While the blockchain has provided several benefits in achieving the trilemma of scalability, decentralization, and security, it still cannot offer the privacy required for certain transactions. Combining blockchain technology with zero-knowledge proofs allows for the solution of privacy and scalability issues. ZKP and blockchain offer users an effective combination of security and immutability.
Let’s review the fundamentals of zero-knowledge proof and how it powers blockchain technology.
What is Zero-Knowledge Proof in Blockchain Tech?
Zero-knowledge proof is an encryption scheme or protocol in which a prover can prove their case of truth concerning specific data to a verifier without revealing the entire secret information.
As the information can be verified using Zero-Knowledge Proofs (ZKPs), this method secures and protects your private chats and transactions without disclosing the information to anyone who is not having valid authentication with the network.
In the coming days, ZKPs have the potential to revolutionize how data is collected, utilized, and traded.
A blockchain is a chain of immutable records that many parties manage, each with a list copy. Blockchains do not provide privacy or anonymity because all participants can see all transactions.
Zero-knowledge proofs provide a way to verify that a transaction was successful without revealing the secret information used. This strategy allows for posting private transactions to the blockchain while maintaining privacy.
ZKPs generally allow one party to demonstrate that they know a given value without providing additional information.
In the blockchain world, zero-knowledge proof solves fundamental security and privacy problem. Multinational corporations use it to maintain confidentiality and facilitate transactions over a secure blockchain network.
A specific (single and designated) node on the blockchain network executes the off-chain application code. The blockchain confirms its proper execution to other parties to verify its accuracy.
The zero-knowledge proof allows users to send private messages without revealing their identity to the server.
Unlike traditional messaging applications, software based on the ZKP protocol enables users to keep their personal information private, with only necessary data shared with the other party.
The two main types of zero-knowledge proofs are interactive and non-interactive. In interactive ZKPs, the prover must carry out tasks or actions to convince the Verifier that they have specific knowledge.
Most of the activities required in interactive ZKPs use mathematical probability principles. Non-interactive ZKPs do not require interaction between the prover and the Verifier and offer the option to complete the verification process later.
These ZKPs require the use of additional computers or software.
Users can securely communicate complex documents by integrating ZKPs with blockchain. The fact that they can encrypt data in chunks allows users to control the availability of specific blocks and the information contained within them, allowing certain users access while restricting others.
Properties of ZKPs:
1. Completeness
The completeness property refers that the transaction has been checked and that the prover can proceed. When the transaction statement is true, the Verifier can give the prover the input he requested.
2. Soundness
The soundness property refers to the authentic transaction, not part of a fraud case. The Verifier can only be persuaded if the marketing is different and the statement is correct. In this case, the Verifier can’t vouch for the prover or let the prover get the inputs.
3. Zero-knowledge
The Verifier knows nothing but the current statement and whether it’s true or false. Any additional information and private information about different parties are kept secret.
At the highest level, a Zero-Knowledge Proof is made by the Verifier asking the prover questions to answer correctly if the prover knows all the needed information. More likely than not, the Verifier’s test will eventually show that the prover was wrong.
What are the two main types of Zero-Knowledge Proof?
There are two basic kinds of ZKPs, which are:
Interactive ZKP:
The actions that go with the ideas have to do with probability in math. In interactive ZKP, a prover has to persuade a specific verifier and then do the same thing for each Verifier. In interactive ZKPs, the person trying to prove a fact must do a series of things to convince the person to check the validity.
Non-Interactive ZKP:
Non-interactive ZKPs don’t allow the Verifier and the Prover to talk to each other. In non-interactive ZKP, a prover makes proof that anyone can check. The system can postpone the process of reviewing the proof later. For non-interactive ZKPs to work better, they need specific software.
Let’s discuss what ZKP means and the use cases of this technology. Zcash is a well-known use of Zero-Knowledge proof. Zcash was the first to use zk-SNARKs, the primary type of Zero-Knowledge cryptography.
Now we have to figure out what zk-SNARKs are. Zero-Knowledge Succinct Non-Interactive Argument of Knowledge is the full name for zk-SNARKs. zk-SNARKs is a technology that uses ZKP that doesn’t need to be discussed.
Algorithms zk-SNARKs work on
The Key Generator
A key generator sets a parameter to make a key pair. A trusted source can delete the private information after making a private or public key pair. Another pair of keys use public information. One of these would be used to prove something, and the other keys are applied to check something else.
Prover
The prover gets the proving key and has to show how well he knows something. He will get the private key and check it. After that, he will send the statement.
Verifier
The prover will give the verifier information, and the Verifier will check that the statement is true.
The following four things must also be true of Zk-SNARKS.
- The person who checks the statement will only find out what is necessary. If a challenge needs to be short, it should take at least a few milliseconds.
- The process should not involve any interaction.
- The proof should be based on the soundness principle and use zero-knowledge encryption.
- Prover and Verifier can only move forward with a reliable witness.
What are some different ways Zero-Knowledge Proof can be used on the blockchain?
1. The blockchain has messengers.
2. Even though most of the messengers we use claim today to be encrypted, unencrypted blockchain could be the next big thing in technology.
