What is ZKP? A Complete Guide to Zero Knowledge Proof

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With people’s information being controlled continuously and the lack of privacy, now, demands a new era. Blockchain holding the torch of a decentralized system is making changes, but it’s not enough. Now a new technology called zero knowledge proof is lurking in the market for a chance.

Many of you must have heard about zero knowledge proof example but don’t really know the concept behind it. Zero knowledge encryption is a new protocol that allows adding a higher level of security. But how good is it in reality? Can it actually be the solution we are looking for?

ZERO KNOWLEDGE PROOF INFOGRAPHIC

Zero knowledge Proof (ZKP)Let’s dive in deep in this zero knowledge proofs guide.

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Table Of Content

Chapter-1: Different Ways to Chain in the Blockchain
Chapter-2: What is Zero knowledge Proof?
Chapter-3: How does Zero Knowledge Proof Work?
Chapter-4: Interactive Zero-Knowledge Proof
Chapter-5: Non-Interactive Zero Knowledge Proof
Chapter-6: Zero Knowledge Proof Explained –zk-SNARK Explained
Chapter-7: Enterprises Utilizing Zero Knowledge Encryption
Chapter-8: Where Can You Use ZKP?
Chapter-9: Implementing Zero Knowledge Proofs Architecture
Chapter-10: Conclusion

 

Chapter-1: Different Ways to Chain in the Blockchain

Typically blockchain is merely a shared database, where you are keeping score of who owns how much cryptocurrency or other digital assets. However different blockchain works a bit differently than one another.

For example, you’ll see metadata in bitcoin and other contractual logics in Ethereum. In any case, blockchains, mainly private blockchains offer two severe use cases.

  • Owning external assets, which is represented by tokens on the network. A user can also transfer external assets using the tokens.
  • Increased privacy and application are more related to general applications of data management.

Not saying, that every private blockchain offers these two use cases. But typically private blockchains can be more suitable for companies, which needs additional confidentiality and privacy.

Regarding storing general data, blockchain does indeed do a lot of services. First, it needs to prove where the data is coming from, then timestamp it and then making it immutable so that no one can change it.

However, the blockchain doesn’t have anything to say about the information itself. So, every app can decide what the data can actually represent or if it’s actually valid or not. Any bad data could be removed or ignored in the app level without any further disruption in the network itself.

So, if blockchains want to transfer any kind of assets, it needs to offer internal rules on the process of validating those transactions. This is something that the blockchain lacks from the start.

 

Can It Maintain the Privacy Needed?

For example, maybe you want to send $50 to your friend Kevin. But before your transaction gets approved the network needs to know whether you really have $50 in your possession. Although many blockchains follow this rule different to one another, still in every case, everyone on the network needs to know that you own $50.

This helps to maintain the validity of your assets along with Kevin’s when he receives the money. However, you are sacrificing your privacy for the sake of this validating process.

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But there’s a catch. In blockchain, you won’t have a regular identification name such as Kevin. Instead, you’ll get addresses for transactions and all these addresses a stream of strings that has no similarities to the real world.

Even though this information is accurate, still this necessarily doesn’t change the scenario. Why? Well, you can still find many ways to figure out connections between two users and figure out their addresses.

 

How it’s Done

At first, if a user wants to transact or send assets on the chain, then he/she needs to know the address. So, when you send the money, you can see which address it’s going to. On the other hand, if someone is paying you, then you would be able to see where it’s coming from.

If a user knows any information about another user from the real world, then he can easily track and figure out what address the other is using. Obviously, they can search through the chain and figure it out based on their activity.

Yes, it’s time-consuming, but it’s not impossible to know. That’s why having addresses instead of names doesn’t help preserve the privacy of the network.

 

Can Only Encryption be Enough?

The concept of privacy and sensitive information is closely related to encryption. If you are thinking about storing only general data on the blockchain, then we can definitely do that. In this case, we would still be able to gain data preservation, immutability, and timestamps.

As none of them don’t have anything to do with the data type, therefore, you would still be able to use the distributed ledger to store any data that is only readable. But you would still need to rely on others to validate its existence to help create the block in the first place. So, it’s the same process as before.

