What attracts many crypto enthusiasts to blockchain is the promise of transparency and privacy. However, recent incidents in the crypto space, especially the FTX saga and Luna, raise doubts about this promise.
This has given rise to the need for Zero Knowledge Proof (ZKP for short), a technology that ensures that transactions are executed and confirmed on the blockchain between two parties without revealing any private information.
Let's study how ZKP works, its core values and use cases.
How does Zero Knowledge Proof (ZKP) work?
Silvio Micali, Shafi Goldwasser and Charles Rackoff, former MIT researchers, were the creators of the Zero-knowledge Proof concept back in the 1980s. They tried to build a cryptosystem in which one side, called a proofer, can confirm that a particular statement is true to another party, called a verifier, without revealing any further information.
Zero-Knowledge Proofs (ZKPs). Source: Towards Data Science
This idea has become an important invention in the cryptocurrency industry. ZKP ensures that not even the blockchain network or any other third party can access your secured data.
To better understand how ZKP works, imagine you are in a dark tunnel with two locked entrances. These two entrances both have a secret code, and you must exit that path. Since you don't know the secret code that opens the door, you need someone who knows the code and can help you out.
Then someone shows up, asking you to transfer a certain amount of money before he can give you the code to open.
However, before you pay the man, you must make sure that he is not cheating on you. So you ask him to prove it by opening and closing the entrance himself with the secret code he has. This way you can XEM he knows the secret code that opens the tunnel without knowing the contents of the secret code.
This is how ZKP works! It allows two parties to make and confirm a transaction without accessing the contents of the transaction.
The core value of Zero Knowledge Proof (ZKP) protocol
Source- Worldcoin
Completion
For a transaction to become ZKP, the verifier can tell if the transaction is correct, and make sure both parties are honest with each other.
Certainty & Transparency
A ZKP transaction must be certain enough to identify invalid transactions. Just as a liar can never convince an honest verifier to believe that an invalid transaction is valid.
Zero Knowledge
As the name itself implies, verifiers and verifiers are not supposed to know what happens on the other side of the transaction. In other words, the verifier must know nothing more than its true or false status (i.e. validity). If the verifier knows its contents, this is not XEM a Zero Knowledge Proof anymore!
Why Zero Knowledge Proof (ZKP) ensures crypto transparency
One of the promises that blockchain technology brings to users is privacy and transparency when making transactions. But sometimes it's not perfect!
Source- Coinloan
Most blockchain networks operate a public database, so anyone online can access your transaction details. However, instead of seeing your name, only your public key appears on the transaction history. A public key is a unique code or account number that represents a user on the blockchain.
While Public Keys are traditionally generated to protect user privacy, certain techniques can be used to reveal the identity of the Public Key owner. As a result, the promise of blockchain to protect user privacy is violated, leading to a lack of transparency between the two parties.
This is where ZKP comes in, as it helps ensure transparency in the blockchain, while protecting your privacy. With ZKP, the parties involved in the transaction can verify the validity of the transaction without having access to any sensitive information.
Zero Knowledge Proof (ZKP) application cases
Source- Coinloan
Pay anonymously
Many people believe that transaction details should be public, and traceable in order to find the upper hand in the cryptocurrency industry. While this argument is not wrong, making transaction details public would lead to misuse and lack of privacy.
So, ZKP helps to hide the identity and details of the people involved in the transaction. Tornado Cash is an example of a protocol that executes Ethereum transactions with no further information being disclosed to the public.
Identity verification
The usefulness of identity verification doesn't just apply to the cryptocurrency industry, it can also be used in digital voting. This means that ZKP can be useful in a digital voting process, where voters' identities can be revealed without compromising their privacy.
Besides identity verification, ZKP also offers identity security, allowing you to choose who can XEM your identity. A great example is the use of ZKP to prove your nationality without showing an ID.
Verify information
In the Internet world, there are cases where the system needs to verify who you are before providing you with certain tools and data. When authenticating yourself, these systems may ask you to disclose sensitive information. Some may ask you to verify your marital status and other information.
ZKP is here to help you authenticate yourself without disclosing such information. This can be done by issuing different levels of verification codes to confirm your eligibility for access, rather than revealing your personal information.
Another good example of ZKP is that you can apply for a home mortgage without disclosing your exact salary. ZKP will show your salary within the expected range without disclosing the details of how much you earn.
Verifiable Calculations
ZKP greatly sanitize the speed and processing power of the blockchain. ZKP allows to outsource certain computations on the blockchain while still getting verifiable results. The entity undertaking the outsourced computation will submit the results and proof that the outsourced computation was performed properly. With this, the processing speed of the blockchain increases while ensuring that security is not compromised.
Way Forward
It can be said that Zero Knowledge Proof is a very important invention in the cryptocurrency industry, as it helps two parties to make and validate a transaction without XEM the details of the transaction.
The core of Zero Knowledge Proof is completeness, certainty and no information about any transaction details. Zero Knowledge Proof is applied not only in the crypto industry for its usefulness in authentication, identity verification and security, and the future is much more!
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