While reading Andy Greenberg’s “Tracers in the Dark” book (great read, highly recommended) I became interested in the ZPF concept he mentions in connection with eCash in the opening chapters. I decided to do a little bit of research on the subject. Perhaps the best resource I found was at Chainlink: Zero Knowledge Proof, but here’s the short version of what ZPFs are.

Zero-Knowledge Proofs (ZKPs)

Zero-knowledge proofs are a cryptographic technique that allows one party (the prover) to prove to another party (the verifier) that they know a certain piece of information, without revealing the information itself.

In essence, a zero-knowledge proof lets you “prove that you know something” without ever revealing what that something is. This is achieved by demonstrating that a statement is true without sharing the underlying data.

Three Key Properties of Zero-Knowledge Proofs:

For a proof to be considered zero-knowledge, it must satisfy the following properties:

1. Completeness: If the statement is true, an honest prover can convince an honest verifier that the statement is true.
2. Soundness: If the statement is false, no dishonest prover can convince the honest verifier that it is true (except with some negligible probability).
3. Zero-Knowledge: If the statement is true, the verifier learns nothing beyond the fact that the statement is true (i.e., no additional information is revealed).

How Zero-Knowledge Proofs Work (Simple Example):

Consider a classic analogy called the Ali Baba Cave:

- Scenario: You are standing at the entrance of a cave that splits into two paths, left and right, with a magic door in the middle that only you know how to open. You want to prove to someone (the verifier) that you can open the door without showing them the exact method.
- How It Works: – You go into the cave and randomly choose either the left or right path. – The verifier stays at the entrance and, without knowing which path you took, asks you to come out through a specific path (left or right). – If you really know how to open the door, you can always come out from the requested path. If not, you would only be able to do so by chance. – After repeating this process multiple times, the verifier becomes convinced that you know how to open the door, without ever having seen you open it directly.

• Real-World Applications of Zero-Knowledge Proofs:*

1. Cryptocurrencies and Blockchain: ZKPs are widely used in privacy-focused cryptocurrencies like Zcash. They allow transactions to be validated without revealing the details (e.g., sender, receiver, or amount).
2. Authentication: ZKPs can be used to authenticate users without requiring them to reveal their password. Instead of sending the actual password, a user can prove that they know the password.
3. Secure Voting Systems: ZKPs can ensure that a voter has cast a valid vote without revealing the vote itself, ensuring privacy in elections.
4. Confidential Data Sharing: Companies or individuals can use ZKPs to prove they have valid information (like credit scores or certifications) without revealing sensitive personal data.

Types of Zero-Knowledge Proofs:

There are two main types of zero-knowledge proofs:

1. Interactive Zero-Knowledge Proofs: The prover and verifier engage in a back-and-forth interaction, like in the cave analogy. This requires multiple steps of communication.
2. Non-Interactive Zero-Knowledge Proofs (NIZK): No interaction is required between the prover and verifier. The prover can generate a single proof that the verifier can check independently. These are more practical for real-world applications like blockchains.

Conclusion
I plan on doing a deeper dive into the topic at some point because even though I understand the general idea, I am very curious as to how it works in practice. It doesn’t seem to me that ZPF are that widely used in crypto or banking contexts. In banking it’s probably because of KYC regulations but why not in crypto? There does seem to be a cryptocurrency using ZPF called ZCoin or something, but it’s clearly not very popular. To be continued…