Understanding Zero-knowledge Proofs & Its Role on Blockchain

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Understanding Zero-knowledge Proofs & Its Role on Blockchain
The world of technology has been advancing significantly in recent years, which also leads to the increase of fraudulent activities. Therefore, the scope of keeping protocols secured is one of the most important tasks in the transactions process. While the blockchain technology has provided us with huge technological advantages such as transparency, immutability, and decentralization, it still misses out on the securteity standards to maintain transaction security. However, by using a combination of blockchain technology and zero-knowledge proofs (ZKPs), it can provide users a potent blend of immutability and security.
The association between cryptography and blockchain are considered strong right from the beginning. However, until the introduction of ZKP, the combination of blockchain and cryptography has been gaining more attention. On a blockchain platform, the transaction can be entirely secured using cryptographic methods. In other words, a secure method of conducting financial transactions has been provided by the combination of blockchain and cryptography. Indeed, the application of ZKP has been helping lots of blockchain projects get beyond the scaling and privacy issues that many layer-1 blockchains have.

What is Zero-Knowledge Proof?

Zero-knowledge technology is a cryptographic technique that enables a user to demonstrate their knowledge of or possession of a piece of information without disclosing the underlying data. A “verifier,” who cannot see the data, verifies that the proof was calculated correctly using the knowledge of a system’s inputs provided by the “prover.” In essence, zero-knowledge proofs allow one to confirm the accuracy of a dataset while maintaining the data’s privacy.
ZKPs have three basic properties, which are:
Inherent-Properties-of-Zero-Knowledge-Proof
(IMG source: https://www.leewayhertz.com/zero-knowledge-proof-and-blockchain/)
  • Completeness: The completeness property indicates that the transaction has been confirmed and that the prover is allowed to proceed with the transaction. The verifier has the power to give the prover the input he initially requested when the transaction statement is true.
  • Soundness: The soundness property makes sure that the transaction is accurate and not connected to any fraudulent activity. It means that the verifier cannot be persuaded under any circumstances if the transaction scenario is different and the statement is false. If it’s the case, neither the prover nor the prover's request for the inputs may be certified by the verifier.
  • Zero-knowledge: The only information available to the verifier is the current statement and whether or not the statement is true or false. Any further information and personal data from different parties will be concealed.

Two Main Types of Zero-Knowledge Proof

The Zero-Knowledge Proof includes two fundamental types, which are:
  • Interactive ZKPs: With this type of ZKPs, the interactions between the prover and the verifier happens several times. The verifier challenges the prover who gives responses to these challenges until the verifier is persuaded. The majority of the necessary tasks completed in interactive ZKPs typically involve mathematical probability concepts.
  • Non-interactive ZKPs: With this type of ZKPs, it requires no interaction between the prover and verifier, or the verification process can be done at a later stage. In contrast to interactive ZKPs, non-interactive ZKPs employ an automated mechanism to verify the prover's claims rather than a human. Therefore, more software and processing power are needed for these ZKPs. Non-interactive ZKPs are frequently used by cryptocurrency applications to enable users to conduct transactions without needing direct communication between the parties.
One of the popular examples of Zero-Knowledge proof usage is Zcash. It is the foundational implementation of zero-knowledge cryptography and the initial application of zk-SNARKs. zk-SNARKs stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge, which is a technology that makes advantages of non-interactive ZKP. A SNARK is a particular kind of cryptographic proof that is small in size and simple to verify.
zk-SNARKs works using three algorithms, including:
  • Key Generator: A parameter is set by a key generator to create a key pair. Here, after creating a private or public key pair, a trusted source can remove the private data. Then, using the available data, a new key pair is created. One of these would be used for proving, and the other would be used for verifying.
  • Prover: The prover is given a proving key and is required to validate his knowledge. After receiving and confirming the private key, he will send the statement forward.
  • Verifier: The verifier gets the statement from the prover and validates the authenticity of the statement.
To be able to work effectively, zk-SNARKs need to maintain four following characteristics:
  • The statement is the only thing the verifier will validate. A challenge that needs to be succinct should only take a few milliseconds to complete.
  • Non-interactive: The process is non-interactive
  • The proof must adhere to the soundness principle and use zero-knowledge encryption.
  • Without a reliable witness, neither the prover nor the verifier can proceed the procedure.