However, you can’t use this type of encryption for transactions that signify any transfer of tokenized assets. If you and Kevin encrypt your transactions, nobody on the chain can ever safely use the asset anymore. It’s because everyone will be unsure of where the assets exact location is.

The asset in question would lose its value on the ledger, so encryption can’t be the answer.

 

A Conflict between Liquidity and Privacy

Now you can see that, if we want to use blockchain for financial purposes, then you will always face a conflict between these two. Many startups are facing this problem now when they are dealing with assets.

Even though there have been many pilot projects simulating the process on the blockchain, in real life, it’s not the same. The process requires too much activity and thus reveals that two addresses are trying to transact assets.

This is how information gets leaked, and it’s one of the major issues, but there aren’t any specific rules on the network still now.

Now many startups settle all their scores off-chain rather than on-chain where they can encrypt and get the privacy. But blockchain has so much to offer, and on-chain settlements with privacy could lead the world finance at a different height.

Among all these conflicts, I think we finally have the solution we have been looking for – The Zero Knowledge Proof.

 

Chapter-2: What is Zero knowledge Proof?

The concept behind zero-knowledge proof is unique indeed. A zero-knowledge proof is a unique method where a user can prove to another user that he/she knows an absolute value, without actually conveying any extra information.

Here, the prover could prove that he knows the value z to the verifier without giving him any information other than the fact that he knows the value z.

The main essence behind this concept is to prove possession of knowledge without revealing it. The primary challenge here is to show that you know a value z without saying what z is or any other info.

Seems tough? Well, it’s not that difficult.

If a user wants to prove a statement, then he would be required to know the secret information. This way the verifier would not be able to relay the information to others without actually knowing the secret info.

Thus, the statement will always need to include that the prover knows the knowledge, but not the information itself. Meaning, you can’t say the value of z but can state that you know z. Here, z could mean anything.

This is the core strategy of zero knowledge proof applications. Otherwise, they won’t be a zero knowledge proof applications. That’s why experts consider zero knowledge proof applications to be a special case where there isn’t any chance to convey any secret information.

 

Zero Knowledge Proof Properties

A zero-knowledge proof needs to have three different properties to be fully described. They are:

  • Completeness: If the statement is really true and both users follow the rules properly, then the verifier would be convinced without any artificial help.
  • Soundness: In case of the statement being false, the verifier would not be convinced in any scenario. (The method is probabilistically checked to ensure that the probability of falsehood is equal to zero)
  • Zero-knowledge: The verifier in every case would not know any more information.

 

Researchers are further investigating the process to be more accurate and make sure it requires fewer interactions between two peers. Mainly the goal is to eliminate the amount of communication and move over to a common reference statement to ensure privacy.

Zero knowledge proof applications have been gaining popularity from quite some time now. But it’s not a new concept out on the blue. It’s been here for more than 20 years. Researchers have improved the output and efficiency of the system.

Now, proving a statement is super easy and highly efficient. It can now go directly with the bl9ckchain system.

 

Chapter-3: How does Zero Knowledge Proof Work?

Zero knowledge proof applications seem like a unique protocol. However, many of you must be wondering how you prove your statement without actually relaying the information. Well, let me explain it with two most famous examples.

Lets’ start.

First Example: Ali Baba cave

This is one of the favorite scenarios to properly investigate how the zero knowledge proof authentication works. Here the prover is known as Peggy, and the verifier is Victor.

So, to keep things on the same level as zero knowledge proof authentication, the prover would know a value z, and the verifier would know that the prover knows the value z.

The example starts like this, imagine that Peggy somehow knows a secret word that can open a magic door inside the Ali Baba cave. The cave looks like a ring with the door blocks the pathway to exit. The entry and exit meet in a similar location.

Now, Victor wants to make sure that Peggy is telling the truth. Meaning, she knows the secret word. But Peggy is a private person and is unwilling to say the magic word to Victor. So, how can Victor know whether she is telling the truth or not?

