What are Zero Knowledge Proofs and How Do They Work

Beginner’s Guide / 01.08.2020

Zero-Knowledge proofs are a popular cryptographic method that utilizes probabilistic assessments to allow parties to verify data without revealing or sharing the underlying data. The process was originally introduced by a group of MIT researchers in the late 80s and has since seen growing adoption in the blockchain sector. Nowadays, zero-knowledge proofs serve a vital role in the business sector by verifying sensitive data securely.

What Problems do Zero-Knowledge Proofs Fix?

Zero-knowledge proofs solve several problems facing the business and personal sectors. There are many scenarios in which one party must verify they possess certain data without revealing the data specifically. 

The Treasure Parable

For example, imagine that you know the secret temple location full of treasure and another party has the key needed to unlock the secret temple. Before agreeing to join forces, they request that you prove you have the actual map. However, you know that if you reveal the location of the treasure, you are no longer needed. 

As any decision to show the map directly would jeopardize your value and potential windfall, you devise another strategy to prove you own the map. Instead of showing the map directly, you instead provide the first steps of the journey. The keyholder understands that only the map holder would know this vital info, and after a bit of back and forth questioning, they have faith you indeed possess the ancient temple’s location. 

Imagine the same scenario: replace the treasure with a cryptocurrency address and the key with a private key. In this way, it’s easy to see why zero-knowledge proofs have become an integral part of conducting business on the blockchain.

Privacy

One of the main benefits of zero-knowledge proofs is that they help retain a certain level of privacy. Parties can verify information without directly exposing the information. In the real world, individuals can use these protocols to verify their identity without revealing sensitive data such as social security numbers. 

Efficient

In many instances, and especially in the case of complex equations, Zero-knowledge proofs can speed up verifying data. It’s much faster for a computer to utilize zero-knowledge proofs rather than re-compute a massive equation. This efficiency equates to more savings and a more responsive network.

How do Zero-Knowledge Proofs Work?

Today, there are many different types of zero-knowledge proofs in use. While their strategies vary, they all share a common tactic. They provide small pieces of unlinkable information that would be nearly impossible for an outside party to know without revealing the important facts.

It’s vital to understand that zero-knowledge proofs are not exact in that there is a minuscule chance that someone could guess the information provided separately. However, when all the provided info is put together, there is such a high probability of ownership that it’s nearly impossible to fake.

  • Interactive Constructs vs. Non-Interactive Constructs

There are two main types of zero-knowledge proofs in use today. The first strategy is known as interactive zero-knowledge proofs. This is the original version of the concept. It requires the two parties to exchange data multiple times until a certain certainty percentage can be verified. This technique is highly effective; however, it does reveal the parties involved in the equation.

  • Non-Interactive Constructs

Non-interactive constructs take the zero-knowledge-proof concept a step further by eliminating the parties’ need to communicate directly. This approach is fairly new and is mostly used within the blockchain sector. In most instances, this approach relies on an initial setup phase that generates a common reference string. 

Zero-Knowledge Proofs in Cryptocurrency

Zero-knowledge proofs have found a home in the crypto sector as of late. These protocols are ideally suited for the cryptographic structures found in today’s blockchains. Early cryptocurrencies didn’t offer anything similar, and it led to issues such as theft and fraud.

For example, Bitcoin transactions reveal the sender, the receiver, the time, and the amount. While it’s possible to obfuscate this data using third-party protocols and additional systems such as CoinJoin, it’s not as effective as zero-knowledge proofs.

Z-Cash was the first cryptocurrency to utilize zero-knowledge proofs effectively, thanks to the network’s revolutionary zk-SNARK protocols. Notably, zk-SNARK stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge. This next-gen protocol provides users with a new level of privacy that was previously not possible. 

The Future of Zero-Knowledge Proofs

One of the biggest areas of development for zero-knowledge proofs is identity verification. There has been a steady rise in both major institutional and government level hacks and identity fraud. The use of zero-knowledge proofs could help to alleviate these concerns because they would provide fewer attack vectors. Every time you provide your personal information, that data remains on a third-party system. If this system gets compromised, you are also left open to attack. 

Zero-knowledge proofs could prevent these security risks by eliminating the need to provide this information in the first place. Imagine going to your doctor’s office, and instead of showing an ID or filling out a registration form, you provided zero-knowledge proof. You could prove you were who you say you are, and you would not have to worry about the office’s security precautions. This same approach is now seeing growing adoption in the medical field and other systems that traditionally hold a lot of personal info. 

Zero-Knowledge Proofs – A Brighter Future for Users

Zero-knowledge proofs provide a glimmer of hope in an increasingly hostile digital environment. They may be the key to protecting citizens’ vital data from state-organized hackers and expanding international cyber warfare. At the very least, they play a crucial role in protecting blockchains and other digital networks. For these reasons, you can expect to see further integration of these helpful systems across multiple industries. 

David Hamilton aka DavidtheWriter is a long time Bitcoinist and cryptocurrency journalist. Currently, he has over a thousand articles published on blockchain technology. His expertise and experience makes him one of the most reputable writers in the sector.