Privacy issues are currently in focus of the digital industries, including blockchain industry. The address owners can be discovered, which can lead to a number of potential abuses. Anything from giving advertisers and malicious persons access to user’s data to government tracking and punishing for the use of alternative payment channels can happen.
Bitcoin, Ethereum and other cryptocurrencies suffer from these issues. Since the need for privacy-focused coins appeared, we are seeing several new coins and techniques getting more exposure every day. One of the most popular protocols is Zero-Knowledge Proofs or zk-SNARKs.
The idea of zero-knowledge proofs was created by MIT researchers Goldwasser, Charles Rackoff, and Silvio Micali. The research was initially based on the idea that the “prover” was malicious in any scenario. These three scientists then decided to flip the board and started questioning the morality of the verifier instead of the prover. The verifier was able to collect a lot of knowledge about the prover during the verification. So, what can guarantee us that verifier won’t leak the gathered knowledge?
Nowadays, zero-knowledge proofs technology is promoted by well-known personalities such as Edward Snowden, Vitalik Buterin and Christian Reitwiessner. The highly complex mathematics (also known as “moon math”) behind the zk-SNARKs can be entirely understood only if you hold Masters Degree levels of knowledge in mathematics.
The acronym zk-SNARK stands for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge,” and refers to a proof construction where one person can own a secret key without revealing the information and without any direct interaction between the prover and verifier. This is a significant difference compared to the previous technologies where at least one party needs to know all the information. An example of this would be storing users passwords on the server.
The privacy of the user is basically dependent on the security of the server. If the server gets compromised the password could end up at the hands of the crooks and consequences could be serious. For this reason, the zero-knowledge protocol is revolutionary and could see mass adoption.
For example, a prover can take the hash of the password stored safely and convince the verifier that the password with this hash value exists without revealing what is it. In zk-SNARKs prover can go even a step further, and prove to the verifier that they know the password — again, without revealing any information about it.
The value proposition of zk-SNARKs in blockchain technology is clear. It can be smoothly integrated with smart contracts, which may be the next big thing. A smart contract usually acts as an escrow of funds which gets released once particular actions are completed. But when the tasks are confidential the problems arise. Zero-knowledge proof can help prove you took the specified steps without actually revealing what they are. This serves as a base for development of secret contracts, a technology Quras is working on.