

What is Homomorphic Encryption, and Why Should I Care? - skorks
http://blogs.teamb.com/craigstuntz/2010/03/18/38566/

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ig1
There might be some interesting uses for this in financial markets as well.
One of the major problems in financial markets is that if you've got a large
position you need to buy/sell you can't just put an order out in the market
because you'll move the market price.

One of the more popular ways of solving this at the moment is through the use
of "dark pools", third parties who will match up counterparties anonymously
who want to do large trades in opposite directions. However this isn't ideal
because going to a third party introduces latency and complexity with credit
checking, etc.

If you could have some way of allowing firms to place orders with each other
directly without exposing the details of the orders, it would have a major
impact.

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secretasiandan
You might work at the institutional level where they want to do this
frequently, but I don't think most players would trade directly with each
other. One of the purposes of exchanges is to reduce counterparty risk. So
only those firms that have the resources to fully vet each other would do
this. Not all firms will do this because then you have to vet everyone you
trade with which is time consuming.

The many reasons why institutions don't often trade directly with each other,
including the anonymity, are covered in the book "Trading and Exchanges:
Market Microstructure for Practitioners"

~~~
ig1
Sure but in most markets I'm guessing the majority of flow is between
institutions who already have credit lines with each other (or alternatively
use clearing houses like CLS or the DTCC).

There are already equity dark pools which operate on the basis that everyone
has credit lines with everyone else rather than taking on the counterparty
risk/margin management themselves.

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Groxx
Very cool, I'm definitely "staying tuned" on this, as I don't believe it would
require any change to the actual computational software. Immediate, effective
encryption for cloud computing, regardless of the platform? Sign me up.

The article he's basing the work on _is_ rather simple, though I haven't given
it a hard deconstruction. An encryption / decryption algorithm research
article that also includes derivation and proofs, in 25 pages? That's
downright _easy_ compared to many I've seen.

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johnwatson11218
If this can be made to work the way these articles are suggesting I think it
will be revolutionary. I think about some business that has my personal
information on file for the purpose of maintaining an account. It could be the
phone company, credit card whatever. I would feel better if all that was
encrypted so that not even the programs that operate on that data would be
able to use it for ID theft.

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greenlblue
Like the author says it will be cool to upload encrypted data to the cloud for
computation without worrying about the data being compromised but it will be a
while before enough people learn the math to start working on practical
implementations.

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Groxx
Practical implementations of the algorithm, or are you thinking that this
would require a change in the cloud computing platform (which it shouldn't,
which is part of why it's cool)?

If it's the former, that's what the article is about. The blogger is going to
be building the algorithm described in the second paper.

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BigZaphod
This totally blows my mind. I'm sorry I have nothing terribly useful to add,
but the idea that you could do meaningful work on data without really ever
knowing the data is... well, it's weird. :)

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andrewcooke
would this help netflix? i'm thinking it might do marginally, but that with a
large enough dataset you only need equality to start identifying values (for
example, you can take the encrypted text in the "state" field that occurs most
often, and assume that is the most populous state, etc etc).

~~~
roundsquare
You may be right, I'm not sure. I wonder if it would be possible to take all
the data, put it into a text file (or equivalent) and encrypt the _whole_
thing.

The problem I see here is that while you are trying to develop the best
netflix prediction strategy, it is often necessary to look at and understand
the data itself.

~~~
andrewcooke
yes, that's the only way it could help (encrypting the whole thing), and then
not only do you have the problem of not being able to see the data, you also
have an efficiency issue (which, even in some future state where this is
improved enough to be usable, is still going to be a real drag).

i was thinking that somehow encrypting each piece of data individually would
help, but the kind of processing netflix requires (and the kind that make it
possible to extract data based on statistical properties) isn't doing
calculations with the values, but doing statistical processing of the tokens
(which is why only equality is needed, really). so encryption of individual
items doesn't change much.