The use cases of Zero-Knowledge Proof on Blockchain

  • A value-added messenger platform on Blockchain: Even though modern messengers are made to be encrypted, unsecured blockchain technology may be the next great thing in technology. With the assurance of a solid, unencrypted solution, ZKPs and blockchain may work together to provide a value-added messenger platform that is secure for everyone.
  • Next-generation file system security: ZKPs can assist in securing data and logins with many layers of protection. As a result, ZKPs can be a significant barrier to data alteration and retrieval for hackers or other manipulators.
  • Storage protection: With the data included in the storage unit, ZKPs feature a security protocol. The access channels have strong security measures in place that provide a highly secure and seamless environment.
  • Private blockchain transactions: Private blockchain transactions raise the most serious concerns due to multiple flaws in established protocols. ZKP may effectively be integrated with private blockchain transactions to produce a robust hacker-proof system.
  • The security of data: Banks and hospitals are examples of organizations that must protect sensitive data from unauthorized access. Combining ZKPs with blockchain can prevent the access to data.

The Advantages and Disadvantages of Zero-Knowledge Proof

In comparison to some other cryptography techniques, ZKPs has its own advantages and disadvantages.
Advantages
Disadvantages
ZKPs employs simple mathematical algorithms that do not require any software expertise, yet provide better solutions that have an impact on our daily life.ZKPs can only verify numerical data because of their reliance on mathematical algorithms. To verify categorical data, it needs to be converted into a numerical format.
Effectively protect personal and secret information with extreme privacy. Users will be able to use it effortlessly without having to learn the codes or analytics.Over 2000 computations must be placed in order to deliver a statistically significant probability of trust. In order to complete each transaction, ZKPs need more resources than other cryptographic techniques.
ZKPs is a modernized solution that can replace obsolete and less trusted authentication techniques, which help fasten the blockchain transactions process and provide value to the customersDuring the transaction, if any pieces of data are lost or deleted, the validation procedure must start over.
ZKPs’ most appreciated feature is the safeguard of privacy of its users. It doesn’t require sensitive data-sharing which brings supreme privacy.Even though many developers consider them to be highly secure, ZKPs can also be subject to security breaches.

The Applications of Zero-Knowledge Proof

ZKPs are also employed in private transactions that conceal financial data, sender and receiver information, in addition to some blockchains like Zcash. The decentralized Oracle networks that offer off-chain data for smart contracts can make use of ZKPs to learn some details about off-chain data without actually disclosing its on-chain data.
Another example of ZKPs application on blockchain is DECO, which is a privacy-controlled oracle system running on the Chainlink network. DECO extends HTTPS/TLS, the most fundamental data transfer protocols, to ensure that data will remain private and impenetrable. DECO uses the most recent TLS version, requires no specialized hardware, and works backward-compatible without any server-side modifications. Therefore, DECO-enabled chainlink oracle nodes can verify the authenticity of data obtained from reliable servers without disclosing on-chain information. Banking and financial organizations can offer undercollateralized loans after the borrower has established creditworthiness thanks to smart contracts that resemble DECO. Without disclosing private or confidential information, the borrowers can generate credentials based on records from reliable sources.
Decentralized Identity protocols like CanDID, which is supported by ZKP, allows users to obtain their data and credentials on the platform without depending on a third party. These credentials are authenticated by issuers who can conclusively link user claims to things like citizenship, employment, and educational background. DECO assists conventional institutions and data providers in a private way by giving a mechanism to monetise the confidential and exclusive datasets. These service providers can access attestations from ZKPs to confirm facts about the data that will be published rather than uploading all data on-chain. With no data leakage, it opens up a new market for data providers to monetize and boost the revenue from their datasets.

Conclusion

It can be undoubtedly concluded that ZKPs is an extremely secure technique to authenticate data required for cryptocurrency transactions and user IDs while protecting private data. In contrast to other cryptography methods, ZKPs use straightforward algorithms and don't necessitate communication between the parties participating in transactions.
As the ZKPs is becoming increasingly popular thanks to their potential, blockchain developers are more aware of its ability to boost trust and confidentiality in the cryptography community. Going forward, we may witness the mass adoption of ZKPs and it will possibly become one of the most vital cryptography techniques in the blockchain world.

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