What is Zero-Knowledge Proof (ZKP)?

The creation of Blockchain technology aimed to give users more control over their data. However, while it provides some level of pseudo anonymity, it lacks adequate mechanisms to protect users' privacy.

For instance, when a user buys something using their wallet address, the seller gains access to information about the user's past and future activities, including purchase history, wallet balance, and so on. This creates a genuine privacy concern that hinders real-world adoption. To address this issue, technology experts are exploring the use of zero-knowledge (ZK) proofs to enhance users' privacy.

What is Zero-Knowledge Proof?

Zero-Knowledge Proof (ZKP) is a cryptographic concept that allows one party to prove to another party that they know a certain piece of information without revealing any details about that information. It is a powerful tool that enhances privacy and security in various applications, including blockchain technology, online authentication, and digital identity verification.

The concept of ZKP was first introduced in 1985 by Goldwasser, Micali, and Rackoff, who demonstrated that it is possible to prove knowledge of a solution to a problem without revealing the solution itself. Since then, ZKP has evolved and become a vital component in modern cryptography.

The basic idea behind ZKP is that a prover wants to convince a verifier that they know a secret, without revealing any information about the secret itself. The prover achieves this by creating a proof that demonstrates they have knowledge of the secret, but does not reveal the secret itself. The verifier can then validate the proof without gaining any knowledge of the secret.

There are several types of ZK proofs, each with its own unique features and use cases. One popular type is the "interactive" zero-knowledge proof, where the prover and verifier engage in a back-and-forth interaction to complete the proof. This type of proof is useful in situations where the verifier may not fully trust the prover, such as in online authentication or identity verification.

Another type of ZK proof is the "non-interactive" zero-knowledge proof, where the prover generates a proof and sends it to the verifier for validation. This type of proof is useful in situations where the prover and verifier do not need to interact directly, such as in blockchain technology.

One common application of ZKP is in enhancing privacy in blockchain technology. In a blockchain network, transactions are recorded on a public ledger, which is visible to all participants. ZKP can be used to provide confidentiality in transactions, by allowing parties to prove that they have the necessary information to conduct a transaction without revealing the details of the transaction itself. This can help prevent fraudulent activity, increase privacy, and improve the overall security of the network.

How Does Zero-Knowledge Proof Work?

An interactive zero-knowledge proof protocol needs to meet specific criteria:

Completeness: The zero-knowledge protocol must return "true" if the input is valid. If the underlying statement is true, and both the prover and verifier act honestly, the proof can be accepted.

Soundness: It should be theoretically impossible for the zero-knowledge protocol to return "true" if the input is invalid. Therefore, a dishonest prover cannot deceive an honest verifier into believing an invalid statement is valid, except with a minimal probability.

Zero-knowledge: The verifier gains no knowledge of a statement beyond its validity or falsity. This requirement ensures that the verifier cannot derive the original input (the statement's contents) from the proof.

In its basic form, a zero-knowledge proof comprises three elements: witness, challenge, and response.

Witness: In a zero-knowledge proof, the prover aims to demonstrate knowledge of a hidden piece of information. The secret information is the "witness" to the proof, and the prover's alleged knowledge of the witness poses a set of questions that only a party with information can answer. The prover begins the proving process by randomly choosing a question, computing the answer, and sending it to the verifier.
Challenge: The verifier selects another question randomly from the set and asks the prover to answer it.
Response: The prover acknowledges the question, computes the answer, and sends it back to the verifier. The prover's response enables the verifier to verify whether the former genuinely has access to the witness. To ensure that the prover is not guessing blindly and obtaining the correct answers by chance, the verifier poses additional questions. By repeating this interaction multiple times, the chances of the prover fabricating knowledge of the witness decrease significantly until the verifier is satisfied.

Non-Interactive Zero-Knowledge Proofs

To address the limitations of interactive proving, which required repeated interaction between the prover and verifier and prevented independent verification of the proof, Manuel Blum, Paul Feldman, and Silvio Micali proposed non-interactive zero-knowledge proofs. These proofs allow the prover to demonstrate knowledge of some information (the witness) without revealing the information itself, using a shared key between the prover and verifier.

Unlike interactive proofs, non-interactive proofs require only one round of communication between the parties. The prover computes a zero-knowledge proof using a special algorithm and sends it to the verifier, who checks that the prover knows the secret information using another algorithm.

