Zero-Knowledge Proofs in Blockchain

Zero-Knowledge Proofs have been a common idea in cryptography since the 1980s.
Blockchain has remained affiliated with cryptography since its conception.
Zero-knowledge proofs represent a cryptographic technique where no information gets revealed during a transaction except for the interchange of some value known to both the prover and verifier.

The scope of fraudulent activities has also risen with time with the advancement of technology. Consequently, sustaining security protocols remains one of the most critical aspects of the transaction process. While Blockchain has emerged as one of the most promising innovations, additional security standards remain necessary to maintain transaction security.

Blockchain has remained affiliated with cryptography since its conception. The integration of Blockchain and cryptography, however, has recently captured the public’s attention. On the blockchain system, cryptographic techniques help safeguard the transaction. In other words, combining blockchain technology and cryptography has resulted in a secure financial transaction method.

Zero-Knowledge Proofs have been a common idea in cryptography since the 1980s. However, their function in cryptocurrencies has recently brought them into the limelight. The global population finds itself amid an increasingly interconnected crypto and fintech ecosystem. As a result, concerns have arisen regarding upholding the crypto ideology’s pledge to user anonymity and privacy.

The recently ambitious Worldcoin crypto project aims to create a global digital identification system for users. The new and ‘controversial’ crypto project employs zero-knowledge proofs to defend privacy while verifying users, claims, and transactions.

What is Zero Knowledge Proof

Zero-knowledge proofs represent a cryptographic technique where no information gets revealed during a transaction except for the interchange of some value known to both the prover and verifier, the two ends of the process.

A zero-knowledge proof is a way of proving whether a particular statement is true without revealing it. Here, the ‘prover’ is the party trying to establish a claim, while the ‘verifier’ is responsible for validating the claim.

In simpler terms, zero-knowledge proofs (ZKP) enable one party to prove to another party that they know something without sharing the information with another party to prove their knowledge.

The history of Zero Knowledge Proofs in Blockchain

Zero Knowledge Proofs began in 1985 when MIT researchers published The knowledge complexity of interactive proof systems. The paper outlined essential concepts, including a hierarchy for interactive proof (IP). Additionally, the paper introduced the idea of knowledge complexity, which quantifies the amount of proof transmitted from the prover to the verifier. The paper presented the construction of ZKPs for any NP-set with any commitment scheme, establishing the applicability of the researchers’ findings.

Again joining forces in 1989, Goldwasser, Micali, and Rackoff published The Knowledge Complexity of Interactive Proof Systems. This paper developed the concept of knowledge complexity, which assesses the quantity of information a prover must possess to persuade a verifier of a statement’s validity. The authors demonstrated that zero-knowledge proofs can help reduce information complexity in interactive proof systems.

In 1993, researchers from the Universities of Chicago and Budapest published Arthur-Merlin Games: A Randomized Proof System and a Hierarchy of Complexity Classes, in which they introduced the concept of randomized proofs that combine zero-knowledge proof theory with conventional proof theory. They employed a combinatorial game in which one participant (Arthur) made arbitrary movements, and the other (Merlin) made optimal moves.

In 2013, Eli Ben-Sasson, Alessandro Chiesa, Daniel Genkin, Eran Tromer, and Madars Virza wrote the Succinct Non-Interactive Zero Knowledge for a von Neumann Architecture. This paper introduced ZK-SNARKS or concise non-interactive zero-knowledge proofs. These are a form of zero-knowledge proofs verifiable with limited computational resources. The authors demonstrated that their system could validate the correctness of computations privately and securely.

The authors of ZK-SNARK released Scalable, transparent, and post-quantum secure computational integrity in 2018. ZK-STARK is a Zero Knowledge proof system that offers robust security assurances while staying highly scalable and transparent.

Existing Zero Knowledge proof systems frequently had scalability issues or required a trusted configuration, making them susceptible to attack. Thus, they introduced ZK-STARK, based on a new mathematical structure known as a polynomial constraint system (PCS). A PCS represents a polynomial equation structure used to articulate complex computational problems.

