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Zero Knowledge Proof

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.

Real-world Applications:

  • 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.

Blockchain Integration:

  • 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.

Industry Adoption:

  • 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.

Prominent Examples:

  • 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.

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