 

A Different Scheme

Victor comes up with a plan to solve the situation. He marks the entrance path A and exit path B. However, as they meet at the same position, path A and B are just left and right path. During this examination, Victor stays put outside, while Peggy goes into the cave.

Peggy now has the option to take path A or B, but whatever she takes Victor can’t know that. After Peggy chooses a path, she goes in, and Victor enters the cave. He then shouts the path name where he wants Peggy to return. He can select randomly – either A or B.

Well, if she actually knows the secret word, it’ll be really easy. She can use that word to open the door and return to Victor. Or she can also return the same path if necessary.

Suppose, Peggy doesn’t really know the word. In that case, she would only be able to return to Victor, if Victor shouts the name of the path she chooses at first. As the selection process is random, Peggy would get a 50% chance to follow Victors instruction. But if Victor repeats this process let’s say 15 time or 25 times, then Peggy would not be able to make a lucky guess to fool him.

Anticipating Victors move will become next to zero and Peggy would get caught.

But even after repeating this process so many times, Peggy manages to come back wherever Victor wants her to be; then Victor can safely assess that she does know the secret word.

 

What Happens With A Third Party View?

Typically if a third party is watching this situation, then Victor would have to have a hidden camera to record the transaction. However, the camera would only be able to record what Victor is shouting – could be either A or B. While it would also record Peggy appearing at B when he shouts B or Appearing at A when he shouts A.

This recording could be straightforward to fake for two people if they agree on this from beforehand. That’s why no third party would be convinced with this record that Peggy actually knows the secret word. If someone even observes the experiment from the cave, he won’t be convinced either.

So, how do they prove the integrity of the experiment?

If Victor flips a coin and then chooses the path based on that, the zero knowledge proof authentication will lose its property. But the coin flip would be convincing enough for any third party observer to verify that Peggy knows the word.

This way Victor would be able to prove the integrity of the experiment without knowing the word. But as I said earlier, it won’t be entirely zero knowledge proof.

In digital cryptography, Victor can flip coin using a random number generator that has some fixed patterns like the coin. But if Victor’s coin behaves like a number generator, then he and Peggy could have faked the experiment again.

Thus, even with a number generator, it won’t be as much as efficient as the simple coin flip.

 

Only Single Trial

Did you notice that Peggy could easily prove that she knows the word without saying the word in the first try? In that case, Peggy and Victor need to go inside the cave at the same time. Victor would be able to watch Peggy go through A and come out B, without revealing the word.

But this kind of proof would convince anyone. So Peggy doesn’t want anyone else to know about it, she can’t say that she conspired with Victor. Because she doesn’t even know who knows about her knowledge and how to control it.

 

Second Example: A Color-blind friend and Two balls

This type of experiment for zero knowledge proof authentication would require two same sized balls but with different colors. The experiment is really popular. Mike Hearn and Konstantinos Chalkias first introduced this new method. You can also do this experiment using two colored cards.

It goes like this, imagine you have a color-blind friend and two balls. The balls need to be red and green and of the same size. Your friend thinks they are the same thing and is doubting your statement that they are different.

So, you need to prove that they have different colors without telling him which is which.

You give the balls to your friend, and he keeps them hidden behind his back. After that, he brings out a ball randomly and lets you see it. He then puts that ball back and then randomly chooses the ball again.

You get to see the ball this time too. After that, he would ask you whether he switched the ball or not. He will be repeating this process for some time to be sure.

Now that you are not color blind, you can definitely tell that if he switched the ball or not. If the balls were of the same color, your probability for answering correctly would be 50%. So, after repeating this process and when you are able to answer each time correctly, your friend would be convinced.

The probability of anticipation would become zero, and you would achieve the three zero knowledge properties.

But make sure that your friend doesn’t know which one is green and which one is red. This way you will be able to preserve the third property “zero knowledge.”

 

Chapter-4: Interactive Zero Knowledge Proof

Zero knowledge encryption can be of two kinds –

  • Interactive zero knowledge proof.
  • Non-interactive zero knowledge proof.

Let’s see what they are.

 

Interactive Zero Knowledge Proof

This type of zero knowledge proof authentication would require interactions between peers or any computer systems. By interacting, the prover can prove the knowledge, and the validator can validate it.

