What Are Zero-Knowledge Proofs in Blockchain?

Nowadays, you are always warned not to recklessly share your personal information online for security reasons. You will be surprised to know that not even blockchain technology is untouched by cyber threats. 

Though blockchain is a promising technology that ensures data security, immutability, and anonymous transactions, we still need an additional security layer. 

Decades old ZK protocol serves as the best solution to combat security threats in blockchain and cryptography. 

What is ZK protocol? What is its role in blockchain? How can it ensure a high level of security?

Read on to know more.

Understanding Cyber Threat In The Digital World

In this digital world, technology is becoming more advanced and sophisticated day by day. Technology has brought everything online. From businesses to finance, retail, agriculture, transportation, government institutions, welfare schemes, citizen data, payments and even our social and work life are online. 

A major part of your life is online and to run it smoothly you use several online services daily. From simple food ordering to bill payments, banking and trading, everything is at our fingertips. 

However, to use these online services, you have to provide some personal identification information at various levels for authentication. While you believe that digitalization has made your life easy, the same can be the reason for your worry.

Providing personal information online makes you prone to fraud, data theft, and scams. Conventional internet systems are no longer secure. However, the integration of blockchain technology into the systems in diverse sectors gave us some relief.

Blockchain technology introduces a high level of security with its hack-proof and immutable distributed ledger technology. 

But is this sophisticated technology safe enough?

The cyber security threat is real. Even the cryptocurrency market, metaverse platforms, and blockchain networks are affected. With the advancement in blockchain technology, hackers are coming up with new innovations in hacking as well.

How can we make our blockchain networks more secure?

The answer to this question lies in the 1985 MIT paper. Welcome to the old technology of the Zero-Knowledge Proof system also known as the ZK protocol. 

The addition of ZK protocol in blockchain ensures data privacy, anonymous transactions, secured identity verification, identity protection, and verifiable computations.

Let us understand in detail what is ZK protocol.

What Is Zero Knowledge Proof?

Zero Knowledge proof is a verification method between a prover and a verifier. In this method, the prover proves that he has a particular piece of information without actually revealing the information to the verifier.

Using the ZK protocol, you can prove that you have the password or sensitive data without revealing the sensitive information or the password itself. 

Let us take an example to understand it.

Suppose A has to prove to B that he has the secret key to the room. He can prove this in two ways.

In the first method, A can hand over the secret key to B. Then B can use the key to open the door himself. Thus, B can verify that A truly has the secret key to the room and is eligible to access the room.

In the second method, A can use the key to open the room and bring an item from the room. He can then show the item to B who knows that this particular item can only belong to that room. Thus, A can prove he has the key without handing over the key to B. In a way, the secret key remains safe with B.

Shafi Goldwasser and Silvio Micali first conceived the concept of Zero Knowledge proof. They published the concept in detail in their 1985 MIT paper. 

In the paper, they demonstrated that it is possible to prove a number without disclosing the number itself or any related information. The paper has also mathematically proved how we can reduce the amount of information shared between a prover and a verifier.

In blockchain technology, cryptography analyses encrypt and transfer the entire data. But the ZK protocol only analyses the insignificant elements of the data. It then uses mathematical computations to prove that the possibility of the presence of the complete set of data can be true.

In the ZK protocol, entire data is not transferred to third parties or across the network for verification. Only irrelevant pieces of information are shared. Thus, the ZK protocol saves crucial data and avoids third parties to intercept anything of value.

How does Zero Knowledge Proof Work?

Let us take another example to understand how websites can use Zero Knowledge proof for secured login and authentication and identity verification.

Assume a round-shaped tunnel that has two entrances. One on the right and the other on the left side. There is a door in the middle of the tunnel. If one has to go from left to right or vice versa he has to cross the door. 

Let us suppose A has the code of the middle door. Now he wants to prove to B that he possesses the code without actually sharing the code.

He can do so by using the simple application of the ZK protocol. A tells B to stand at the entrance and only A enters the tunnel. Now he asks B to tell him which way he should exit from – left or right?

B asks A to exit from the left side. A can exit the tunnel from the left side only if he has the code to go through the middle door. If A successfully exists from the left side, B will be 50% convinced that A has the code. 

If B repeats this process many times, and every time A comes out successful, he will be sure that A truly has the code.

Similarly in the ZK protocol, the prover offers a set of commitments to the verifier. The verifier then challenges the commitments. If the prover completes it, the verifier can trust the prover’s claims.

The same mechanism as in the example can be used by online websites to verify users’ credentials without sending their passwords to the servers.

Properties Of ZK Protocol

A zero-knowledge proof enables you to establish the validity of a claim without disclosing its details or how you came to your conclusion. Zero-knowledge protocols use algorithms that take data as input and produce “true” or “false” as output.

Zero Knowledge proofs work only when these three conditions are met.

Completeness

Completeness property assures that the transaction is verified. It also permits the prover to process the transaction ahead. 

If the input is valid the zero knowledge proof always returns “true”. Thus the verifier can verify that the underlying statement is true.

Soundness

This property ensures that the complete transaction is correct and not even a part of it is anyhow fraud. 

If any input is invalid, there is no way to make the zero knowledge protocol return as “true”. The protocol will always show “false”. Thus the prover cannot fool the verifier into believing that the invalid statement is valid.

