The Next Chapter for Stablecoins: Built-In Confidentiality using FHE

Over the past 15 years, the cryptocurrency landscape has seen significant developments, with Bitcoin emerging as a store of value and stablecoins revolutionizing monetary systems. Stablecoins, like USDT, provide financial stability in inflation-prone countries and serve as essential components in both centralized and decentralized financial platforms. Despite their growing market cap of $225 billion, stablecoins represent a mere fraction of the global money supply, facing regulatory hurdles that limit their expansion. The primary challenges include regulation, scaling, and confidentiality concerns, with the latter being a critical issue affecting businesses and personal financial activities due to the lack of transaction privacy. Efforts to address these issues include the development of confidential stablecoins using Fully Homomorphic Encryption (FHE), which promises to enhance privacy by encrypting identities and transaction amounts while maintaining composability in smart contracts. This innovation aims to upgrade the global financial system by combining privacy with the programmability and ownership benefits offered by blockchain technology, paving the way for a more secure and private financial ecosystem.