This is the most typical scenario of zero knowledge proof blockchain. Here, you would be proving without disclosing the understanding. But you are also revealing it to the user you’re interacting with. So, if someone is just watching you two, he won’t be able to verify your knowledge.

Although it’s one of the best privacy protocol, still it requires a lot of efforts when you want to prove it to more than one people. This is because you would have to repeat the same process over and over again to each person as just by watching they can’t agree with you.

This protocol would need any kind of interactive response from the verifier to execute. Or else, the prover can never prove it on their own. The interactive input could be a form of challenge or another kind of experiments. Obviously, the process has to convince the verifier about knowing the knowledge.

In other cases, the verifier could record the process and then play it for other so that they can also see it. But whether other people would actually be convinced or not depends solely on them. They may accept it or not.

This is why interactive zero knowledge proof blockchain is more efficient for few participants rather than a large group.

 

Chapter-5: Non-Interactive Zero Knowledge Proof

Non-interactive zero knowledge proof blockchain is here to verify one’s statement to a larger group of people. You don’t always have to go for the non-interactive zero knowledge proof blockchain to check though. Often, you might be able to find any trusted verifier source who can vouch for you.

But when you can’t find anyone, then non-interactive zero knowledge proof blockchain is the way to go.

 

The Sudoku Challenge with Cards

Sudoku is one of the most difficult games but with simple rules. All of the rows, sectors, and columns need to have the number 1-9 only once.

In this case, imagine you know the solution of this puzzle, which may take days for even computers. So, if you want to sell the solution how the verifier will know that you are not tricking him? You would have to prove your knowledge without revealing the solution to the verifier.

Let’s see how you can do it.

 

A Way to Solve

You would need 27 cards where they are numbered from 1-9. So, 27 cards would contain the number 1 and then another 27 the number 2. In total, you would need 243 cards.

Now you would have to put three cards in a corresponding box with the solution. Meaning if the correct number for that box is five, you will put three number 5 cards in that box.

In a Sudoku table, you see some answers are always visible. In these boxes, you will place the card face up. On boxes that don’t have the answer, you will place the cards upside down.

Now you need to prove that you have placed all cards in the right position without revealing it. You have to:

Take the topmost card from each column until you have nine piles. Repeat the same thing for rows and sector.

Then you would need to shuffle every pile and then turn over to reveal the numbers.

You know the basic rule, all numbers from 1-9 have to appear once in every row, sector, and column. So, if all of your pile has the number 1-9 appearing only once then the verifier would know that you have the solution.

Pretty neat trick, right?

Non-interactive can be the best way to prove your statement to a lot of people without increasing resources and costing.

 

Chapter-6: Zero Knowledge Proof Explained – zk-SNARKS Explained

You must have heard about zk-SNARKS by now. Ever wonder what it actually is? Well, zk-SNARKS explained is a technology that uses the non-interactive zero knowledge proof example concept. Zcash utilizes this form of cryptography to ensure better privacy.

It’s actually an acronym for Zero-Knowledge Succinct Non-Interactive ARgument of Knowledge.

This technology consists of three different algorithms:

  • Key Generator: The key generator sets up a parameter to generate a key pair. Here, a trusted source could generate a private or public key pair and then destroy the private part. After that, using the public part generated another key pair. Here, one would be used for proving another for verifying.
  • Prover: The prover has to take the proving key and some public input to proof his knowledge. Here, he will be witnesses privately and then satisfy the context to prove his point.
  • Verifier: The verification would need the verification key to make sure the statement is true or false. He has to take in the public input and the proof to evaluate whether it’s true or false.

 

Other than these three the zk-SNARKS also need to maintain –

  • Zero-knowledge: The verifier would not learn anything other than the fact that the statement is true. Succinct: Whatever the challenge may be it needs to be really small so that one can prove it within few milliseconds.
  • Non-Interactive: The user would only be sent the stamen to the verifier and nothing else. Verifier won’t be able to interact further with the prover.
  • ARgument: The proof would hold the soundness of zero knowledge encryption and would be bound by polynomial-time.
  • Of Knowledge: Prover and Verifier can’t execute the process without a trusted witness.