Zero Knowledge

The verifier cannot access any information other than the current statement and the authenticity of the statement as true or false. It also prevents the verifier from intercepting the crucial original information from the proofs.

In simple words, the verifier questions the prover to go through a set of actions. The prover can successfully pass the actions only when he knows the original correct information.

If the prover passes all tests the verifier trusts that he has the correct information. However, if he fails in any of the actions, the verifier will identify the prover as a fraud claiming to possess the actual information when he actually doesn’t have it.

Types Of Zero Knowledge Proof

There are two types of Zero Knowledge proof protocols.

Interactive ZKP

The concepts’ accompanying actions relate to mathematical probability. In interactive ZKP, a prover must persuade a particular verifier before doing the same for each additional verifier. To persuade the verifier of a particular fact in interactive ZKPs, the prover must carry out a set of tasks.

Non-Interactive ZKP

There is no voluntarily occurring interaction between the prover and the verifier in non-interactive ZKPs. In non-interactive ZKP, a prover provides a piece of evidence that anyone can check, and the verification process can even be deferred. They require specialized software to improve the non-interactive ZKPs’ mechanism.

Applications Of Zero Knowledge Proof On Blockchain

Have a look at some of the applications of ZKPs on the blockchain.

Verifiable Computation

One of the key applications of Zero knowledge technology in blockchain is verifiable computation. 

It allows us to outsource the computation while maintaining verifiable results. The entity submits the results with proof proving that the program was executed correctly.

Verifiable computation is crucial for improving blockchain designs and speeds without compromising security.

To understand this, you will have to first understand the key difference between on-chain and off-chain scaling solutions.

On-chain scaling solutions such as Sharding require heavy remodeling of Ethereum’s base layer to increase its speed and reduce network congestion.

Off-chain scaling solutions don’t require extensive modifications of the core Ethereum protocols. It depends on outsourcing the computation model to improve the output of the base layer.

In this case, Ethereum does not have to do every transaction. It outsources the transactions to a separate chain. The other chain then processes the transactions and submits the results. 

Ethereum chain only has to apply the results from the outsourced computation to its state. This reduces network congestion and improves transaction speeds.

But the Ethereum chain needs a way to validate off-chain transactions without having to redo all of them. It is where the zero-knowledge proof application of verifiable computation comes into play.

A node submits a zero-knowledge proof to demonstrate the accuracy of off-chain execution whenever it completes a transaction outside of the Ethereum network. When a transaction is validated with this proof (also known as validity proof), Ethereum can immediately apply the outcome to its state.

Two off-chain scaling techniques that leverage validity proofs to deliver secure scalability are zero-knowledge rollups and validiums. These protocols carry out tens of thousands of transactions off-chain and send Ethereum proofs for validation. Once the proof is confirmed, those conclusions may be instantly put into use, allowing Ethereum to handle more transactions without having to perform more base-layer processing.

Identity Authentication

To use online services we provide much personal information like email address, name, phone number, passwords, etc. Even while accessing crypto exchange platforms, NFT marketplaces, or Metaverse platforms, you have to memorize your credentials and safeguard private keys and other crucial data.

With ZKPs, we can simply identify authentication and secured the log in the process along with protecting your personal information.

Platforms can use ZKPs to let users login securely without having to share their credentials, login pins, or passwords with the server.

Identity Protection

Your personal information is always at risk online. Zero knowledge proof can verify your identity without risking your sensitive personal data.

It plays a key role in decentralized identity which gives the individual control access to personal identifiers. 

CanDID is a decentralized identity protocol powered by ZKP. On this platform, users can retrieve their information without relying on a third party. 

With ZKPs, you can prove your identity without revealing your Aadhar number or social security number. You can even trade and invest online or file taxes without revealing your PAN Number or tax ID.

Anonymous Payments On Blockchain

In credit card, debit card, or online transactions, your private information is shared with several third parties like merchants, banks, etc. Though financial institutions have necessary security protocols, they devoid you of your privacy.

Cryptocurrencies claimed to provide secure, private, anonymous, and peer-to-peer transactions. However, transactions are visible on public blockchains and User identities are often pseudonymous and linked to real-world identities.

Using ZKPs, we can create highly private blockchains which facilitate anonymous and secure transactions in a true sense. With zero knowledge proofs, the blockchains allow nodes to verify and validate transactions without knowing the transaction details.

Examples of privacy-focused blockchains are ZCash and Monero. These blockchain networks shield transaction details, including sender/receiver addresses, asset type, quantity, and the transaction timeline.

Zero Knowledge is also used in anonymous transactions on the public blockchain. One such example is Tornado Cash. It is a decentralized, non-custodial service that allows you to carry out private transactions on Ethereum. Tornado Cash uses zero-knowledge proofs to obfuscate transaction details and guarantee financial privacy. 

Blockchain Messengers

Though blockchain messengers are encrypted, unencrypted blockchain secured with ZKPs can be the next big thing.

Data Security

Blockchain ensures a high level of data security and immutability. However, we can always upgrade the security layers by integrating ZKPs into the blockchain.

ZKPs and Blockchain together can make data theft and interpretation impossible.

Conclusion

If you are looking for robust blockchain solutions to streamline and upgrade your business processes, Block Tech Brew is here for you.

We offer custom blockchain development solutions to help you build a decentralized, secure and automated business ecosystem for business growth and success.

Talk to our experts today!

September 26, 2022

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