Data encryption is a fairly old technology for protecting information. In the context of blockchain, cryptography was initially used to guarantee security (digital signatures and hash functions in Bitcoin), but the data in blockchains is still open. The public nature of the blockchain, with transparency and verifiability, has become an obstacle to privacy: all transactions and balances are visible to anyone.

The first attempts to ensure privacy on the blockchain led to the emergence of privacy-coin projects.

Thus, in 2014, Monero was launched, specifically created to eliminate the lack of privacy in Bitcoin. Monero implemented a whole arsenal of cryptographic methods (ring signatures, hidden addresses, etc.) to achieve anonymity of senders, recipients, and transaction amounts.

In 2016, Zcash appeared - the first widespread blockchain network to implement encryption of transaction data at the protocol level using zero-knowledge proofs. Zcash introduced the concept of “shielded” transactions, where the details of a payment are encrypted but the correctness of the transaction is cryptographically verified.

These projects laid the foundation for privacy in cryptocurrencies, but often required either the use of separate anonymous tokens or the creation of parallel ecosystems.

Over time, solutions emerged that give contract developers tools for privacy. Some projects went the way of hardware protection (for example, the Secret Network based on trusted enclaves, TEE), others - the way of mathematical proofs (for example, the Aztec protocol with zero-knowledge proofs). However, such solutions either rely on trust in the hardware or are limited to narrow use cases.

Today, two new developments are coming to the forefront - the Zama protocol and the Seismic blockchain, offering innovative approaches to encryption in the blockchain.

Zama Confidential Blockchain Protocol is an innovative cryptographic project that aims to introduce privacy into the blockchain using Fully Homomorphic Encryption (FHE). Zama has developed the Confidential Blockchain Protocol, a cross-network infrastructure that runs on top of an existing blockchain (L1 or L2) and allows for the execution of confidential smart contracts without modifying the underlying network protocol.

Zama thus does not create its own separate blockchain, but offers a privacy layer that can be integrated with any compatible networks (e.g. Ethereum, Polygon, Solana, etc.).

Zama is based on fully homomorphic encryption, a method that allows performing calculations on encrypted data without decrypting it. Zama's flagship product is the FHEVM (Fully Homomorphic Encryption Virtual Machine), which extends the functionality of the EVM to work with encrypted values.

Smart contracts remain on regular Solidity, but with the addition of special encrypted data types (euint - uint) and functions that work the same way as with open data. All inputs, outputs and states of such a contract remain encrypted - validators and outside observers will not be able to see the data. The correctness of calculations is ensured by a combination of cryptographic techniques: FHE and MPC (multi-party calculations) are used for decryption keys and Zero-Knowledge proofs are used to prove the correctness of the input data.

Over the course of several years, the team has created a set of open libraries and tools for working with FHE (e.g. TFHE-rs, Concrete, Concrete ML) and integrated FHE into the context of the blockchain. In 2023–2025, a number of demo applications were released demonstrating the capabilities of the protocol: confidential token transfers, secure image processing, credit scoring using encrypted data, and even DNA analysis without disclosing genetic information.

Zama has attracted significant investment: as of mid-2025, total investments exceeded $150 million, the company's valuation reached $1 billion.

• Privacy without compromise. With FHE, all data remains encrypted even during computation.

• Compatibility with existing blockchains. The Zama protocol works on top of any L1/L2, especially EVM-compatible chains, without requiring them to be modified.

• A wide range of applications. Zama technology allows for the creation of applications previously impossible in public blockchains, such as private payments.

• A strong team and foundation. Zama has assembled the world's largest homomorphic encryption research and engineering team.

• No hardware limitations. Fully homomorphic encryption allows for unlimitedly complex computations on encrypted data while maintaining the accuracy of the results.

• High computational load. The main historical disadvantage of FHE is its slowness and resource intensity.

• Development complexity and new tools. Although Zama provides developers with convenient libraries (FHEVM, Solidity extensions, and SDK), the barrier to entry into homomorphic encryption technology remains non-trivial.

• Issues of decentralization of some components. Zama adds another layer above the blockchain, which means the presence of separate nodes operating in the cloud environment. Dependence on cloud infrastructure and node coordination can become an obstacle to decentralization.