 

Chapter-7: Enterprises Utilizing Zero Knowledge Encryption

Now that you know all about zero knowledge proof let’s take a look at some of the famous enterprises that use this protocol.

 

Notable Projects

  • Zcash

Most of the blockchain platform exposes the transactions between two peers. Not only it’s one of the disadvantages of the blockchain, but it’s also disrupting its growth. Zcash, on the other hand, can provide full-on privacy when it comes to transactions.

It’s open-source and permissionless blockchain platform that utilizes the essence of zero knowledge proof. The transaction process is shielded. So, it will find the value, the sender and recipient on the blockchain.

It’s also famous for introducing zk-SNARKS and after that many have followed its path.

 

  • ING

The ING is a Netherlands based bank who has started their new zero knowledge blockchain. Although they launched a bit of a modified version of zero knowledge system is called zero knowledge range proof. In this one, they require very less computational power than necessary.

It’s directly related to the financial sector such as mortgage value. You will be able to prove that you have the salary to get a mortgage without revealing your salary.

Currently, it’s open source, but it does through a considerable challenge to other financial blockchains.

 

  • PIVX

This company wants to change the typical ways that the world works. In a system where everything is controlled and managed by others, PIVX intends to introduce a safe heaven for your financial statements. They are working on a new integration where they will follow the zero knowledge proof example.

Here, the only thing that would be public is the confirmation of sent money. Meaning, you would see that someone sent money, but the address or amount of timing would be hidden. PIVX ensures a faster transaction rate with his new integration with the added enhancement of privacy.

 

  • Zcoin

The company utilizes Zerocoin protocol for providing extra security and completely anonymous transaction. The Zerocoin protocol obviously follows the zero knowledge proof example concept. However, what more Zcoin offers is the scalability that many blockchain networks lack.

Here, with the use of Zcoin, you will be able to preserve your identity to the fullest and what you are spending on the network. It’s a great way to protect fungibility.

But don’t confuse them with Zcash. They have different protocols and definitely not forks of each other.

 

Notable Vendors

  • StarkWare

StarkWare is another great company that utilizes the zero knowledge proof example for technology to the fullest. But they seem to twist up the typical SNARKs protocol. Instead of SNARKs, they use STARK technology.

StarkWare aims to improve the privacy and scalability problem of blockchain with a transparent transaction method. They are currently developing the hardware and software support to ensure a better output from their STARK tech.

This new technology will get rid of the hidden inflation problem, which will remove the trusted setup. zkSTARK is the acronym for Zero Knowledge Scalable Transparent ARgument of Knowledge. However, even though the hidden inflation is gone, it will still be quantum resistant.

This new STARK technology could be the next stage of SNARKs. Know more about StarkWare from here.

 

  • QED-it

This is one of the startups that utilizes zero knowledge proof to provide security. QED-it is an Israeli based company that is capable of handling confidential data without the third party eye. You can integrate into your system for better data management.

Some of their popular customers include BNP Paribas and Deloitte. The main goal is to provide privacy to enterprises. Last two years, they improved their project, developing brand new SNARK systems that can tackle any situation.

Some of their use cases are a real-time risk assessment, supply chain, asset management, predictive maintenance, and many more.

 

Chapter-8: Where Can You Use ZKP?

ZKP or zero knowledge proof use cases need to be able to work with cryptography and trustable devices. Compared to other devices mobile seems to be the correct choice here. They offer a safe runtime environment compared to browsers. However, it’s not still out of risk.

But the main question is where can you utilize zero knowledge proof use cases?

  • Messaging

In messaging end-to-end encryption is necessary. So that, no one can read your private messages without the client itself. Two users have to verify their trust to the server and vice versa. On the other hand, ZKP provides that end-to-end trust without leaking any extra info. With the help of ZKP, no one would be able to hack their way to your message anymore.

This is one of the zero knowledge proof use cases.

  • Authentication

Zero knowledge proof can help to convey sensitive information like authentication information with extra security. Here, ZKP can maintain a secure channel for the user to use his/her authentication information without exposing it. Thus, he would be able to efficiently avoid the leakage of data.

