Blockchain technology has transformed the world with its inherent transparency, immutability, and security. However, amidst the rising dominance of a few tech companies, concerns about increasing centralization and censorship underscore the need for enhanced privacy.
This is where zero-knowledge technology comes into play. It not only offers improved privacy but also provides a better solution to blockchain’s scalability issues. Zero-knowledge is a broader category of cryptographic methods designed to preserve privacy by allowing one party to prove to another cryptographically that they possess knowledge about a piece of information without revealing the actual underlying details. In blockchain, zero-knowledge proofs (ZKPs) use algorithms to process data and confirm its truthfulness. Zero-knowledge proofs focus on three main criteria:
So, a basic zero-knowledge proof consists of three components. A witness who provides the secret information; a challenge, in which the verifier selects a question for the prover to answer; and a response, in which the prover answers the question.There are several types of Zero-Knowledge Proofs (ZKPs):
While the basic concept of cryptographic primitives has existed for the past couple of decades, its development accelerated substantially only after the introduction of Bitcoin and Ethereum due to the technology’s ability to scale blockchains. By enabling one person to demonstrate to another that a computation was performed correctly without redoing the work or sharing the data used, ZKPs streamline and speed up the verification process.
This efficiency reduces costs and accelerates transactions on blockchains like Bitcoin, as it eliminates the need for every node to re-execute each transaction.
Instead, a single node handles the processing and then uses a ZKP to prove its accuracy, while the other nodes only need to verify this proof. Thus, ZKPs facilitate the development of a financial system that, unlike traditional finance, does not depend on social trust.
With the help of zero-knowledge technology, crypto users can also maintain their anonymity on public blockchains, where all the transaction history is for everyone to see, track, and monitor.
The tech actually allows for private identity verification, allowing for compliance while eliminating the need to reveal the data itself. This way, it even takes the load off the blockchain, offering scalability benefits. In the crypto world, teams like Polyhedra and Lambda Class are actively exploring this topic. The venture studio and investment firm Lamda Class sees SNARKs having a significant impact on shaping our world. Earlier this year, they proposed a simple and modular bridge that uses multi-storage proofs.
Ethereum co-founder Vitalik Buterin, too, has expressed his support for implementing zero-knowledge (ZK) technology to achieve user privacy, censorship resistance, and autonomy. He believes in the future, all rollups, a solution to improve blockchain scalability, will actually be ZK.
“zk-SNARKs will be as important as blockchains in the next ten years,” Buterin said last year. He has long been a proponent of this cryptographic tech to help overcome the problem of scalability and privacy.
Not just crypto but also ZKPs will become essential in verifying whether AI-generated content is produced by AI models or not. Moreover, in the coming decades, ZKPs are likely to play a key role in enhancing efficiency, securing devices, and ensuring national security.
Over the past few years, zero-knowledge proofs have been widely used to scale Ethereum. Now, they are also recognized as a crucial element for unlocking Bitcoin's programmability. Weikeng Chen, a PhD graduate from UC Berkeley and sponsored by infrastructure company Starkware, achieved the first implementation of a zero-knowledge verifier using Bitcoin script.
The historic milestone came after three months of exploring the possibilities of the technical proposal “OP_CAT” to expand Bitcoin’s capabilities by introducing smart contract functionality to the network. StarkWare’s ZK verifier marks the first large-scale practical application of the proposal’s opcode on the testnet, Bitcoin Signet.
“This was a tremendous effort and took a significant amount of time,” said Chen in an interview. “We started with nothing… We had to build the full stack, which eventually led to the implementation of the STARK verifier.”
While challenges remain, contributors at Starkware believe the project’s success represents “a monumental leap forward” towards Bitcoin scaling solutions that can use its ZK roll-up technology.
Other developments in the space include Polygon Labs’ latest version of its ZKP, Plonky3, which aims to enhance efficiency and security in distributed networks. While its previous versions had limitations in flexibility and adaptability, Plonky3 will empower developers to leverage ZK technology to build their own zkVM or zkEVM virtual machines.
With Plonky3, which has undergone auditing, the goal is to encourage innovation and community collaboration. Its versatility stems from its capability to adapt to various finite fields such as Goldilocks, BabyBear, and Mersenne31, as well as hash functions such as Keccak-256, BLAKE3, and Poseidon.This development comes a month after Polygon Labs acquired the tech firm Toposware, the third ZK tech-based team. So far, the organization has invested $1 billion in zero-knowledge technology.
“ZK is easier, not only from a development perspective but for users and user experience too,” a Polygon spokesperson told local media.
These efforts by Polygon Labs aim to enhance interoperability. Yet, ZK-based technology struggles with compatibility issues within EVM networks and requires a Type 1 Prover to confirm the validity of a transaction to a blockchain. In response, Polygon Labs and Toposware are jointly developing such a Prover.
In April this year, VC giant Andreessen Horowitz (a16z) unveiled the release of its zero-knowledge virtual machine (zkVM) to help its portfolio companies scale their operations. a16z is also an investor in Matter Labs, a leading zkEVM maker. ZK Proofs, according to the firm's researcher and associate professor at Georgetown University, Justin Thaler, scale blockchains by doing the hard work off-chain. Not all nodes have to do all the work, but they get the guarantee that the work was done correctly.
With scalability continuing to be a big challenge for blockchains, zero-knowledge technology has vast potential in the crypto space. For now, the implementation of ZK tech is in its early stages. However, the growing demand for privacy on public blockchains is expected to lead to growth and advancement in this technology.
The future of this tech focuses on prioritizing speed, improving developer tooling, reducing hardware requirements, enhancing flexibility, and widening support. With these advancements, we'll truly see ZK's transformative potential, leading to a more scalable and secure blockchain world.
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Shyft Network powers trust on the blockchain and economies of trust. It is a public protocol designed to drive data discoverability and compliance into blockchain while preserving privacy and sovereignty. SHFT is its native token and fuel of the network.
Shyft Network facilitates the transfer of verifiable data between centralized and decentralized ecosystems. It sets the highest crypto compliance standard and provides the only frictionless Crypto Travel Rule compliance solution while protecting user data.
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