Introduction to Midnight Cardano Project
Web 2.0 introduced a new era of communication, which enabled global communities to better interact and share information with each other. However, consequently, the risk of data loss, manipulation, and misuse has increased drastically due to weak regulatory systems. With the introduction of Web 3.0, many users expected direct solutions for these privacy issues. It was clear after some time that developers and regulators had not answered these questions. 1
Organizations are under immense pressure to safeguard sensitive information from the general public and government institutions. With the adoption of digitalization, the risk of data breaches and cyberattacks has increased compared to the last decade. 2 Blockchain technology, specifically Cardano, which is a decentralized proof-of-stake blockchain, has implemented a stringent solution for data security issues.
The introduction of the ‘Midnight Network’, a blockchain focused on digital security, addresses the issues and concerns regarding the confidentiality of user information.
The commencement of the Midnight Cardano Project has created an optimistic ecosystem among the crypto community. The development showcases the dedication of IOG (Input Output Global) towards preserving the anonymity of user and transaction data within the blockchain. Midnight enables users to choose what information is shared on the network. The developers have chosen 100 ‘Midnight Pioneers’ to access the alpha version of the new network to design data protection applications. These pioneers have the ability to develop Midnight’s capabilities further. 3 Sensitive data can be shared without fear of data breaches using the Devnet. Proponents of the project affirm Midnight’s ability to start a new chapter of blockchain technology.
The Concept and Vision of Midnight
The CEO of IOG and founder of Cardano, Charles Hopkins, assigned Eran Barak (CEO of Midnight) to construct the business unit of the New Devnet, which was announced at Scot Fest 2022. Midnight has been in development for the past five years. This new sidechain of Cardano incorporates its Layer 1 blockchain as a settlement layer to store sensitive data securely. The project’s primary objective is to identify mechanisms for addressing the privacy issues inherent in blockchain platforms and provide comprehensive solutions. 4">https://medium.com)) Midnight claims it ensures that the identities of protocol users and the confidentiality of transactions are safely stored on the network. This provides an opportunity for individuals, developers, and organizations to fearlessly connect and share information with each other. 5
More importantly, the Cardano community was excited after Midnight announced that it had leveraged Zero-Knowledge Proofs. The concept of ZKP was first introduced by Shafi Goldwasser, Silvio Micali, and Charles Rackoff in 1985. ZKP is a technology used to verify information. 6 These cryptographic protocols are used by one party to verify the truthfulness of a statement to another party without revealing any supplementary information.
Fundamentally, it allows the verification of information without communicating any elemental data. With the incorporation of ZKP, Midnight will function as a data-protection-based blockchain safeguarding sensitive personal and commercial data. Developers are able to use a variety of programming languages to build applications using Midnight. Users are able to control the privacy of information from regulators. Midnight developers have been given fundamental freedom of association, which most crypto communities have hoped for, for a long time. Different networks can collaborate on open standards with agreement among the group. Midnight users can start creating data protection-first DApps using languages such as typescript. 7
Technical Aspects of Midnight
Similar to most blockchain platforms, Cardano is not without scalability and functionality limitations. Thus, Midnight was also developed to address core functionality difficulties apart from privacy issues. Developers have used Midnight to create and deploy complex smart contracts that are difficult to build using the Cardano mainchain.
The sidechain makes the building of smart contracts more accessible for the designers. As mentioned before, developers are able to use any language they prefer to build smart contracts.
One of the main objectives of Midnight Pioneers was to simplify the development process of smart contracts on the Cardano network. It has achieved its objective by giving the team the freedom to incorporate any programming language. 8">https://academy.geniusyield.co))
Decentralized applications, more commonly known as DApps, are open-source software programs that run on a peer-to-peer blockchain network instead of a single computer. It is not within the control of a single entity. DApps are built to function on an open-source, decentralized blockchain network to preserve independence. These applications are utilized to decentralize a wide range of functions on the network 9 Developing a stack of decentralized applications comfortably has generated a wave of attention towards Midnight.
A number of new users have shown interest in using Midnight to develop applications. Commonly, smart contracts are utilized to create DApps, which are self-executing digital agreements. Developers can use Midnight and smart contracts to develop and deploy DApps that are efficient and cost-effective 8">https://academy.geniusyield.co))
Midnight’s Role in the Cardano Ecosystem
Midnight has given 100 developers the authority to use it on the devnet. Simply, Cardano is the main blockchain, and Midnight is the sidechain. It will have independent PoW and PoS from Cardano. It is still not clear as to whether Midnight will function as a competitor or an ally to Cardano.
- What is the economic connection?
- What is the infrastructural connection?
- What is the functionality connection?
- What is the view of the management?
These questions will determine Mindnight’s position as an ally or competitor 10">https://cexplorer.io))The sidechain will provide privacy and security for the Cardano user community. In some scenarios, Midnight will be able to function on its own.
It is not logical to have one-half of an organization’s data on the Cardano network, which is public, and the other half on Midnight. Most organizations and financial institutions will require perfect privacy. In today’s age, most users have adapted to store and implement their financial transactions securely. Hence, customers would see Midnight as a better solution for their requirements than the main chain. 11">https://cexplorer.io))
Potential Applications and Use Cases
The interoperability feature is one of the significant benefits of Midnight. Developers are able to utilize the Midnight network to build DApps that are interoperable with blockchain ecosystems. Interoperability is designed with the use of sidechain bridges. This tool is used by developers to transfer data and assets between blockchains. Furthermore, with the use of sidechain bridges, developers can construct decentralized applications that harness the strengths of several blockchain platforms. Hence, users have a greater variety of choices. 12
Financial institutions and banks use the measure ‘credit ratings’ to determine if an entity or a person is worthy of receiving credit. Creditworthiness is an important feature of any entity. These financial institutions will require the disclosure of various personal and sensitive information to provide credit facilities. This process creates opportunities for theft and misuse of information. With the use of ZKP technology, Midnight can verify a statement or a claim without revealing any supplementary information. ZKP is utilized in decentralized credit scoring. This will enable the classification of a credit score as a digital identity. The owner of the identity is not required to disclose any other information that will enable other users to identify the person who is linked to the credit score. 13 ">https://adapulse.io))
Challenges and Future Prospects
The cryptocurrency token of the Midnight blockchain is named ‘DUST’. ‘ADA’, the native token of Cardano, will coexist with Dust.
“This will be a completely new way of writing and running private smart contracts and private computation. So you can have a private DEX or go mine an anonymous data set or these types of things” (Charles Hoskinson)
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As explained by Hoskinson, DUST tokens will play a major role in the implementation process of Midnight and are expected to be a payment option for buying gas. 15The lack of communication from Midnight developers has created uncertainties among the crypto community. Critics have raised concerns about the Token and the partners involved with IOG to confirm the legality of the Midnight Project. 16
Whether as a complement or a competitor for Cardano, Midnight has sparked new interest in crypto communities about developing decentralized applications and using blockchain platforms to secure the privacy of transaction data. 15
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