Seismic is a Layer-1 blockchain built from scratch to support encrypted smart contracts and private decentralized applications. It is designed as a new blockchain where user and data privacy is embedded directly into the protocol.

Seismic's goal is to solve the problem of full transparency in L1 blockchains by making all transaction data private through end-to-end encryption at the protocol level.

Seismic is based on the use of secure hardware enclaves integrated directly into the blockchain. In simple terms, technologies like Intel TDX (or similar trusted execution environments) are embedded into the smart contract execution layer.

The network’s architecture assumes that each blockchain node includes isolated memory regions (enclaves), where data can be processed in encrypted form, remaining hidden even from the node’s own operating system.

The Ethereum Virtual Machine has been modified to separate EVM execution into two parts — transparent and encrypted. Standard smart contract logic can run openly, as on any blockchain, while operations involving confidential data are handled in the encrypted memory segment. A set of special instructions (such as CLOAD and CSTORE) is provided to load data into the secure area and retrieve results from it without revealing the underlying content. This keeps the private parts of contract state and computation hidden, while the rest of the contract functions as usual.

Seismic inherits its core consensus mechanism and block structure from Ethereum (maintaining EVM compatibility), with modifications that enable encryption at every stage of data processing.

Seismic defines three core layers of privacy built into the protocol:

• Encrypted global state – All global variables and contract storage can be encrypted and accessible only within the enclave for reading and writing.

• Encrypted memory access – Data structures are handled through encrypted pointers, ensuring no data can leak outside the secure environment.

• Confidential contract interaction – Smart contracts on Seismic can call each other and pass encrypted data without exposing it on the public blockchain.

Seismic combines both software and hardware encryption:

• The hardware layer (enclaves) ensures that even a node validator cannot access the data stored in the secure zone.

• The software layer (a modified EVM) provides developers with a convenient interface to handle encrypted data directly from regular Solidity code.

• Privacy by default. Everything that happens inside smart contracts can be automatically hidden from external observers.

• Hardware-level security integration. The use of proven hardware enclaves (such as Intel TDX) provides strong protection for data during execution. Unlike purely software-based encryption methods, enclaves offer isolation at the processor level. This is enterprise-grade security, previously used in cloud computing, now applied to blockchain. When implemented correctly, this approach can combine high processing speed with privacy, as part of the computation is done directly in hardware.

• Compatibility with Ethereum technologies. Seismic uses a modified EVM, allowing developers to build private applications using familiar tools like Solidity and standard Ethereum development workflows.

• New financial products. With core encryption, Seismic becomes an attractive platform for innovations with real assets and payments. For example, real asset tokenization (RWA) is one of the areas the team mentioned where privacy is critical.

• Trust in hardware. The main trade-off of Seismic’s approach is the need to trust the security of hardware enclaves.

• New network and ecosystem fragmentation. As a standalone blockchain, Seismic faces the challenge of attracting users and liquidity away from established ecosystems.

• Early stage and lack of performance transparency. As of 2025, Seismic has not yet disclosed full technical specifications regarding scalability and throughput. Enabling encryption usually comes at a cost in the form of slower performance.

• Regulation and perception. With the advent of fully encrypted blockchains, regulatory concerns may increase. Full privacy is often associated with the risk of money laundering or financing illegal activities.

Both of these solutions address the same problem – making blockchain privacy usable and mainstream – but they approach it from different angles.

Zama acts as a layer on top of existing infrastructure, bringing privacy through advanced cryptography.Seismic, on the other hand, builds a new infrastructure from the ground up, embedding privacy as a fundamental property of the blockchain.

The table below provides a clear comparison of these two approaches:

The transparency of the blockchain, once considered its main advantage, in modern realities turns into an obstacle for many areas - from decentralized finance to corporate use.

Zama and Seismic represent two promising approaches to solving the “blockchain privacy dilemma.”

The first approach — Zama — relies on the power of cryptography, embedding encryption directly into smart contracts without disrupting existing ecosystems.

The second — Seismic — reimagines the consensus layer itself, building privacy into the protocol through modern hardware technologies.

Both strategies are valid and will likely find their own place in the evolving blockchain landscape.

As these technologies mature, blockchain may move beyond being a “glass ledger.” In the coming years, we can expect to see the rise of private blockchain solutions where users have control over what remains confidential and what is publicly visible.