Privacy infrastructure firm NuCypher has closed a $4.3 million token pre-sale round backed by thirteen investment entities spanning crypto hedge funds and traditional venture capital. Polychain Capita
Privacy infrastructure firm NuCypher has closed a $4.3 million token pre-sale round backed by thirteen investment entities spanning crypto hedge funds and traditional venture capital. Polychain Capital spearheaded the funding, with backing from Michael Novogratz's Galaxy Digital Assets Fund, FBG Capital, Compound VC, Satoshi Fund, and Blockchain Korea Partners among the participants.
The Y Combinator-backed startup specializes in cryptographic layers for distributed infrastructure. Its core offering centers on proxy re-encryption—a public-key encryption method that lets an intermediary transform ciphertexts from one public key to another through re-encryption keys, without gaining access to the underlying plaintext. This enables users to transfer encrypted information to other parties while keeping private keys secret and without needing to decrypt data beforehand.
The company's explanation captures the fundamental problem: "Distributed systems, including blockchain, are often characterized by an N-to-N data sharing pattern in which many different nodes produce, operate on, or relay data. This poses a challenge for traditional public-key encryption, which works best for 1-to-1 communication. Proxy re-encryption is far more scalable for these N-to-N data sharing scenarios, allowing for both access delegation and revocation."
The platform isn't theoretical—it's already integrated into shipping applications. MediBloc has deployed it within its patient-controlled health records platform to encrypt medical information and permit sharing with authorized recipients including doctors and hospitals. Datum employs the technology for a marketplace where individuals can auction personal data to advertisers. Wolk leverages it to develop an end-to-end encrypted database running atop Swarm.
NuCypher frames itself as core infrastructure for the emerging decentralized application landscape. "NuCypher is part of that core infrastructure, enabling developers to store, share and manage private data on public blockchains. We've been very diligent in building out the NuCypher network prior to our token sale so that it is available and usable from day one. A year from now, NuCypher will power many decentralized applications, from data exchanges and marketplaces to end-to-end encrypted databases to healthcare apps."
The company will conduct its public ICO in early 2018. The NuCypher token serves as an economic mechanism to incentivize honest network participation. Operators of re-encryption nodes, referred to as miners, must stake NuCypher tokens as collateral. Nodes that malfunction or disconnect face challenges and stake confiscation. Properly functioning nodes earn transaction fees and protocol-issued token rewards, with payouts proportional to staked amounts.
