Zero Knowledge Proof : ZKP In Blockchain Pros And Cons

What Is Zero Knowledge Proof?

Zero Knowledge Proof is a method in which the prover can prove to the verifier that they know the value x in the world of cryptography. They also do not disclose any other information apart from the fact that they know the value of x.

 If proving a statement means that the prover has some secret information, then the verifier will be unable to prove the statement to anyone else without having the secret information. It is necessary to prove the statement and emphasize that the prover has any such knowledge, but not the knowledge itself.

Otherwise, the statement would be unable to be proved in Zero-Knowledge Proof because it provides the verifier with additional information about the statement.

There are two types of Zero-Knowledge Proof of Knowledge they are- Non-Interactive Zero-Knowledge Proof and Interactive Zero-Knowledge Proof.

 

Is Zero-Knowledge Proof Anonymous?

In the Blockchain networks, the transaction is recorded in the public ledger and hence transparent. Because of this transparency, many reputed brands are hesitant to use this technology. Anyone requires confidentiality of their client and the transactions.

There are many ways to make transactions anonymous. Zero-Knowledge Proof is one of the highly appreciated in the field.

Zero-Knowledge Proof is a set of tools. It allows for a piece of information to get validated without exposing the data that demonstrates it. It has a Cryptographic algorithm using which a “tester” can mathematically explain to a “verifier”, that a computational statement is correct. In the process, it does not reveal any data.

For example, a user could show that he/she is of appropriate age without revealing their actual age. A person could prove that he/she has enough money to buy something without revealing the amount in their possession.

Thanks to Zero-Knowledge proof, it is possible to create an identity authentication system without the risk of information being stolen.

Zero-Knowledge Proof is still in its early ages. Zero Knowledge Proof implementation can be the key to where users can interact with other people, objects, or companies anonymously.

 

What Makes Zero Knowledge Proof Unique?

Zero-Knowledge Proof is unique. Zero-Knowledge Proof must satisfy three criteria.

The first is completeness. Completeness is when the statement is true prover convinces the verifier. Then next comes soundness. If the statement is false then the prover cannot convince the verifier.

The third and the last is Zero-Knowledge. The first two properties are general but the third is what makes Zero-Knowledge Proof unique. In this case, if the statement is true, the verifier doesn’t learn anything other than the fact the statement is true.

Just knowing the statement is enough to show that the prover is aware of the secret. It means that the verifier can produce a transcript of the interaction between the two.

 

How Does Zero Knowledge Proof Work?

With the definition on, one can only understand so much. Let us try to understand How Does Zero-Knowledge Proof Work?. When a prover convinces a verifier that he/she has executed some computation correctly on secret data. In the process, the prover has not revealed any secret data. Let us understand how it works with an example.

There is a Zero-Knowledge Proof example of the kids and candy bars. Two kids have received some candy bars. The first kid A wants to know how much candy does the second kid B has.

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To know, A brings lockable boxes, assuming the numbers as 10,20,30,40 label the boxes. Now A keeps the key of the box in his pocket which has his number of candy ( let us assume he has 30 candy) and throws the other keys away.

Now, B comes into the room carrying four pieces of paper. She writes ‘+’ on one and ‘- ’ on the rest. ‘+’ tells the number of candy she has and ‘-’ tells other values. Now A comes and checks the box to which he has the keys and checks whether it has a ‘+’ or ‘-’ on it. If he gets a ’+’ that means B has the same amount of candy or in other cases doesn’t.

Now B has 20 and A has 30 candy. A will find a ‘-’ in the box which keys he had. This will tell him that they both don’t have the same number of candy. At the same time, B will see the ‘-’ in A’s hand which will also tell her that they have a different amount.

Now by this method, they will find whether they don’t have the same amount of candy. But they will still not have a clue whether they have the same amount or not.

 

How Can Zero-Knowledge Proof Deliver Better Security?

Presently, new Blockchain technologies are unreal. You can trace back the user’s identities to their transactions. Despite blockchain’s reputation as being the perfect cybersecurity system, it has its weaknesses. Law enforcement has been using this weakness to catch criminals like the silk road, an online black market.

Zero-Knowledge Proof can fill the gaps left by the flawed anonymity provided by the blockchain. Zero-Knowledge Proof transforms the trust and lack of privacy into a real and 100% private.

Let us take an example of the real estate sector. Before carrying out a visit, the estate agents ask you for your latest paychecks, bank statements, and other sensitive information just to be sure that you have sufficient income.

In this scenario, Zero-Knowledge Proof can provide users with the possibility to show that they have enough income without sharing any private data.

Hence, Zero-Knowledge proof can transmit information like authentication with better security. It can build a secure channel for the users without revealing anything unnecessary to avoid data leakage.

 

Zero-Knowledge Proof Applications.

Let us look into where Zero-Knowledge Proof Applications can be used.

Private Blockchain Transactions

When it comes to Private Blockchain transactions, it is important to keep them out of the reach of third parties. The blockchain methods are protective but they have some drawbacks as well.

Now Zero-Knowledge Proof comes into use. The concept makes it impossible to get hacked or intercept the private blockchain transactions.

