Zero-Knowledge Proof (ZKP) in Blockchain Explained

In a world where surveillance is almost becoming the order of the day, different institutions are constantly monitoring information about people, and the resultant lack of privacy demands a new technological intervention. 

The blockchain, also known as distributed ledger technology, is a decentralized system that’s disrupting the way we’ve traditionally done most things. The technology has made profound changes, but it doesn’t go far enough.      

There’s now a new kid in the block called Zero-Knowledge Proof (ZKP). If you’ve heard about ZKP and don’t yet know what’s behind it and how it works, you’re in the right place. 

Zero-knowledge encryption has been touted as the best protocol to enhance security, but is it good enough, and could it be the solution the world has been waiting for? This article seeks to answer these and other related questions.  

What is a Zero-Proof Knowledge Protocol?  

Zero-knowledge proof refers to a novel way used in cryptography by which one party (the prover) can ascertain the validity of a statement to a different party (the verifier) without necessarily revealing more information beyond the fact of the statement’s legitimacy. 

The proof system involves the prover, verifier, and the challenge that necessitates the concerned parties’ ability to publicly display proof of ownership or knowledge while leaving the finer details intact.  

To simplify it further, the zero-proof protocol can be used in cryptography to enable you to convince someone else that you know or have accomplished something without necessarily revealing that exact secret thing. 

Let’s assume you intend to take a loan but are unwilling to reveal your financial details to a bank; the bank can use Zero-Knowledge proof to determine your financial history, including more information like account payments, proof of residence, credit score, or real estate, without getting access to the specific details of those assets. 

The protocol was first conceptualized in 1985 by three MIT scientists, Shafi Goldwasser, Silvio Micali, and Charles Rackoff, via a research paper titled “The Knowledge Complexity of Interactive Proof-Systems.” Numerous decentralized finance (DeFi) protocols are already ZKP to guarantee better security and privacy to users of their lending, borrowing, and trading services. 

Several Layer 1 blockchains like Zcash and Polygon are already incorporating ZKP-based rollups or Zero-Knowledge Ethereum Virtual Machines (zkEVMs). There are high hopes among blockchain and Web 3.0 enthusiasts that ZKPs will play an integral role as the adoption rates of their applications continue growing.     

Properties of a Zero Knowledge Proof

The Zero-Knowledge proof method becomes especially useful in situations where information is profound, and the prover believes the verifier doesn’t have to access it. 

In this case, the prover offers mathematical proof only they are able to generate, which the verifier can use to authenticate the truth of the statement. Nonetheless, the information supplied can’t be used to reconstruct the information. 

Suppose a colossal mountain cuts across your city, but there’s a tunnel with two entrances connecting both ends of the town, and only you know the secret code to the locked doors to both ends of the tunnel. 

If you demanded an advance payment from anyone who wanted access to the tunnel before you revealed it to them, it’s only evident that they’d want proof that you really know the code before they can trust you. 

The interested parties could believe you got the secret code if they stood at the entrance of the tunnel and watched you walk from one end and exit through the other. 

Three essential properties of any zero-proof knowledge protocol are:     

❇️ Completeness: The verifier has to certify the prover has the required input to qualify the statement.  

❇️ Soundness: It’s impossible to falsify the statement, and there’s no way to convince the verifier the prover possesses the required input if they don’t. 

❇️ Zero-knowledge: There’s no mechanism available to offer the verifier information beyond the statement’s authenticity. Personal data or the contents of the information belonging to the parties remain anonymous. 

Different Types of Zero Knowledge Proofs 

There are two primary types of ZKPs, namely: 

Interactive Zero-Knowledge Proofs

In this type of Zero-Knowledge Proof, there will be numerous interactions between the prover and the verifier. That’s because the verifier could challenge the prover’s replies to the existing challenge several times until they’re totally convinced. 

Since the actions associated with this type of ZKP deal with mathematical probability, the prover must persuade the specific verifier or repeat the process to several verifiers through a series of actions related to the particular fact.       