Numerous other papers have proven significant in the history of Zero Knowledge Proofs, but the ones mentioned above have played a critical role. Recent generations of Layer-2 (L2s) and ZK-based electronic voting machines (EVMs) have created a blank canvas for applying these innovations to scaling blockchain runtimes.

Types of Zero Knowledge Proofs

There are two fundamental types of ZKPs as follows:

Interactive Zero Knowledge Proofs: In Interactive ZKP, the verifier challenges the prover who replies to these challenges until the verifier is convinced. They must be simultaneously online, and the prover must complete a series of actions to convince the verifier about a specific fact.
Non-Interactive Zero Knowledge Proofs (NIZKP): Non-interactive Zero-Knowledge Proofs do not require an interactive process between the prover and verifier. The prover delivers the proof to the verifier, with the proof verification happening only once at any time. NIZKP can be more efficient and convenient than IZKP as it has no requirement for the prover and the verifier to be online. However, requires more computational power as compared to Interactive Zero Knowledge Proof.

To fulfill the role of an effective verification process that also protects the data, a zero-knowledge proof must be:

Complete: The verifier will accept the proof if the claim is valid and both parties follow the protocol.
Sound: If the claim is false, convincing the verifier that it is true should be near-impossible.
Zero-knowledge: No information except the truth of the claim should be known or discoverable by the verifier.

The elements of Zero-Knowledge Proofs

In basic form, a zero-knowledge proof has three elements:

Witness: With a zero-knowledge proof, the prover wants to prove knowledge of some hidden information. The secret information is the “witness” to the proof, and the prover’s assumed knowledge of the witness establishes a set of questions that can only be answered by a party with knowledge of the information. Thus, the prover starts the proving process by randomly choosing a question, calculating the answer, and sending it to the verifier.
Challenge: The verifier randomly picks another question from the set and asks the prover to answer it.
Response: The prover accepts the question, calculates the answer, and returns it to the verifier. The prover’s response allows the verifier to check if the former can access the witness. The verifier picks more questions to ask to ensure the prover isn’t guessing blindly and getting the correct answers by chance. By repeating this interaction many times, the possibility of the prover faking knowledge of the witness drops significantly to the point of satisfying the verifier.

Applying Zero-Knowledge Proofs in Blockchain

Optimizing performance

Application code is executed off-chain or by a single node on the blockchain network, and only proof of its correct execution posted to the Blockchain for other parties to verify its correctness. An example is ZK Rollups, where transactions are executed off-chain, and a summary of all transactions is submitted on-chain.

Private transactions in Blockchain

Transaction data is encrypted, and proof is posted to prove it was computed correctly. ZKPs also apply used in private transactions that do not reveal monetary data and receiver and sender information. An example is Tornado Cash, a decentralized, non-custodial service that allows users to conduct private transactions on Ethereum.

Data privacy and security

Organizations that control sensitive data, such as banks and hospitals, must keep them free from third-party access. ZKPs and Blockchain together can make accessing data impossible. ZKPs can help in adding multiple layers of security to files and logins. As a result, ZKPs can present notable obstacles for hackers or manipulators to alter and retrieve the data.

Private blockchain transactions transfers:

The most notable concern in private blockchain transactions is the numerous loopholes evident in conventional procedures. The productive integration of ZKP with private blockchain transactions can create a robust hacker-proof process.

Messengers on Blockchain

Although messengers nowadays hold the encryption promise, unencrypted Blockchain could become the next big thing in the technological world. With the guarantee of an unencrypted yet robust solution, ZKPs and Blockchain can co-create a value-added messenger platform secured for one and all.

Zero-knowledge proofs have great potential in saving costs and preserving users’ privacy in the blockchain and crypto world. Moreover, this concept is easy to use, and the technologies that support ZKPs are also superbly efficient. By leveraging the latest-generation ZKP, users can benefit hugely without spending much money.