NuCypher is a decentralized key management system (KMS), encryption, and access\ncontrol service for distributed apps and protocols that aims to provide a security\ninfrastructure for decentralized applications. Having a reliable and efficient KMS is\nessential to company security because it prevents malicious actors from accessing\nsensitive files and data. Currently, enterprises use centralized KMS systems as\nfeatures in products such as Amazon Cloud HSM and Microsoft Cloud HSM, but\ndecentralized apps do not work as well with centralized systems and do not have a\ndecentralized alternative. NuCypher is exciting because it has a chance to become a\nleader in decentralized KMS and the decentralized security infrastructure by using\nre-encryption techniques to ensure that data remains safe. Although NuCypher has\npotential to succeed in decentralized systems, it will have a hard time breaking into\ncurrent enterprise markets because of the benefits of centralized multi-cloud systems, which means that the success of NuCypher will be solely based on the growth of\ndecentralized apps.
\nNuCypher provides a reliable security infrastructure because of its use of proxy\nre-encryption and split-key encryption. Proxy re-encryption allows any node on a\nnetwork to send secure data to any other node, whether it is known or unknown. In\nproxy re-encryption, the proxy re-encrypts data using the sender’s private key and the\nrecipient’s public key without seeing the private key, ensuring that data can be sent\nsecurely. Also, NuCypher uses a decentralized network instead of one centralized proxy\nthat has to be online at all times, and uses split-key encryption to achieve this. In\nsplit-key encryption, the re-encryption key is split among many nodes in NuCypher,\nwhich makes collusion between nodes difficult. NuCypher’s use of these encryption\ntechniques provide safety and security for decentralized apps and protocols, making\nsure that malicious agents cannot damage the company’s network.\n
\nIn order to earn revenue, NuCypher is developing the NuCypher Token, which acts as a\nmethod of payment for re-encryption services. If users choose to stake their tokens\n(i.e. provide re-encryption services for the network), they receive compensation\nlevels determined by an incentive structure that discourages malicious behavior.\nCompensation levels rise with the amount of work performed, time online, and tokens\nstaked, which ensures there will be sufficient supply of re-encryption services and\nencourages good behavior. NuCypher is also trying to mitigate the potential for\nattacks by developing ways of distributing NuCypher Tokens to prevent one entity from\ncontrolling a large part of the network and to increase the supply of staked tokens.\nNuCypher developed the WorkLock contract, which discourages speculation and encourages\nstaking by forcing users to escrow ETH into a contract. The contract sends user the\nescrowed ETH if they stake the token, and burns the ETH if not. This process\nencourages users to stake their tokens and provide re-encryption services for the\nnetwork.
\nThe primary barrier to NuCypher’s success is that enterprises in the status quo may\nnot use NuCypher because of the advantage of multi-cloud systems, which 82% of\nenterprises use. Currently, enterprises use KMS’s as features in different cloud\nproviders, and they choose to use many different cloud providers to hedge against the\nthreat of service provider failure and security issues. To connect multi cloud systems,\nproducts such as Hashicorp Vault create low-trust networks for multiple clouds as a\ncentralized system. Assuming that NuCypher would be used alongside multiple clouds,\nproducts such as Vault will incorporate the network as a part of a centralized\narchitecture, which will eliminate some benefits of decentralized architecture. Also,\nbenefits such as N-to-N communication will be lost unless other cloud providers\nchoose to join partnerships. Problems with the management of all the different KMS\nmay discourage enterprises from using NuCypher. Because it will be difficult to\nincorporate and justify the use of NuCypher in enterprises early on, NuCypher will\nstruggle to attract enterprises on centralized networks. So, the growth of NuCypher\nwill depend on the growth of high value decentralized applications, especially in\nNuCypher’s early stages. This can potentially be a massive barrier to NuCypher’s\nshort term success if impactful decentralized applications don’t pop up.
","frontmatter":{"title":"Why NuCypher will Grow with the Decentralized World","date":"August 12, 2019","description":"What is NuCypher? NuCypher is a decentralized key management system (KMS), encryption, and access control service for distributed apps and..."}}},"pageContext":{"isCreatedByStatefulCreatePages":false,"slug":"/nucypher-analysis/","previous":null,"next":{"fields":{"slug":"/videocoin-analysis/"},"frontmatter":{"title":"Why VideoCoin is Doomed to Fail"}}}}}