Non-interactive Zero-Knowledge Proofs

There’s no voluntary interaction between the prover and the verifier in this type of ZKP since the verifier has only one chance to authenticate the proof delivered by the prover. 

Since this type of ZKP depends more on computational power than the interactive ZKP, the prover is obliged to create proof that anyone can verify so the verification process can progress to the next stage. 

The non-interactive ZKP may require specific software for the mechanism to be truly effective.   

Application of Zero Knowledge Proof in Blockchains

Blockchain technology introduced numerous significant characteristics like decentralization, immutability, transparency, and distributed ledger, enabling users to perform transactions with top-notch security and act anonymously. 

While blockchain may have given users control of their privacy, there’s a feeling it hasn’t done so thoroughly, primarily because blockchain networks use public databases. Anyone with an internet connection can access a network’s transaction history. 

As a result, many details associated with a user’s transaction and wallet details could be seen. Even though their identity remains anonymous, third parties will still see your public keys. 

Creating public keys via cryptographic techniques may safeguard privacy. Still, there could be techniques that could blow the cover of anonymity and privacy, hence the need to apply Zero-Knowledge Proof in blockchain systems to achieve the following results: 

#1. Messaging

When people write messages using end-to-end encryption, it’s always desirable that no one else but the intended party will access the private messages. The concerned message platforms go the extra mile to verify the identity of the users to the servers and vice-versa. However, implementing ZKPs will enable message platforms to create end-to-end trust in the messaging sphere without revealing pertinent user information.

#2. Authentication

ZKPs can be used to facilitate the transmission of delicate information, such as authentication, with utmost security. Blockchain platforms will be able to create secure channels for users to send their information without undue revelation to avoid risks of data leakages in the worst-case scenarios. 

The best example of blockchain-enabled privacy-preserving transactions is Manta Network’s decentralized application, MantaPay. 

The DApp uses ZKPs that enable users to carry out transactions on Decentralized Exchanges without necessarily revealing their personal identities or pertinent transaction details. Users are, therefore, able to maintain their privacy as they use the platforms.   

#3. Storage Protection

Since blockchains handle vast amounts of data, ZKPs could also come in handy as far as data storage is concerned. 

Zero-knowledge proofs integrate protocols that can safeguard sensitive information besides the storage unit itself. Furthermore, ZKPs can also protect the access channels to give users a seamless and secure experience.  

#4. Sending Private Blockchain Transactions

The essence of sending private blockchain transactions is ensuring that third parties don’t encounter them. With all their positive attributes, the existing protective methods may have some loopholes, which is where ZKPs come into play. 

If implemented correctly, ZKPs will make it impossible for anyone to hack, intercept, or divert private blockchain transactions. 

For example, Zcash uses Zero-Knowledge Transactions in enabling shielded transactions that obscure sender and recipient addresses in addition to the amounts involved from the public blockchain and adding a level of security.   

#5. Complex Documentation

ZKPs are designed with the potential to encrypt data in sizeable chunks, which gives users the ability to decide which chunk blocks they’ll allow particular users to access and restrict others. This concept can be used to ensure that only authorized parties can access complex documentation.   

#6. Democratizing Vote Verification

The following practical place to apply ZKP in blockchain is the democratic role it can play in checking cotes. The protocol can provide reliable answers for any auditable vote process by recording cast votes on a public blockchain. 

The effect would be a voting process that would eliminate the requirement for restriction and any third-party confirmations. Zero-knowledge proofs would enable voters to demonstrate their eligibility to cast votes while at the same time ensuring their sensitive personal data remains intact. 

Voters could also use ZKPs to demand immutable evidence of their vote in the final tallied vote count.    

#7. Security for Delicate Information

ZKP will also deliver in the way blockchain is used in providing transactions by adding an extra high-end security layer to the blocks carrying sensitive information. 

This could include sensitive banking information like credit history and credit card details so that the recipients only have access to the necessary blocks that have required user information. In contrast, the other blocks remain untouched and protected.    