  • Sharing Data

Sharing data across the internet without a third party eye is exceptionally crucial. When you share something on the network no matter how protective they claim to be, there are always some risks.

Someone could always hack in or intercept in between sharing information — this is where ZKP can definitely help out.

This is another great one of the zero knowledge proofs use cases.

  • Security for Sensitive Information (Credit Card Info)

Sensitive information such as bank statements or credit card info needs an added level of protection. The bank preserves the credit card history. However, when you request the information from them, you have to communicate with their server.

Even though banks go through a secure line, still one’s credit card history is a lot more sensitive than average data. In this case, not just encrypting the whole information as one but blocks, the banks can provide better security.

Because banks would only manipulate the necessary blocks without touching other blocks, your history will get the right amount of security layer. And ZKP can provide that.

  • Complex Documentation

ZKP can restrict any user from accessing complex documentation that he isn’t authorized to see. As ZKP is able to encrypt the data in chunks, you will only have to manipulate certain blocks to give access, and restrict access to other users.

This way, unauthorized people won’t be able to see your documents.

  • Storage Protection

It can provide greater protection for your storage utility. ZKP is equipped with the protocol to keep the hackers away. With this, not only your storage unit but the information within it will also be encrypted. Not to mention the access channel too will be overly protected.

  • File System Control

Everything within a file system can be protected by the zero-knowledge proof protocol. The files, the users and even every login can have different layers of security. So, it can be a great use case when needed.

All of these zero knowledge proof use cases can be used in real life scenario.

 

Chapter-9: Implementing Zero Knowledge Proofs Architecture

Before you want zero knowledge proofs implementation, you need to know about what it relies on.

Key Wrapping Process

ZKP splits a single stream of data into small blocks. Each of these blocks is encrypted separately. In zero knowledge proof implementation, the key to encrypt will be on the user only, and with that, he will be able to encrypt and decrypt the information.

 

Managing Privileges

The keys will be stored in containers. But if a user wants to change the storage key, then he would have to compare his ownership tag. If they match, then he will be able to change it, and if they don’t then, it will remain untouched.

 

Controlling Requests

You should make sure that no one can just add up texts within your zero knowledge proof implementation. As the users will only be able to access it in the blockchain network, you need to convert every operation to API commands.

This way no one would be able to bypass your security measures.

 

Mitigate All Attacks

The blockchain is not a perfect network. Even if it lowers the amount of attack, it doesn’t fully get rid of it. So, when you integrate ZKP in a system, couple it with other measures. This way you will get rid of the remaining attacks that could potentially harm the network. Zero knowledge proof implementation does require these methods to work correctly.

 

Is Zero Knowledge System Important?

Zero knowledge proof explained by far has been proving itself to be capable of handling enterprise level businesses. Not everyone is a fan of the public ledger system where everyone can see your transactions. Yes, you do get the anonymity with the help of addresses, but still, people can track addresses too.

Also, when it comes to storing additional sensitive information blockchain isn’t the best idea. Enterprises deal with a lot of private info, and the existing privacy protocol isn’t enough.

Zero knowledge proofs explained only can improve blockchain, but it can also get rid of all the negative issues. Many enterprises aren’t interested in blockchain even though; it’s a beautiful invention. But with the help of Zero Knowledge proof explained, now everyone can start to utilize it.

So, the answer would be yes, zero knowledge system is undoubtedly an important factor regarding blockchain.

 

Chapter-10: Conclusion

Blockchain comes with its own set of merits and demerits. Even though at first it seemed quite promising, but it does indeed have a lot of baggage. These faults are slowing the growth of this wonderful technology.

However, with the introduction of zero knowledge system – the knight in shining armor, things have started to change. Now blockchain can be the super protective platform everyone hoped for.

Let’s see how zero knowledge proof and blockchain changes the world.


About Author

Just is a born geek who loves tweaking his computer and gadgets for effectiveness and productivity. He seems to have a greater interest in blockchains, which makes him perfect for sharing his new discoveries on 101 Blockchains.

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