 

End to End Encrypted Messaging

When it comes to messaging, end-to-end encryption is important. So, that no one can read your messages besides the one you are messaging. To keep it secure messaging platforms ask the users to verify their identity to the server and the other way round as well.

But with Zero-Knowledge coming into the picture now, they will be able to create an end-to-end trust in messaging without sharing any unnecessary information. This is one of the major roles of Zero-Knowledge Proof in the blockchain.

 

Storage Protection

Another expected use of Zero-Knowledge Proof is in storage protection. Zero-Knowledge Proof comes with a protocol to keep the storage unit safe but also the information that it has. The access channels are also protected to give a hassle-free and secure experience.

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File System Control

File system control is another place where we can see effective use of Zero-Knowledge Proof. Zero-Knowledge Proof adds multiple layers of security to files, users, and log in that makes it difficult for anyone to hack or use the data in any way.

 

Zero-Knowledge KYC or Authentication

Identity verification is always a challenge. By implementing KYC (Know Your Customer) is an accepted way of authentication. The process limits fraud and money laundering. At the same time, collecting personal data might end up difficult. it’s not easy collecting personal data.

Zero-Knowledge Proof authentication helps the customers to verify their personal information without ever receiving that information. So, people can minimize the data collection and in the process reduce the risk that holding personal data creates.

 

Zero Knowledge Proof Blockchain Protocols

There are some Zero-Knowledge Proof blockchain projects, they are:

ZCash

The main disadvantage of blockchain is that it exposes the transactions between peers. ZCash can provide full privacy where transactions are concerned.

ZCash is open source and permissionless using Zero-Knowledge Proof. As a result, the transaction process gets protected. So it finds the value, the sender, and the receiver on the blockchain.

ZCash is the only blockchain project that has implemented ZKP successfully.

 

ZCoin

ZCoin is used to provide extra security and anonymity on transactions. ZCoin also follows the Zero-Knowledge Proof. Apart from it, ZCoin also offers scalability lacking in many blockchain networks.

ZCoin preserves your identity and what you are spending on the network. It is a great way to protect fungibility.

 

 What Is ZK-SNARKS?

ZK-SNARKS is a technology that uses the non-interactive Zero-Knowledge Proof concept. It stands for “Zero-Knowledge Succinct Non-Interactive Argument Of Knowledge”.

It utilizes this cryptography for better privacy. It allows one party to express that a particular bit of information exists and the involved party knows about the information. In the case of ZCash, ZK-SNARKS gets verified instantly without the interaction between the prover and the verifier.

 

What Is ZK-STARKS?

ZK-STARKS is an alternative version of ZK-SNARK. But, they are considered efficient as they are faster and cheaper depending on the implementation. They do not require an initial trusted setup because they rely on collision-resistant hash functions.

ZK-STARK comes with a simple structure when it comes to cryptographic assumptions. It has one disadvantage, that is the size of the proof is bigger compared to ZK-SNARKs. The difference in data size can come with limitations. There will be ways to solve as the technology is further tested and worked.

 

Zero Knowledge Proof Ethereum – DAO And Defi Use Cases

Ethereum networks use public addresses for replacing the identity of the party. So, the transaction is partially anonymous. However, here it is possible to know the identity through interaction records. Whereas in ZKP the transaction details can remain unknown.

Decentralized Finance or Defi is the shift from a traditional financial system to peer-to-peer finance built on the Ethereum blockchain. The creation of DAO was to automate decisions to help with cryptocurrency transactions.

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With the emergence of Zero-Knowledge Proof Ethereum, the privacy angle of the crypto world is sorted. It acts as digital notaries by authenticating the transactions.

After trying for a long time ZKP came as the protection for trustless distributed ledgers like Defi and Dao.

 

Pros And Cons Of Zero-Knowledge Proof In Blockchain

Every technology has its advantages and disadvantages. Let us look into its pros first:

Simple: The first advantage of Zero-Knowledge Proof is that it does not have any complex encryption involved.

Secure: It is secure because it does not require anyone to reveal any unnecessary information.

 

Zero Knowledge Proof has some disadvantages as well.

Lengthy: Zero-Knowledge Proof has around 2K computations which require a set amount of time to process. The problem with Zero Knowledge Proof is that the time required time to process makes it lengthy.

Imperfect: There is a chance for messages sent to the verifier or prover can get destroyed or changed.

Limited: Zero-Knowledge Proof requires the secret to be a numerical value, which in some cases might need a translation.

 

Takeaway – Zero Knowledge Proof

  • Zero Knowledge Proof allows data verification without revealing any unnecessary data.
  • Zero Knowledge Proof is trying to make transactions anonymous.
  • It has immense potential to give people back control over their data.
  • Zero Knowledge Proof can transmit data with better security.
  • Zero Knowledge Proof has been applied in many fields like messaging, authentication, etc.
  • ZCash and ZCoin are the two protocols of Zero Knowledge Proof used in blockchain.
  • ZK-SNARKS is a technology that uses the non-interactive Zero-Knowledge Proof concept.
  • ZK-STARKS is an alternative version of ZK-SNARK.
  • It will be great if ZKP comes to Ethereum blockchain and its ERC-20 tokens.

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