Understanding Zero-Knowledge Proof (ZK-Proof) in Blockchain Technology
How do you prove that you are who you say you are, without actually saying who you are? Or, how do you prove to another party that you know something (like a password), without actually revealing that password to that party, because you want to safeguard the password?
By the end of this article, you will be able to impress your friends with your knowledge of what zero-knowledge proof is, why it’s important, and how it works.
What is Zero-Knowledge Proof?
Zero-knowledge proof uses cryptographic techniques i.e. fancy math to enhance privacy and security by allowing parties to validate information without disclosing the actual data. This is crucial in an era where personal data is highly valuable and sensitive.
Imagine you and a few friends are competing to locate Waldo on the page of a “Where’s Waldo?*” book. A few minutes in, you spot Waldo first, but your friends think you’re lying. How do you convince them you’re not lying, without revealing Waldo’s exact location?
You place a big piece of paper over the page, with a tiny cutout that you position right over the image of Waldo. In this way, you prove to your friends that you know where Waldo is, and your friends were able to verify this, without finding out where Waldo’s location is.
This is what the term “zero knowledge” in “zero-knowledge proof” refers to–the idea that one party (the prover) can prove to another party (the verifier) that a statement is true without revealing any information about why the statement is true. In other words, the prover can convince the verifier of the validity of a claim without disclosing the underlying details or knowledge that supports that claim.
*Where’s Waldo is a British series of children’s puzzle books where readers are challenged to find a character named Waldo hidden on densely illustrated pages.
The Secret Handshake Analogy
Here’s another way to think about it–zero knowledge proofs are like a secret handshake. If two fellow spies from the same secret organizations need to meet, they can confirm their identities to each other without disclosing any personal information (in case the other party is an undercover cop or spy from a rival organization). The secret handshake serves as proof that they belong to the same group, without revealing any details about themselves.
Similarly, zk-proof helps you prove that you are the rightful owner of an account without revealing the secret key you possess in order to access your account.
Zero-Knowledge Proof In Blockchain Technology
Zero-knowledge proof has in recent years found increasing use in blockchain technologies, as blockchain transactions are typically transparent and open for public scrutiny.
Here are some intriguing use cases:
- Private exchange & settlement of digital assets
In the realm of blockchain technology, zero knowledge proofs can transform the way digital assets are exchanged and settled. Currently, blockchain transactions are publicly viewable, allowing anyone to track the movement of funds and potentially leading to privacy concerns.
Zero knowledge proofs can address this issue by enabling private and confidential transactions. They allow participants to verify the validity of a transaction without revealing the amount of funds being transferred or the identities of the parties involved. This enhances privacy and prevents malicious actors from gaining insights into somebody’ financial activities.
2. Selective disclosure
In an era where data is power, zero-knowledge proofs enable users to disclose specific information while keeping the rest confidential. In scenarios where only certain aspects of data need verification, ZKPs allow for selective disclosure without compromising the entire dataset.
3. Secure multi-party computation
Imagine a scenario where multiple parties need to collaborate on a sensitive task, such as jointly analyzing medical data or conducting financial audits. Sharing the data directly among all parties could pose privacy risks.
Zero knowledge proofs provide a secure solution for multi-party computation. They allow parties to collectively compute a function on their private inputs without revealing those inputs to each other. This enables secure collaboration while preserving privacy and confidentiality.
Beyond financial transactions, zero-knowledge proofs have the potential to be applied in various other use cases such as supply chain management, where proving certain knowledge without revealing all details is essential.
Popular Crypto Projects that Utilize ZK-Proof Technology
- Polygon (MATIC): Polygon is a Layer 2 scaling solution for the Ethereum blockchain that uses ZK-Rollups to improve scalability. ZK-Rollups are a type of Layer 2 solution that batches transactions together and then uses ZKPs to prove the validity of the transactions. This allows Polygon to process transactions much faster and more cheaply than the Ethereum mainnet.
- Immutable X (IMX): Immutable X is a Layer 2 scaling solution for the Ethereum blockchain that uses ZK-STARKs to improve scalability. ZK-STARKs are a type of ZKP that is more efficient than ZK-SNARKs. This allows Immutable X to process transactions even faster than Polygon.
- Zcash (ZEC): Zcash is a privacy-focused cryptocurrency that uses ZK-SNARKs to prove that transactions are valid and that the sender and receiver of a transaction are authorized to perform the transaction. This allows Zcash users to send and receive transactions without revealing their identity or the amount of the transaction.
In Conclusion
Zero-knowledge proofs contribute significantly to the advancement of privacy, security, and efficiency in blockchain technology. Their ability to validate information without exposing sensitive details makes them a valuable tool in addressing the challenges associated with transparency and confidentiality in decentralized systems.