3. With the promise of a strong but unencrypted solution, ZKPs and blockchain can work together to make a secure messaging platform with added value for everyone.
4. Next-gen file system controls
ZKPs add more security layers to files and logins. So, ZKPs can make it hard for hackers or people with bad intentions to change and get the data.
- Keeping things safe
- The information in a ZKP storage unit protects a security protocol that is part of the ZKP.
- The access channels have strong security measures that make the environment safe and easy to use.
- Getting private blockchain transactions to other people
- The biggest worry about private blockchain transactions is that traditional methods have a lot of holes.
- When ZKP and private blockchain transactions work well together, they can make a robust process that hackers can’t break.
Advantages of Zero-Knowledge Proof
Simplicity: ZKPs are best known for their simplicity. You don’t need to know anything about software to use it, but it can offer better solutions that affect our daily lives. Also, because it is completely unencrypted but still very safe, it can give you the best of both worlds.
Secure: When it comes to sharing information, ZKPs is very safe. So, a user can use it confidently and not have to be an expert in codes or analytics to figure out how it works.
Time saver: ZKPs cut down on the time needed for blockchain transactions, which is suitable for users.
Privacy: The most liked thing about ZKPs is that it protects their users’ privacy. It never needs to share sensitive information, so it is always very private.
Safety: Users of ZKPs know that ZKPs need to share data, and they can avoid any company that wants access to their personal information for no good reason.
Data Safety: Banks and hospitals with access to sensitive information must ensure that no one else can see it. Together, ZKPs and blockchain can make it impossible to get to data.
Applications of ZKP:
Faceless Verifiable Voting
Establishing explicit governance norms for distributed ledger technologies has always been difficult. Anonymous and verifiable voting is critical for ensuring adequate on-chain governance arrangements.
Voting is fundamental to any democracy, from national to corporate shareholder engagement. As a result, as governments move toward digitization and security tokens proliferate, the demand for secure and faceless voting solutions is sure to rise.
This increase in demand is due to how ZKPs handle anonymous verifiable voting. A responsible third party can no longer verify the outcomes because the public blockchain records votes. Furthermore, this system eliminates any chance of censorship.
Eligible voters can use ZKPs to establish their voting eligibility without revealing their identity, making the voting mechanism anonymous. Furthermore, ZKPs allow voters to obtain verifiable assurance from the institution reporting the results that their vote was counted in the final total.
This procedure makes the electoral body’s vote results auditable, even if the votes are not viewable on a public blockchain.
Private Exchange and Settlement of Digital Assets
Although one of the crucial that made the public blockchain trustworthily was its transparency, it has a lot of disadvantages. While some data should be available for public verification, a significant amount must be kept private.
A privacy layer is required to ensure that the transaction amount and the participants in each transaction stay private. ZKPs alleviate this problem. The system readily prevents problems like order front-running when relevant transaction information is hidden.
Furthermore, the system provides this functionality if auditing specific orders are ever required.
In terms of asset settlement, for example, the system validates the best execution of an order without revealing the entire order book. Because the verification process is automated, this provides for a more efficient audit method. This process will also reduce the likelihood of disagreements between counterparties.
It also enables the exchange operator to keep critical information private if necessary. This technology applies to both centralized and decentralized exchanges.
This step is significant now, as several exchanges create blockchain-based decentralized alternatives. If they incorporate ZKP technology into these decentralized exchanges (DEXs), they can further reassure their clientele and their demand for anonymity.
Privacy of Public Blockchains
Public blockchain systems such as Ethereum, Cardano, and Tezos are already highly advanced. However, the system should ensure data privacy to utilize its potential fully. No company that values data privacy will use an entirely transparent blockchain.
For example, companies that utilize the blockchain to trace their supply chain would prefer to keep their crucial supplier information private. As a result, they can introduce particular privacy layers. This strategy applies to private enterprise blockchains.
ZKPs can provide this crucial privacy.
Now, blockchains started adopting ZKPs in the context of blockchains. These are zk-SNARKS integrated into the protocols of several blockchains. Zcash, Horizen, and Komodo are examples of them.
They can not only serve to protect information on a public blockchain, but they can also aid in alleviating scaling issues.
Watching which protocol(s) will be at the forefront of ZKP research and implementation in the future will be fascinating. Some procedures already build the basis by teaming with industry professionals or sponsoring research institutions.
Zcash, for example, is in the process of releasing new improvements to its ZKP-based zk-SNARK protocol. This step is all part of their sapling improvement, which will considerably minimize the difficulty of building ZKPs.
If the sapling improvement produces the desired effects, shielded Zcash transaction prices and times are anticipated to decrease. This step means that ZEC is becoming the digital equivalent of untraceable cold hard cash.
Final Thoughts
ZKPs is undeniably a game-changing piece of technology. Even though it might take a long time for its implementation in any real-world applications, their complexity is evident.
However, recent data breaches and other privacy issues have increased demand for a new choice. We only learned ZKPs’ potency when privacy-conscious cryptocurrencies began employing them in their protocols. Follow us on LinkedIn
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