Zero Knowledge, The Crypto Privacy Research That’s Breaking Out Of Blockchain

Zero Knowledge Ninja Breaking Out

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A little known privacy tech is receiving massive amounts of funding from the blockchain industry. It could transform how we live and work together. It turns out, it doesn’t need blockchains to do it.

Although institutions and investors are fleeing association with blockchain, amid stories of rampant fraud and dysfunction, there’s at least one technology coming out of the crypto ecosystem with potential far beyond blockchain projects and cryptocurrency. This sector of privacy tech tools and research is called Zero Knowledge cryptography, or “ZK” for short.

In simplest terms, ZK is a tool to prove that you know the truth about something without offering up the details to others — and worrying about what they might do with that information. That’s a handy trick, but the technique is incredibly complex and difficult to scale.

Examples of crypto organizations investing heavily in ZK research include the =nil; Foundation that raised $22 million this past January for a ZK-powered marketplace, the Ethereum Foundation’s ongoing 2023 ZK research grants, and the millions of venture capital raised by ZK companies like Starkware. All this investment is starting to produce practical results.

Why Crypto Startups Care About ZK

Public blockchains, which make cryptocurrency possible, are essentially digital nudist colonies on public beaches. Everything ever written to them is visible to anyone. Even if you use encryption, you’re leaving tracks in the sand that can be used to learn who you are, what you have, and who you interact with. ZK is a way to avoid making those tracks.

With a chance to solve a fundamental privacy problem like that, it’s no wonder that crypto industry companies like Polygon MATIC and Algorand ALGO are hiring top ZK talent and dumping millions into their research — with significant results:

  • An approach called PLONK improves ZK security and flexibility.
  • Using proof-carrying data and recursive proofs helps when you need to trust the output of multiple computations, performed by multiple parties.
  • And the Halo2 system improves security by removing the need for a trusted setup ceremony, an otherwise necessary process that increases security risk.

Work like this is driving down costs and complexity while expanding the number of ZK tools and practical use cases.

Zero Knowledge Projects With Zero Blockchain

With all these advances, it’s becoming clear that much of ZK’s impact lies far beyond blockchain.

Vitalik Buterin (Photo by Michael Ciaglo)

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Even blockchain leaders agree. Ethereum ETH co-founder Vitalik Buterin said in 2022 that ZK is necessary for blockchains, but also that ZK alone will be at least as important in shaping the future of the whole tech industry.

This wider view of ZK is starting to drive real innovation in how organizations think about solving problems, particularly where the solutions require coordination between people, companies and governments that can’t share data directly with each other. For example, ZK proofs can be used for verifying content and prohibiting malicious data sharing, like fake images.

Fake images on the internet have always been a problem, but in a world of increasing conflict and tribalism, the use of images that aren’t what they seem is causing outrage and eroding trust. To address this problem, a group called the C2PA proposed an industry standard for photographic digital signatures. Already some camera chipsets are implementing it. But it’s easy to defeat the signature when editing the image, and nearly all images shared on the internet are edited in some way.

That’s why Stanford researchers Trisha Datta and Dan Boneh developed a ZK method to prove that an image has only undergone permitted transformations, like scaling. Problem solved, no blockchain involved.

When We Need To Share But Can’t Share

Shoppers wait in line to pay at a Walmart. (Photo by Robyn Beck)

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Walmart WMT created a supply chain network on a blockchain in 2018 to track down contaminated food. Vendors resisted the project. Another supply chain project led by Maersk was recently shut down. Companies participating in these projects, some of which competed with each other, didn’t want their internal data sitting in a shared system, blockchain or otherwise. A ZK approach addresses this concern by leaving the data in each company’s internal system and generating ZK proofs about anything from customs certifications to shipping status. There’s no need for a blockchain in these cases.

Unless you’re trying to prevent issues like financial double-spending, creating ZK proofs and validating them can be done faster and cheaper on traditional computing infrastructure.

Add A Little Dash Of Blockchain To ZK For Flavor

Blockchains can still be useful in non-cryptocurrency ZK applications. The Baseline Protocol is a standards body I worked on with industry leaders such as Ernst & Young, ConsenSys, Microsoft MSFT and SAP. It advocates using ZK proofs to orchestrate services like Google Maps and Twilio TWLO without exposing data between them. The baselining technique reduces the need to copy data between systems, which can be a real comfort to companies worried about data leaks.

The standard does not require any cryptocurrency or specific blockchain. But a blockchain is a handy, always-on, tamper-resistant bulletin board for publishing ZK proofs in order to signal other services that it’s their turn to do something.

The Research Continues

Cryptocurrency stakeholders are continuing to double-down on ZK research. Token networks like Zcash ZEC use ZK proofs. Projects like Mina and Aztec are continuing to roll out. And so called zkEVMs are all the rage among Ethereum scaling enthusiasts. Even if ZK has a long life ahead of it beyond blockchain, some of its most obvious uses are still relevant in the crypto community.

If you’re thinking that high-security file validation, enterprise system integration and web service orchestration constitute incredibly boring uses of exciting technologies like blockchain and ZK…you’d be right. But maybe, after a decade of blockchain hyperbole, boring is just what we need.