#8. Tokenization and Ownership Verification

Blockchain platforms can also use ZKPs in the process of tokenizing assets and verifying their proof of ownership. An example is a user can prove the ownership of a property without revealing their personal information publicly.  

Advantages of Using Zero-Knowledge Proof 

Like every other form of new technology, the use of ZKPs brings with it a horde of advantages when they’re used in combination with blockchain protocols. Apart from the freedom and flexibility it offers users, the other benefits of using Zero-Knowledge Proofs include the following:  

🔷 Simplicity: Simplicity is perhaps the most notable advantage of using ZKPs, as users don’t require knowing how to use complex software to apply the different superior solutions they offer. Furthermore, ZKPs are fully secure despite being completely unencrypted, meaning they seamlessly straddle both worlds.    

🔷 Security: Zero-Knowledge Proof protocols are highly secure in how they facilitate information sharing. This means users can confidently use them to interact without having to master any specific codes or analytics. 

🔷 Time-saving: With ZKPs, users save the amount of time otherwise required to complete blockchain transactions by decently offering value.  

🔷 Privacy: Protecting and preserving the privacy of users is a primary feature of ZKPs. That’s because users don’t have to share sensitive data, making it a supremely private protocol. 

🔷 Safety: Users of Zero-Knowledge Proof protocols already know their policy regarding the sharing of data, meaning they will keep off any entity that requests their personal information without valid reasons. 

ZKPs Vs. Multiparty Computation (MPC)

We’ve already established that ZKPs involve a unique string used to prove the authenticity of a statement containing pubic value without revealing the finer details to the corresponding party. This may involve the hidden structure of some communication or a secret key related to the public key. 

In the context of blockchain transactions, this could mean the originator of a transaction will hide its exact value while offering proof that a valid transaction actually took place.  

Multiparty Computation (MPC), on the other hand, refers to interactive communication between numerous parties that enables them to securely and concurrently compute an identical function of their undisclosed values while keeping the details individually to themselves. 

A good case scenario would be having three parties having a secret number each, and they can calculate the sum of the three numbers. Still, the parties need to learn the secret number held by the other two counterparts apart from the total of the three figures.    

The primary feature of MPC, therefore, is that there are numerous peers involved, and every one of them aims to securely evaluate the secret value of their peers’ functions while allowing their peers the same privilege without revealing their private personal value. 

Zero Knowledge Proof Vs. Zero Trust

The aspect of verification is what draws the line between Zero-Knowledge Proofs and Zero trust. The Zero Trust model demands strict identity verification for the users and their devices before they can be allowed to access applications and confidential data. 

ZKPs, on the other hand, encrypt data in a way that only an authorized party is able to access it. While identity verification is the driving force behind the entire Zero Trust mechanism, encryption is the fundamental principle in the Zero-Knowledge protocol.    

The aspect of scope also sets apart the two protocols such that where network security is the primary focus of Zero Trust, data security is the mainstay of Zero Knowledge. 

Where Zero Trust is applied to ensure only an authorized and authenticated device or user is able to access confidential applications or data, Zero Knowledge Proof secures personal data by encrypting it such that only an authorized participant will access it.  

Final Thoughts

The Zero-Knowledge Proof may not be magic, but it has introduced a new and exciting frontier to blockchain technology. The protocol proposes immense potential to a wide array of applications that run on sensitive information like proof of identity, confirmation of password, or evidence of membership may be necessary. 

As ZKPs continue gaining attention, thanks to their scalability and privacy preservation properties, they’re increasingly being applied in blockchain, cryptocurrencies, and DeFi applications. Furthermore, they are expected to continue expanding their horizons as they play an integral role in the DApp ecosystems, where security, privacy, and efficiency are critical. 

When used as a fundamental tool in cryptography, Zero-Knowledge Proofs will help prove data properties and become the exciting and versatile missing link that could bring blockchain and its applications into the mainstream. Blockchain operators can leverage the latest-generation ZKPs to draw its huge benefits at affordable rates. 

Next, check out the detailed guide on Zero Trust Security.