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On a global scale, every person wants to keep their details private, and financial and health details are valuable info. As such, people try to find ways to keep them completely private. Unsurprisingly then, the demand for privacy has been rising, especially with the growth of the Internet, which makes it incredibly easy to infringe personal user privacy. However, zero-knowledge proofs (ZKPs)—a concept discovered decades ago—seem to be the best solution to this problem. So, what are zero-knowledge proofs? What are some of their applications? Keep reading as this guide explores ZKPs and their role in cryptocurrencies and decentralized finance (DeFi).
What Are Zero-knowledge Proofs?
ZKPs allow a person to prove they have information (that is secret), without actually having to share it; the idea is to ensure that the information and parties involved remain hidden. ZKPs were discovered in the early 1980s by a group of scholars, including Shafi Goldwasser, Charles Rekkofom, and Silvio Mical. Silvio Mical is the founder of a popular carbon-negative blockchain called Algorand, and its green credentials have been gaining popularity in the virtual assets world.
ZKPs function uniquely to enhance efficiency. They involve three different parties: key generator, prover, and verifier. The key generator creates the relevant keys—one to help prove and another to help verify. The prover receives the first key, verifies, and sends the statement to the verifier who then authenticates the statement using the second key.
Attributes of Zero-knowledge Proofs
There are three main attributes or components that define ZKPs. They are as follows:
● Completeness: ZKPs provide completion details to make the verifier complete the prover’s request; hence, the ZKPs are complete.
● Soundness: Soundness reflects the endeavor of proving that the transaction is genuine and not part of a malicious act. If a transaction is unsound, ZKPs will ensure that the verifier will not be convinced.
● Zero-knowledge: This is where the verifier does not need to see every piece of detail to be convinced.
Classification of Zero-knowledge Proofs
The idea behind zero-knowledge has been in existence and evolving for years. These kind of proofs are often grouped into two main groups:
● Interactive ZKPs: This type of proof requires the prover to convince each individual verifier. The prover convinces the first verifier and repeats this again with other verifiers.
● Non-Interactive ZKPs. As the name already suggests, this type of ZKPs requires only one proof for all verifiers.
Examples of ZKPs
There are two primary examples of ZKPs available today, which are both distinct from the other. These ZK proofs are detailed below:
ZK-SNARKs
The zero-knowledge succinct non-interactive argument of knowledge (ZK-SNARK) is the most popular ZK proof today. It is a non-interactive proof that allows a person to prove their possession of information without giving details about it. Zcash is currently leveraging ZK-SNARKs to protect the anonymity of the parties involved and is referred to as one of the most private crypto coins.
ZK-STARKs
The second zero-knowledge proof gaining traction is the zero-knowledge scalable transparent arguments of knowledge (ZK-STARKs), which is an advanced type of ZK SNARKS. This version of ZKPs is also non-interactive and will be launching on Ethereum 2.0 in the future. Ethereum developers are working on this proof to enhance anonymity within the network.
Blockchain Applications of Zero-knowledge Proofs
Private Transactions
ZKPs have a world of applications and uses in the blockchain sphere. Due to their ability to hide details, these proofs are excellent for private transactions. Using ZKPs, individuals can conduct private and safe transactions.
Messaging Encryptions
Communication is a vital aspect of life, and messaging is one of the most popular communication routes. Everyone needs a privacy guarantee when sending their messages, so ZKPs can help users prove their identities to a server to access messaging details.
Complex Encrypted Documentation
Another benefit that comes with ZKPs is the ability to send private documents. Due to their capacity to encrypt messages, ZKPs can encrypt other pieces of data and restrict access.
As a Consensus Mechanism
ZKPs are applicable in blockchains as consensus algorithms. Mina protocol is a good example of a digital currency leveraging ZKPs. All Mina users are verifiers, and block producers get delegated coins from verifiers and act as validators. Meanwhile, Snarkers known as provers are tasked with producing zero-knowledge proofs for transaction verifications.
Protection of Storage
ZKPs as systems can also help to protect data that is in storage in a particular system. Only the verified parties will have actual access to the details provided in the encrypted storage facilities.
What Are the Benefits of Zero-knowledge Proofs?
There are many benefits associated with ZKPs. One is simplicity. ZKPs are fairly easy to install as they do not require complex encryption algorithms. Another benefit that comes with the use of ZKPs is top privacy. These types of proofs ensure the user's personal information remains private, and privacy enhances the security of blockchain networks and persons transacting.
While ZKPs come with many pros, there are also a few cons. A few of them are highlighted below:
● Limited: ZKPs only work with arithmetic manipulations and numeric answers.
● Some need large amounts of power: Each unit of ZKP needs large amounts of power to complete.
● Restricted: If the sender of the information loses their data, they lose everything.
● Vulnerable to advanced technologies: Advances in certain technologies mean that ZKPs are open to attacks.
Final Word
The ZKP—a product co-invented by one of Algorand’s founders—is a unique system that helps users to preserve their privacy. Consequently, it has recently seen vast levels of adoption in the crypto speculation arena. ZKPs involve a key generator, a prover, and a verifier that all work together to improve efficiency. Moreover, these proofs possess a number of different attributes like completeness, soundness, and zero-knowledge. The utilization levels of ZKPs are growing in both blockchain and none blockchain spaces, and some of their possible system-based applications include transactions, messaging, storage, and consensus algorithms. Once ZKPs become even more popular, people will enjoy more privacy.
