The Privacy of Midnight - Cardano's new side chain

At Scotsfest, the IOG developer-focused conference hosted at the end of November, Cardano founder Charles Hoskinson announced the launch of Midnight during his keynote address. Midnight is the privacy-focused sidechain that the IOG team has been working on for the past four years.

Midnight will be a data protection-based blockchain that safeguards sensitive commercial and personal data, protecting fundamental freedoms of association, commerce, and expression for developers, companies, and individuals.

Midnight will enable developers to quickly build and deploy data protection-first DApps using many programming languages, starting with Typescript. At the same time, companies can share mission-critical information without the fear of leaks or censorship. In addition, individuals can safely share their sensitive information when operating in a connected world.

The Midnight sidechain will run on its token called $DUST

You can watch the keynote address below.

Midnight Explained

Both users and developers can benefit from the functionality offered by the technology thanks to the Midnight blockchain and the network's $DUST token, which goes beyond the scope of traditional privacy-coin projects.

Midnight will use a programming language that most developers are already familiar with to deliver “zero-knowledge-proof smart contracts.” Users will also have the option of selecting between total and partial privacy, where they permit access to some data.

Hoskinson argues that by allowing users to control what information they publish, Midnight goes above and beyond the traditional privacy-coin solutions. Cardano network stakers will automatically begin receiving $DUST tokens and ADA rewards once Midnight starts. If this setup is effective, it may serve as a stimulus for expanding the Cardano ecosystem.

The Freedom of Midnight

Midnight seeks to provide users with discretion, privacy, and the chance to connect with others who share their interests in trading and interacting. The network enables developers to create dapps using a simple language. In addition, users can decide which guidelines to follow and which data sets regulatory organizations can access.

Midnight seeks to safeguard the fundamental right to form associations. This means that the network will be able to cooperate using open norms approved by the community or consortium. The Midnight network also works to defend commercial independence. Without centralized gatekeepers, it enables users to trade value in a private yet regulatory-friendly manner. Finally, Midnight seeks to uphold the right to free speech. With a worldwide ecosystem, users will be free to express their thoughts and beliefs without worrying about being censored.

But is there a backdoor?

Allen Wu explained why this is not the case in his below Tweet sighting, including a link to a point in the presentation from Scotfest where this was discussed. See the thread below.

DUST vs. ADA

$DUST was unveiled as the native token for the Midnight blockchain. Here is what we currently know, even though the token has yet to arrive. $DUST will serve as the Midnight blockchain network's native token. Although ADA is the native token for Cardano, both will coexist without canceling each other out or becoming obsolete. The $DUST token from Midnight is a component of the Midnight network and will become more significant. Although the project's supporters generally agree that the $DUST currency would be used to pay gas fees, its precise details and use case still need to be clarified.

Flagship's Thoughts

Recently we have seen an increase in focus on central bank digital currencies (CBDCs); I recently noticed that over 100 central banks are working on some version of a CBDC. One concern of a CBDC is the level of control it will offer governments. When CBDC rolls out, and if even some of the privacy concerns are realized, the focus on a privacy-focused blockchain will become more acute.

After all, it isn’t only payments for illegal activities that you may want to keep secret. Donations to your local church or sponsorship of a political party may be purchases you don’t want to make public. There are many other uses for a privacy side chain. I think the focus on developing this as an offering positions Cardano well for the future considerations of the crypto community.

I am still unsure why a new token was needed and why ADA couldn’t have been leveraged to give the existing token more utility. Let's hope in time, this becomes clear, or I fear people may view $DUST as a cash grab, i.e., creating a new token to raise more capital rather than simply adding utility to the existing ADA token.

I’m keen on your thoughts on Midnight and privacy coins more generally. Are they something you are considering holding as part of your portfolio?