What Are Zero-Knowledge Proofs?

3 mins read

Whether we use social media, get a loan, or visit a website, companies collect as much information about us as they can.  While we can tailor our privacy settings on our computer or per website to adjust the level of information that is obtained, we inevitably are forced to reveal more information than we want.

But what if there is a way to provide companies with the data that they need (say, to execute a transaction) without disclosing the data itself? What if we can prove something is in fact true, without disclosing the very thing we are proving?

Zero-Knowledge proofs (ZKPs) are encryption methods that allow an individual (prover) to prove the validity of certain information or data to another individual (verifier) without disclosing any additional information.

To gather real-world insight and application on ZKPs, Gokhshtein spoke with a few constituents in the industry.  One such company is Discreet Labs which is the organization building Findora, a public blockchain that utilizes the latest breakthroughs in zero-knowledge proofs and multi-party computation to allow users transactional privacy with selective auditability. 

Warren Paul Anderson, VP of Product at Discreet Labs, speaks to the need for a combination of privacy and auditability in public blockchains, as this enables compliance with regulations without the radical transparency implicit in legacy blockchains like Bitcoin that hinder institutional involvement.

Warren explains ZKPs this way:

“It’s a cryptographic method that allows information to be shared without showing the details of it. For example, I have value X and I want to determine the validity of that value X without actually revealing what value X is. The shortened definition is sharing without showing.” 

“A lot of technology is being used to help scale a number of blockchains – effectively compressing those blockchains into a single proof and verifying that proof. This is a lot more succinct than having to verify the entire blockchain. ZK-rollups are being used to help scale projects like Ethereum.”

Warren adds that the first true use case of zero-knowledge proofs is Zcash. 

“Zcash allows for private transactions.  This is instrumental because there has been a missed opportunity on the privacy side of cryptocurrencies. There needs to be a verification system for the miners that allows them to work in a more scalable way.”

Warren believes that the state of zero-knowledge proofs when first invented just wasn't scalable enough to support transactions, but now they are. 

“So, we think there's going to be more of a paradigm shift to blockchains that do support zero-knowledge proofs at layer one for both scalability and privacy.”

He says that there are two types of zero-knowledge proofs: Interactive and Non-interactive. Interactive ZKP’s requires the individual (prover) to complete a series of actions to verify certain information or facts to another individual (verifier). The tasks performed typically involve mathematical probability.

The limitation of interactive ZKPs is in transferability – that is, the actions have to be repeated for each new verifier. And while the probability that the proof is fake can get to a very small percentage by a very large number of actions taken, the probability of truth can never get to zero.

Non-interactive ZKPs on the other hand do not require interaction between the prover and verifier. Projects like Zcash use non-interactive ZKP’s to hide transaction information.

As we already started pointing out, there are pros and cons with ZKPs.

ZKPs have the following benefits:

Ø  Enhance the privacy of users, by eliminating the need to reveal personal information on public blockchains

Ø  Allow for scalability of blockchains

Ø  Don’t necessitate complex encryption methods

Ø  Are more secure than other ineffective authentication methods

The drawbacks include:

Ø  Requires a vast amount of computing power to facilitate the vast number of mathematical computations required

Ø  Subject to lost information. If an individual executing a transaction forgets their information, all information associated with the transaction will be lost

Ø  Subject to potential vulnerabilities with technologies such as quantum computing

As advancements in Zero-Knowledge proofs continue to emerge, even wider spread applications will take place. The Metaverse is just one example of this.