus, NuCypher could keep financial data transmission fast and secure.

To enable these solutions, NuCypher is building a decentralized cryptographic network. For example, the network could connect an attorney to her clients, or store documents for a law firm.

The NuCypher Network will use miners and staking to make its cryptographic solutions widely available. For example, hundreds of nodes could support NuBLS signatures for thousands of people.

What Value Does NuCypher Have?

The NuCypher Token (NU) is an ERC-20 token that serves that serves as the governance token for NuCypher Network. Presumably, people could purchase cryptographic services with NU.

Mr. Market thinks NU has some value. For example, CoinMarketCap listed NuCypher as the fourth most trending cryptocurrency on 16 October 2021. In addition, CoinMarketCap estimates NuCypher as the 1055th most valuable cryptocurrency on 18 October 2021.

NuCypher had a Coin Price of $1.30, a Market Capitalization of $895.198 million, a Fully Diluted Market Cap of $5.065 billion, and a 24-Hour Market Volume of $783.963 million on 18 October 2021, CoinMarketCap estimates. They base those estimates on a Circulating Supply of 687.5 million NU, a Maximum Supply of 3.886 billion NU, and a Total Supply of 1.311 billion NU.

Conversely, CoinBase gave NuCypher a Coin Price of $1.31, a Market Cap of $890 million, and a 24-Hour Market Volume of $7838 million on 18 October 2021. They base those numbers of a Circulating Supply of 697.5 million NU. The typical hold time for NU tokens is eight days, CoinBase estimates.

I think there is a strong demand for the cryptographic solutions, NuCypher claims to offer. In particular, enormous leaks of data from organizations such as banks and law firms generate news stories and demands for stronger cryptographic solutions. To explain, law firms will be under pressure to encrypt data to keep it from leaking.

However, there is no evidence that NuCypher’s solutions exist or work. Hence, NuCypher is a purely theoretical solution. Yet there could be an enormous demand for that solution.

If you want a cryptocurrency that offers a solution to a real-world problem, NuCypher is worth examining. I think NuCypher could make money if its cryptographic solutions work. Encryption will be big business in the future and NuCypher could be a leader in that business.