FHE State OS: Bringing Public Infrastructure Onchain While Protecting Citizens' Privacy
The concept of “network state” has been gaining traction among technologists and policy enthusiasts worldwide. Proponents such as Balaji Srinivasan envision entirely digital-first communities, while others like Vitalik Buterin explore physical enclaves—often in special economic zones—to foster innovation in areas like longevity research. Despite their differences, these visions share a core belief: blockchain technology can streamline governance and collective decision-making by reducing intermediaries, increasing transparency when necessary and keeping information private when needed.
A framework for Digital Communities
However, transparency in blockchain systems can be a double-edged sword. Many early crypto adopters face challenges in areas like currency, taxation, and public spending, mainly because traditional blockchains expose too much data. This hinders the adoption of blockchain-based infrastructures for critical government functions, where confidentiality is essential for personal records, tax filings, and state-level decision-making. Enter the idea of Zama's FHE State OS (Operating System): a blockchain-based, robust, and efficient IT infrastructure designed for entire states or communities that safeguard privacy by default using Fully Homomorphic Encryption. By integrating identity and monetary functions, it seeks to manage everything from tax collection to public spending with minimal reliance on third parties. Blockchains are especially suited for this because they remove the need for a centralized intermediary, thus lowering costs and potential points of failure.
Privacy by Default with Fully Homomorphic Encryption
Yet, achieving privacy on public ledgers requires advanced cryptographic tools. Zero-Knowledge (ZK) proofs offer one route, enabling users to prove something without revealing the underlying data. Another promising approach is Fully Homomorphic Encryption (FHE), which allows computations on encrypted data without the need to decrypt. FHE-based solutions, like the emerging “encrypted coprocessors,” are starting to show real promise in tackling the tension between transparency and confidentiality. Some industry players—quietly working on bridging these technologies—believe that once sophisticated privacy solutions become standard for network states, traditional institutions will follow suit.
A practical example of this vision of privacy-focused blockchain governance is the hackathon run by Crecimiento in December 2024, where developers experimented with confidential smart contracts to build a new framework for Argentinian citizen services and decentralized budgeting. The results demonstrated that integrating encryption at the protocol level—such as in FHE-capable environments—can preserve blockchain’s core benefits (integrity, immutability) while meeting the privacy requirements typically demanded by national and local governments.
Looking ahead, innovators see potential in applying encrypted co-processors - like an fhEVM (Fully Homomorphic EVM) - to serve as the backbone for a FHE State OS. This could streamline critical operations without exposing sensitive data. Although these solutions are still evolving, they represent a step toward safer, more trustworthy digital governance.
Contributing to Innovation
For those interested in shaping the future of government services and digital nations, now is the time to explore privacy-enhancing technologies on smart contract platforms. By participating in open hackathons, experimenting with prototype systems, or contributing to ecosystems that support homomorphic encryption, developers and entrepreneurs can pioneer the next wave of public infrastructure.
Ultimately, as network states gain influence, solutions that balance blockchain’s transparency with strong privacy will redefine how we manage public resources, conduct political processes, and ensure data confidentiality. The race to build the next generation of state infrastructure is already underway.
Additional Links
- Zama's FHE State OS
- Zama's fhEVM documentation
- Interesting in building FHE-enabled community infrastructures? Contact us.