Non-interactive proofs significantly reduce the communication between the parties and improve the efficiency of ZK-proofs. Furthermore, once a proof is generated, it can be independently verified by anyone with access to the shared key and verification algorithm.

The development of non-interactive proofs was a breakthrough for zero-knowledge technology and has paved the way for the proving systems used today.

Zero-Knowledge Proof and Cryptocurrencies

One of the challenges facing cryptocurrencies is privacy. Transactions on the blockchain are transparent and visible to all, which can compromise the anonymity of users. Zero-Knowledge Proof (ZKP) is a promising solution that can enhance privacy in cryptocurrencies while maintaining their decentralized and secure nature.

ZKP can be used in various ways in cryptocurrencies. One application is in enhancing privacy in transactions. With ZKP, users can prove that they have the necessary funds to conduct a transaction without revealing their wallet balance or the amount being transacted. This can help prevent malicious actors from tracking the spending habits of users and protect their privacy.

Another application of ZKP in cryptocurrencies is in enhancing the security of smart contracts. Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. ZKP can be used to verify the validity of transactions within smart contracts without revealing sensitive information about the contract itself.

ZKP is a promising solution that can enhance privacy and security in cryptocurrencies. Its implementation in cryptocurrencies has shown that it can be an effective tool in maintaining the decentralized and secure nature of cryptocurrencies while also providing privacy for users. As the adoption of cryptocurrencies continues to grow, the importance of ZKP in enhancing privacy and security is likely to increase as well.

Types of Zero-Knowledge Proofs

Zero-Knowledge Proofs come in different types, including ZK-SNARKs and ZK-STARKs.

ZK-SNARK stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge. This type of proof protocol possesses the following characteristics:

Zero-Knowledge: A verifier can verify the truthfulness of a statement without gaining any additional information about it.
Succinct: The proof is smaller than the witness and can be quickly verified.
Non-Interactive: The proof only requires a single interaction between the prover and verifier.
Argument: The proof satisfies the soundness requirement.

ZK-STARK stands for Zero-Knowledge Scalable Transparent Argument of Knowledge. This type of proof is similar to ZK-SNARKs, but it is:

Scalable: ZK-STARK is faster than ZK-SNARK in generating and verifying proofs when the witness size is larger.
Transparent: ZK-STARK uses publicly verifiable randomness instead of a trusted setup, making it more transparent.

ZK-STARKs typically produce larger proofs than ZK-SNARKs, which can result in higher verification overheads. However, in situations such as proving large datasets, ZK-STARKs may be more cost-effective than ZK-SNARKs.

Exploring Zero-Knowledge Proof Through a Thought Experiment

To better understand how Zero-Knowledge Proof (ZKP) works, let us explore a thought experiment that involves two people, Emily and David. Emily wants to prove to David that she knows the secret code to a locked box, without revealing the code itself.

Emily places an item inside the locked box and locks it with a combination lock. She tells David that she knows the combination to the lock and challenges him to prove that she does. David, however, does not want to know the combination itself as that would compromise the security of the box.

To solve this problem, Emily and David employ ZKP. Emily puts the locked box in front of David, but she does not reveal the combination. Instead, she asks David to choose a number between one and ten. Emily then unlocks the box, shows David the item inside, and locks it again with the same combination.

Emily then proceeds to perform a series of moves with the box, including rotating it and shaking it, before handing it back to David. She challenges David to guess the combination of the lock by trying different numbers between one and ten. David begins to guess the combination, but he does not know that the box has been manipulated in such a way that only the correct combination will open it.

After several failed attempts, David asks Emily to prove that she knows the combination. Emily agrees and opens the box, revealing the item inside. She then explains that the specific moves she made with the box are a code that only she knows. The code can be used to validate that the combination she used was the correct one, without revealing the combination itself.

In this thought experiment, the locked box represents the secret information that Emily wants to prove to David that she knows. The combination lock represents the proof that Emily must provide to David. ZKP allows Emily to prove that she knows the combination without revealing the combination itself, just as in the experiment, Emily is able to prove that she knows the combination without revealing it to David.

The Bottom Line

In conclusion, ZKP is a powerful cryptographic concept that enables the proof of knowledge without revealing any details about the information being proven. It has various applications in enhancing privacy and security, such as in blockchain technology, online authentication, and digital identity verification.

As the need for privacy and security continues to grow, the importance of ZKP is likely to increase, and it will likely continue to evolve and advance in the years to come.