What is NuCypher?
NuCypher is a data encryption and security layer that is not reliant on a central service provider for Ethereum (and possibly other networks) and decentralized applications (dApps).
The protocol, dubbed a decentralized key management system (KMS) by the researchers, is designed to allow developers to store, distribute, and manage private data on public blockchains. In return for a charge, developers obtain this encryption service through a network of NuCypher nodes (paid for in ETH). Participants may only create a node by staking NyCypher’s NU token as collateral on the network.
How Does NuCypher Work?
NuCypher secures the private data of public blockchains and offers cryptographic services to numerous protocols.
Through Umbral, the platform’s encryption method, and Ursula, a network of running nodes, the platform provides a secrets management system and dynamic access control services.
NuCypher’s encryption system, Umbral, enables users to keep data private while yet sharing it securely.
Owners of data offer decryption rights to data receivers via a procedure using “proxy” nodes called Ursulas, which re-encrypt data for the recipients. (It’s worth noting that proxies don’t have access to the underlying data or unlocking keys; instead, they impose additional requirements that must be satisfied in order for the data to be unlocked.)
To fulfill their network obligations and earn freshly generated NU tokens, Ursulas must invest NU. If nodes conduct faulty re-encryption or experience severe downtime, they may lose some or all of their staked NU.
Ursula nodes are compensated in ETH transaction fees in addition to NU incentives for delivering NuCypher’s security and privacy services to applications hosted on the Ethereum network.
What is the History of NuCypher?
NuCypher was created by MacLane Wilkison and Michael Egorov in 2015 to offer data security and encryption that enables users to safely migrate information and computation to the cloud.
At a high level, cloud providers would only receive encrypted data, while users would maintain control over the information and the accompanying encryption keys. Proxy Re-Encryption (PRE) is a procedure that seeks to prevent data leakage if the cloud service is hacked.
The team first focused on areas that deal with huge volumes of sensitive data, such as banking and healthcare, and at one time was operating lab environments for many significant banks. NuCypher was accepted into Y Combinator’s Summer 2016 class as a result of this progress. The firm subsequently raised $750,000 in a seed round led by the accelerator.