Crypto Glossary: Zero-Knowledge Proof (ZKP)
Zero-Knowledge Proof (ZKP): A cryptographic method allowing an entity to prove the truth of a statement without revealing any additional information. This privacy-focused technique is instrumental in enhancing security and scaling blockchain networks, particularly through rollups. ZKPs play a crucial role in achieving validity proofs for verifiable computation, preserving the confidentiality of underlying information.
Key Components and Characteristics:
- Prover and Verifier Interaction: ZKPs involve interaction between a prover and a verifier. The prover demonstrates knowledge of specific information without disclosing the information itself to the verifier.
- Completeness and Soundness: To be effective, a ZKP must satisfy two fundamental requirements: completeness, ensuring the prover accurately demonstrates knowledge, and soundness, allowing the verifier to reliably determine the prover’s possession of information.
- Privacy Enhancement: ZKPs are utilized in applications where privacy and security are paramount. Notably, authentication systems can employ ZKPs to verify credentials without directly revealing sensitive information.
- Blockchain and Cryptocurrencies: ZKPs find prominent application in the blockchain and cryptocurrency domain. Notably, zero-knowledge Succinct Non-interactive Argument of Knowledge (zk-SNARK) proofs are utilized. Privacy-focused cryptocurrencies like Zcash leverage zk-SNARK to enhance transaction privacy. Ethereum has also incorporated zk-SNARK proofs since its Byzantium update in 2017.
- Authentication and Security: Beyond cryptocurrencies, ZKPs contribute to authentication systems, ensuring secure verification without the need to disclose sensitive data. This enhances privacy in various applications.
- Privacy in Blockchain Transactions: ZKPs enable private transactions on blockchains, allowing users to confirm successful transactions without revealing the confidential information involved. This is particularly crucial in maintaining user privacy within transparent blockchains.
- Off-chain Code Execution: ZKPs facilitate running application code off-chain, with only a confirmation of proper execution sent to the blockchain. This ensures the accuracy of executions without exposing the underlying code.
Types of Zero-Knowledge Proofs:
- Interactive and Non-interactive: ZKPs can be categorized as interactive or non-interactive. Interactive ZKPs involve a sequence of activities between the prover and verifier, while non-interactive ZKPs do not require real-time interaction, allowing verification at a later stage.
- Corporate Confidentiality: Multinational companies incorporate ZKPs to preserve confidentiality and facilitate secure transactions over blockchain networks.
- Secure Communication: ZKPs enable secure communication of complex documents on blockchains, allowing users to control the availability of specific blocks and the information within them.
- Zcash: Zcash, a privacy-focused cryptocurrency, leverages ZKPs, particularly zk-SNARK, to enable secret transactions.
- AdEx Network: The AdEx Network utilizes decentralized ZKP ad auctions, allowing users to bid on ad display costs without disclosing the bid amount to others.